1. Exports continue to decline
India’s merchandise exports declined for the 13th consecutive month, according to the December trade data released last week. Shipments fell 14.75% in December from last year, although they rose compared to November levels. The commerce ministry has projected that India’s exports in 2015-16 would fall by around 13% to a level of $270 billion compared to 2014-15. The poor performance has made the task of achieving the government’s target of taking exports of goods and services to $900 billion a daunting task. Weak global demand and a relatively stronger rupee are being seen as a major reason for the tepid performance, according to experts. The situation could worsen further if China devalues its currency even more.
2. Reliance posts record profit
Riding on high gross refining margins due to low crude prices, Reliance Industries Ltd (RIL) posted a record 39% increase in profit for the quarter ended 31 December. RIL’s net profit, which stood at Rs7,290 crore, surpassed the Rs7,100.4 crore median profit estimate of analysts polled by Bloomberg. Crude oil refining accounts for more than 65% of profit and 70% of revenue for RIL. While RIL’s shares surged after the results, all eyes are on the commercial launch of Reliance Jio Infocomm Ltd, which would mark a return of Mukesh Ambani to the telecom business after a decade. R-Jio plans to raise an additional Rs15,000 crore through a rights issue.
3. Rupee and Sensex continue to worry
Movements in the rupee and Sensex continued to worry market watchers. The rupee tanked below the level of 68 per dollar on 21 January, trading at its lowest level since Raghuram Rajan took over as the governor of the Reserve Bank of India (RBI). On the same day, the Sensex slipped to its lowest level of 23,962.21 since Prime Minister Narendra Modi took office in May 2014. While the clamour about the rupee going below 70 per dollar has increased in a scenario in which most emerging market currencies are under pressure, the Sensex has lost 8.5% of its value this year, thanks to foreign investors pulling $1.4 billion from local equities.
4. RBI amends gold monetization scheme
The Reserve Bank of India (RBI) has amended the gold monetization scheme, allowing depositors in the short-term bank deposit scheme for a period of one-three years to accrue interest in gold units. In the case of medium- and long-term gold deposits, where medium-term deposits have a 5-7 year term and long-term deposits have a 12-15 year term, the principal will be denominated in gold and the interest will be calculated in rupees with reference to the value of gold at the time of the deposit. RBI also said the government will pay banks a 2.5% commission in order to incentivize them to unlock massive amount of gold deposits in the country. The scheme, which intends to collect an estimated 20,000 tonnes of gold lying with temples and households, had only attracted a few kilograms over the past two months.
5. NFHS-4 results start coming in
The results of the fourth round of the National Family and Health Survey (NFHS) have started coming in. Data from the survey, which gives detailed statistics on important health indicators, especially for women and children, would be available after 10 years. The first three rounds of the NFHS were conducted in 1992-93, 1998-99 and 2005-06. This is the first round to have covered all states, Union Territories and districts in the country. Although data is yet to come for all states and at an all-India level, initial comparisons to NFHS-3 show improvements in health levels for the country. A significant decline in indicators, such as child malnutrition and maternal mortality, have been seen in the major states for which data has been released so far.
6. Crude oil prices continue to slide
International crude oil prices continued their downward direction last week. Brent crude future price went below $28 per barrel on 20 January, registering a 12-year low. While analysts are attributing the fall to a supply glut that is worsening, given low demand and a sluggish economic environment, many are not ruling out prices increasing to $50 per barrel by the end of 2016. The expectations are backed by a contango—future prices being higher than spot or near-term contract prices—in the oil markets and forecasts of consumption catching up with supply.
7. IMF keeps India’s growth forecast unchanged
India will retain its place as the fastest growing major economy in the world, said the International Monetary Fund (IMF) in its update to its global economic outlook released last week. The IMF has kept its growth projections for both India and China unchanged for 2016 and 2017. While the Indian economy is expected to grow at 7.5%, China’s growth is seen as slowing to 6.3% in 2016 and 6% in 2017 against the 6.9% level of 2015. IMF cut its forecast of global economic growth by 0.2 percentage points, largely due to a huge contraction in the Brazilian economy, sluggish economic environment in West Asia, due to low oil prices, and a less-than-expected performance by the US.
8. Richest 1% wealthier than rest of the world
A report released by anti-poverty charity Oxfam International on the eve of the World Economic Forum (WEF) in Davos shows that the richest 1% is now wealthier than the rest of the world. The report also says that the richest 62 people—53 men and nine women—had the same amount of wealth as the bottom half of humanity. The report, which has been prepared using data from Credit Suisse Group AG, warns that if pro-poor efforts are not witnessed soon, more than 500 million people would still be living under extreme poverty by 2030.
9. Indian bowlers flounder Down Under
India on Saturday won the last match in the five-match One-Day International (ODI) series against Australia, preventing a washout after having lost four games on the trot. While India could not defend its score in the first three matches, its batting line-up imploded in the fourth ODI, losing nine wickets for just 46 runs, after a 212-run partnership between Shikhar Dhawan and Virat Kohli. The poor performance has raised questions about the inability of the Indian bowlers to restrict their opponents. Also under doubt is the reputation of skipper M.S. Dhoni being a great finisher of the game after a string of poor scores in the series.
10. IndiGo results disappoint analysts
Despite increasing year-on-year profit by Rs121 crore for the December quarter, the performance of InterGlobe Aviation Ltd, which runs the IndiGo airline, has failed to impress analysts. The airline firm’s stock fell 19.10%, closing at Rs968.75 on 22 January. The main reason for the disappointment has been its failure to do well in an environment that is considered favourable for airlines due to declining fuel costs. IndiGo had registered a profit of Rs640 crore in the June quarter, which makes the Rs657 crore level of December less impressive. Analysts have made downward adjustments in their estimates of profits and earnings even as IndiGo remains uncertain about meeting its target of adding 111 planes to its fleet by the end of the 2016 fiscal. IndiGo’s stock is still much above the issue price of Rs765, though.
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