Our Top Reports For Today
- (00:00) Stories Of The Day
- (01:48) The stock markets post a surprise rebound, Sensex jumps 945 points from low.
- (02:52) India’s rice, wheat, onion export bans could lead to $5 billion hit.
- (03:25) The world’s largest oil producer is the USA.
- (05:01) Garment exporters brace for higher costs as uncertainty continues on Red Sea shipping routes.
- (12:29) RBI bans AIFs from investing in downstream debt. Understanding why.
- (21:55) Mumbai-Delhi is 9th busiest domestic airline route in world
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.
The Surprise Rebound
The Indian markets saw a surprise rebound yesterday for reasons that were similar to the one that saw a surprise fall the day before.
Which is that there was no real reason except the general discomfort that markets usually demonstrate when at new peaks. Discomfort with valuations most likely.
The BSE Sensex hit an intraday low of 69,920, but jumped 945 points from there to end at 70,865, up 359 points vs previous close.
The Nifty50 closed at 21,255, up 105 points after swinging down before.
The rupee is returning to its previous state of weakness. It fell on Thursday and was at 83.25 against the U.S. dollar on Thursday morning, against its previous close of 83.17.
Dollar demand from importers is likely to stay buoyant heading into year-end, a foreign exchange trader at a state-run bank told Reuters.
India Faces $4 Billion Hit Because of Food Export Bans
Yesterday, we spoke of how onion prices were rising across Asia thanks to India’s ban on its exports.
As you know, India has in the last year banned or curtailed exports of wheat, rice and sugar as well of which it is the second largest producer.
The impact of all this, Reuters is reporting, is a shortfall of about $4 billion to $5 billion this year. Worse, the Red Sea attacks may also hit basmati rice shipments.
The USA Is The World’s Largest Oil Producer Now
And our energy segment is supported by IndiaEnergyWeek.
Oil prices have paused and slipped back after rising for three days as the forces of supply clashed with sentiment on the impact of Houthi attacks on ships on the Red Sea.
Global benchmark Brent hovered around $78 a barrel on Thursday even as US crude output hit a new record high of 13.3 million barrels a day last week, according to government data quoted by Bloomberg.
Rising production from the US, Guyana and Brazil offsets output cuts by Saudi Arabia and the OPEC cartel.
The US consolidated its position as the world’s largest oil producer, with daily output increasing 200,000 barrels last week to the highest in data going back to 1983, according to the Energy Information Administration, quoted by Bloomberg.
This may not be a surprise for someone who follows the oil industry closely right now but would come as a shock to someone who does not or has not been keeping in touch in recent months.
Being that US Shale production has rocketed in a manner not anticipated including thanks to massive productivity increases at the oil fields themselves.
Garment Industry Braces For A Hit
India’s garment industry, already struggling because of lower imports from markets like the United States and Europe thanks to lower demand over there, is now faced with another whammy at its peak season.
Right now is the peak season for garment exporters shipping out for the spring and summer season of 2024.
The delays because of the Red Sea tensions and potentially increased costs are not helping.
Some 12% of global trade goes through the Red Sea and more than 100 container ships are currently taking the long route around Africa due to the fear of attacks.
I reached out to Vijay Jindal, Chairman of the roughly 50-year old Gurgaon based Garment Exporters and Manufacturers Association and began by asking him whether garment exporters were already experiencing any delays in their shipments.
Very broadly speaking, garments like any other goods exports can be either free on board or F.O.B which means the buyer accepts the title of the goods at the shipment point and assumes all risk once the seller ships the product.
If the deal is on CIF basis, then the seller bears cost, insurance and freight.
The Alternate Investment Fund Crackdown
The Reserve Bank of India a few days ago directed banks and non-banking financial companies to liquidate their holdings in the not so tightly regulated alternate investment funds or AIFs, which in turn have downstream investments in debtor companies.
The AIFs were essentially buying loans that the NBFC had made to a third entity, which had a probability of going bad. AIFs are regulated by Securities & Exchange Board of India while NBFCs are regulated by the Reserve Bank of India.
Last year, Sebi had raised a flag about AIFs which have smaller groups of mostly more risk bearing investors making such investments.
A handful of non bank finance companies including IIFL Finance have already declared that they had invested in AIFs and were winding it down.
So what does this exactly mean and what were the NBFCs upto via this intriguing sounding route of investments ? I reached out to Jyoti Prakash Gadia, Managing Director at Resurgent India and began by asking him to define what was an AIF in this context and what the RBI was cracking down on.
Jet Setting From Mumbai Delhi
Mumbai-Delhi is the 9th busiest domestic airline route in the world with 7.2 million seats, latest figures from flight data analytics company OAG has revealed.
Mumbai-Delhi was preceded by Jeddah to Riyadh.
Incidentally, the busiest domestic airline route is Jeju (CJU) to Seoul (GMP) both in South Korea with 13.7 million seats
Meanwhile, the one-hour flight between Singapore and Kuala Lumpur in Malaysia was the world’s busiest international route this year.
Atlanta remained the world’s busiest airport in 2023, followed by Dubai, Tokyo, London Heathrow and Dallas, Texas.
The only new entrant in this year’s top 10 airports list was 10th-placed Guangzhou, in China, OAG said. It was 16th in 2022.
On that note, here’s wishing you a merry Xmas and happy holidays and see for our daily news report in the new year.