Nifty Closes At Record High, HDFC Bank Floats Up
The Nifty50 closed at a record closing high of 22,197, up 75 points. The Nifty50 had touched these levels earlier but had receded though it hit a record high of 22,216 in intraday trade.
Our Top Reports For Today
- (00:00) Stories Of The Day
- (00:50) Nifty Closes At Record High, HDFC Bank floats up.
- (01:38) Ships Carrying Millions of Barrels of Russian Oil Are Anchored On High Seas
- (03:27) Two decades on, India resumes flirting with private nuclear power generation
- (06:46) The most shocking statistic about Indian car buyers and their preferences.
- (18:59) Why HDFC Bank Does Not Want to be a cowboy lender and why branches are still important
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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Nifty Closes At Record High
Stockmarkets opened lower on Tuesday as we had forecasted but turned around in a fairly volatile session after index mover stocks like HDFC Bank shot up around 2.6%, the biggest intraday gain in several months.
This was the sixth winning session and the longest such run in two and a half months.
The S&P BSE Sensex ended at 73,057, up 349 points while the Nifty50 closed at a record closing high of 22,197, up 75 points. The Nifty50 had touched these levels earlier but had receded though it hit a record high of 22,216 in intraday trade.
Russian Crude To India Is Stranded
Oil prices are still holding around $83 a barrel, moving narrowly around this level right now as the markets try and make sense of the demand and supply factors including of course the tensions in the middle east.
Elsewhere, India is facing a problem in oil from Russia as its seaborne crude shipments fell for a second week, with the situation likely to get worse next week, according to Bloomberg.
Nearly 15 million barrels of Russia’s Sokol crude — meant for delivery to India — are sitting on tankers idling off the coasts of Malaysia and South Korea. They show little sign of moving.
Twelve tankers are anchored, holding the key Russian crude grade. Most haven’t moved far for more than a month, vessel tracking data compiled by Bloomberg show.
Moscow has been struggling to get its Sokol crude into India, the main market for the grade produced by the Sakhalin 1 project which are offshore fields, with India’s refiners apparently wary of falling foul of US sanctions and complaining that the grade is too expensive relative to alternatives.
Although two shipments were delivered recently to India after a break of more than two months, Russia's problems seem far from over as at least 13 more, totaling about 9 million barrels, are still sitting on vessels that appear to be going nowhere.
Adding to Moscow’s concerns, all seven of the specialised shuttle tankers that haul the crude from the export terminal now have cargoes on board, leaving none available to take on fresh shipments. The lack of available ships will hamper exports of Sokol for at least the next week, and possibly longer, Bloomberg reported.
India Flirts With Private Nuclear Power Again
What goes, comes back, sometimes after a few decades.
I asked a CEO of a private power company if they were going to bid for setting up nuclear power projects. “Well, we have a team in place and are working on the scope and feasibility. It is upto the Government,” he said.
When I asked him why they were going ahead without the Government clearly greenlighting the whole process including amending the law, he said what choice did they have ? “We have to take a stab at all opportunities, present or distant.” he said, thus imparting a lesson which was more about doing business than nuclear power.
Back to the present. Reuters is reporting that the Government of India is going to invite private firms to invest about $26 billion in its nuclear energy sector.
Nuclear power contributes less than 2% to India’s power generation capacity and has a long way to go and of course the argument for nuclear has changed in the context of climate change whereas it is seen as a cleaner, greener energy, though the debate on its risks is still on
Around 2006 or close to 20 years ago and the time I spoke to the power company CEO, companies like Tata Power and NTPC were waiting for the Government to amend the Atomic Energy Act of 1962, yes that is the law that needs amending to allow the private sector and others to get into nuclear energy.
Incidentally, in most western countries, nuclear power is run by private companies, including in countries like France where nuclear power is almost 68% of total annual power generation as per the the US Energy Information Administration and as of 2021.
In the same year, nuclear plants accounted for 21% of America’s power generation.
Back here, according to Reuters, the Government is talking to at least five private firms including Reliance Industries, Tata Power, Adani Power and Vedanta to invest around $5 billion each.
The target apparently is 11,000 megawatts (MW) of new nuclear power generation capacity by 2040. India’s current capacity is 7,500 MW, and has committed investments for another 1,300 MW.
So at least Reliance and Tata were there around two decades ago as well though the Reliance entity of then and today is different.
Reuters report says the private companies will invest in the nuclear plants, acquire land, water and undertake construction in areas outside the reactor complex of the plants. But, the rights to build and run the stations and their fuel management will rest with NPCIL, as allowed under the law, they said.
The private companies are expected to earn revenue from the power plant's electricity sales and NPCIL would operate the projects for a fee, the sources said.
This obviously seems a workaround on the law, being the Atomic Energy Act of 1962 but it is not clear to me why the company’s would agree to this, unless incentivised elsewhere.
Twenty years ago too the effort faltered because the private sector did not get clarity or movement on the legal foundation to going nuclear. At that time the fears may have been greater. Today, the fears have receded, hopefully the bureaucracy will recede as well.
Shocking News About India’s Auto Consumers
Last month saw the highest car sales in India, at around 393,000 cars dispatched, according to the Society of Indian Automobile Manufacturers.
There are some glitches like dealers complaining that they are being dumped with more inventory that they can manage which means that car companies are producing a little more than they should but demand is clearly strong.
The Deloitte 2024 Global Automotive Consumer Study is out with a substantial India focus as well.
And some of the findings are quite surprising and revealing.
The broader takeaway is that hybrids, as the data is already showing, are now preferred to electric. That reflects the choice consumers are making in going from Internal Combustion Engines or petrol and diesel engines to hybrid before going to battery.
Electric vehicles are roughly 2% of the market while hybrids, which means they have a battery and run on fuel and thus deliver greater mileage, are around 12%, according to Rajeev Singh, partner and consumer industry leader, Deloitte Asia Pacific.
I spoke with him and asked him to talk about the report, the key takeaways globally and from India and themes at the intersection.
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So here is the interesting part to sum up.
First, Indians are shying away from electricity because they are unsure about resale value, which means they feel that the price will drop quite sharply. This is apart from range anxiety and so on which are of course influencing customers world over, though to different degrees.
The second and most important factor and a big surprise to me was loyalty. Some 78% of Indian customers do not want to continue with the car they own today. And loyalty is apparently amongst the lowest in the world.
Contrast that to Japan where 70% stick to the same model. All of this flows from studies across 28 countries that Deloitte has studied.
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HDFC’s Masterclass In Finance And Risk
HDFC Bank’s stock has been pummelling in recent months, especially after it emerged that they were having problems finding low cost deposits or sufficient deposits to fund their growth.
The stock has fallen 17% this year alone, though the Benchmark Sensex has gone up in the same period, albeit marginally.
The path here looks a little different though with all major brokerages, almost like brothers in arms giving buy calls.
There are two interesting questions that Bank CEO Sashidhar Jagdishan addressed which were important in a conversation he had with a Goldman Sachs analyst the day before and posted on YouTube.
The first is will or would (my words) be more aggressive in the way it targets business. Put simply, you can obviously lend to more riskier customers, big and small and earn more. But then it could also blow up in your face. And what does HDFC Bank think about that? Hear this.
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The second is interesting and should be a masterclass for anyone over enamoured by all things digital.
The question, my framing of it, why does a bank need branches in this day and age ? What do they do, do they really deliver and is it worth it, having physical people sit in a street corner office dealing with all kinds of walk-ins. And if so, how do you know it is working?
I would urge you to listen closely because the insights don’t just apply to banks but to general retail facing businesses and brands as well, at least many of them.
