Markets Zoom Up Once Again On Federal Reserve Moves

• (00:00) Stories Of The Day
• (01:09) Markets Zoom Up Once Again On Federal Reserve Moves, Why Infrastructure Stocks Are Hitting Record Highs
• (03:22) Gold Prices Rise Again To Fresh Highs
• (04:22) Accenture Cuts Growth Forecasts In A Move That Could Hit Indian It Stocks
• (06:28) A Host Of New Auto Investments Are Being Lined Up, From JSW To Tata Motors. How Much Will The Market Grow?
• (15:28) New Domestic Airports And International Destinations In India’s Summer Time Table

NOTE: This transcript contains only the host's monologue and does not include any interviews or discussions that might be within the podcast. Please refer to the episode audio if you wish to quote the people interviewed. Email [email protected] for any queries.

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Markets Rise On Fed Trigger

Stock Prices rose on Thursday, amidst a global equity surge after the Federal Reserve maintained its projection of three interest rate cuts this year, despite higher inflation in the United States.

The S&P BSE Sensex was up  540 points higher at 72,641 levels, while the Nifty50 closed above 22,000-mark at 22,012, up 173 points

Infrastructure is a big theme in general and specific.

Stocks of CG Power and Industrial Solutions, Cummins India, Thermax, Hitachi Energy India rallied up to 9 per cent, hitting record highs in intraday trade, the Business Standard reported.

The stock price of Siemens was up 5 percent to Rs 4,954.50, trading close to its record high level of Rs 4,973.55 touched on March 11, 2024, reported the Business Standard.

There are two bets of course, one is infrastructure spending and continued infrastructure spending including massive outlays for railways to whom some of these companies supply materials to.

While the spending has been on for some time, the continuity is what is giving markets more comfort at this point, including the large outlays.

Elsewhere, the MidCap and Small Cap indices are now recovering so all is forgiven or forgotten it appears, both were up roughly 2% each on the BSE.

A Federal Reserve move, or likely move in this case to reduce interest rates later affects almost a range of asset classes almost instantly, from equities and bonds to currencies, gold and oil.

And if you are a frequent trader, a shortened settlement cycle is what you have been waiting for. The Securities and Exchange Board of India (Sebi) has issued guidelines for the beta version of same-day (T+0) settlement on an optional basis. 

The new framework will become operational by March 28. This will be in addition to the existing T+1 settlement cycle in the equity cash market. The option will be available for trades done only till 1.30 pm.

The beta will cover 25 stocks and will work with a limited number of brokers, Sebi said.

Gold Hits Another High

Speaking of gold, gold surged above $2,200 an ounce for the first time as lower interest rates means bullion becomes more attractive though you could only buy it for capital appreciation.

There are other factors driving up gold prices including extensive buying by central banks around the world led by countries like China for political reasons as well, as we discussed yesterday on Episode 250 of The Core Report.

Gold rose as much as 1.6% to a record $2,220.89 in early trading, before pulling back.

Gold has rallied more than 10% since mid-February, as the outlook for looser US monetary policy triggered fresh bets on bullion by investors, Bloomberg reported.

The rupee back home was mostly steady, unlike its Asian peers which were stronger on Thursday. It closed at 83.14 against the U.S. dollar.

Accenture Cuts Growth Targets Globally, Indian IT Stocks Could be Hit

Accenture, which has a large IT services and consulting business, in many ways similar to Indian IT majors like Infosys, Wipro and TCS, has said it now expects full-year revenue growth in the range of 1% to 3%, from its prior forecast of 2% to 5%.

Accenture has been grappling with sluggish demand for its IT and consulting services as higher interest rates, among other factors, have slowed down growth for IT services, delivered in the US and from countries like India. 

ADR (American Depository Receipt) shares of IT majors Infosys and Wipro  were trading lower on Wall Street on March 21 after Accenture cut its 2024 revenue forecast, and also causing its stock to fall around 5.6% in premarket trading, MoneyControl reported.

Tata Consultancy Services and Infosys, two of India's biggest IR services firms, also reported downbeat quarterly results earlier this year as spending dries up. 

India Private Sector Activity Jumps

India’s private sector activity rose to an eight-month high in March, thanks to manufacturing and the fastest expansions in factory orders and production in nearly three-and-a-half years or October 2020.

The HSBC Flash India Composite PMI (Purchasing Managers' Index) Output Index rose to 61.3 in March, compared with a downward revised figure of 60.6 in February, according to the third flash results released by the company on Thursday.

According to survey participants, efficiency gains and robust consumer appetite, alongside investment in technology and favourable market conditions, spurred sales. The pace of growth was substantial and stronger than that recorded in February,” said the survey.

Total order volumes received a boost from international sales as new export orders across the private sector expanded at the fastest pace in seven months

Major Auto Investments Are Lined Up

The latest to announce a major passenger car investment is the Sajjan Jindal led JSW Group which has partnered with the SAIC-owned MG Motor to ramp up production of electric vehicles.

While JSW’s stake in MG Motor India was announced a few months ago, the duo that’s JSW MG Motor India will invest Rs 5,000 crore to expand annual capacity to produce 3 lakh cars annually and launch one new car every 3-6 months starting September. 

MG Motor is in India already with a manufacturing plant in Halol in Gujarat with a capacity of around 120,000 vehicles. The proposed investment will go into a second plant

The company dreams that it will create a Maruti Moment, JSW’s Sajjan Jindal said while announcing the joint venture, adding they want to sell a million electric cars by 2030.

A one million would mean almost 1/6th of the market by then and we will come to that in a moment. But it depends on what you project the market at.

Maruti has launched a little over 40 years ago and has an over 40% share of the market right now.

The company said all the steel for the cars would come from JSW Steel, a synergy which sounds interesting but does not really have a comparison or at least not visibly anywhere elsewhere in the world, including in India. Which would suggest that there is not much synergy.

Production capacity of MG Motors Halol facility in Gujarat will be increased to three lakh vehicles annually from the current capacity of one lakh vehicles, reports said.

The chairman of the joint venture will be from JSW Group and the board of the company will be jointly managed by JSW and SAIC.

Elsewhere, Tata Motors said it would build a vehicle manufacturing facility in Tamil Nadu with an investment of Rs 9,000 crore over the next five years. Some 5,000 jobs are expected to be created because of this.

A little earlier, Vietnamese electric vehicle maker WinFast said it would invest Rs 4,000 crore over the next five years to produce 150,000 cars also in Tamil Nadu.

There are other investments. In January, Maruti said it was investing close to Rs 38,000 crore to double its capacity to around 4 million cars in the next 6-7 years.

So how are these investments stacking up in contrast to the projections of market growth, between electric and non electric or internal combustion engines ? I reached out to Jayesh Kale, auto industry analyst and senior vice president at Elara Securities and began by asking him how he was seeing the slew of investments announced in recent weeks ?

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New Flights, New Routes In India’s Summer Airline Schedule

\Indian airlines will operate a total of 24,275 weekly domestic flights during the summer schedule starting from March 31, a nearly 6 per cent increase compared to the year-ago period, the ET reported. 

This is marginally higher by around 540 flights from the winter schedule that ends on March 31, according to the DGCA, India’s aviation regulator.

Broadly, airlines like IndiGo, Air India and Vistara will operate more flights while SpiceJet will reduce departures during the 2024 summer schedule that spans from March 31 to October.

Some 27 domestic airports will now fly internationally including to countries like Uzbekistan, Georgia and Azerbaijan apart from traditional routes like the US, Middle East and the UK. Some 37 countries will be connected directly from here.

Domestic carriers will operate some 1,922 weekly international flights, up 5% from the 2023 summer schedule. 

The regulator said there will be 24,275 domestic departures per week which have been finalised to/from 125 airports as per the summer schedule.

"Out of these 125 airports, Azamgarh, Aligarh, Chitrakoot, Gondia, Jalgaon, Moradabad and Pithoragarh are the new airports proposed by the scheduled airlines," DGCA said on Thursday.

Indigo, Vistara, Air India and Akasa are all increasing their weekly domestic departures.