N Chandrasekaran, Chairman of Tata Sons, reaffirmed the conglomerate's dedication to preserving the legacy of its founder, Jamsetji Tata, during an event commemorating Tata's 185th birth anniversary at Postal Park in Bistupur, Jharkhand's Jamshedpur. Accompanied by Tata Steel CEO and MD TV Narendran, Chandrasekaran emphasized Tata's vision of industry as a force for positive change, pledging to uphold the values of integrity, innovation, and social responsibility that have guided the company since its inception.
Chandrasekaran highlighted the company's commitment to working in collaboration with the community to foster a brighter and more prosperous future for Jamshedpur and its residents. The occasion also witnessed the inauguration of an exhibition at Steelennium Hall, showcasing Tata Steel's various technology-led initiatives across departments.
Founder's Day celebrations were held across different units of the Tata Group, underscoring the enduring legacy and values instilled by Jamsetji Tata. As part of the festivities, Chandrasekaran flagged off a fleet of green-fuel-powered commercial vehicles manufactured by Tata Motors for Tata Steel's operations. This fleet included Prima tractors, tippers, and the Ultra EV bus, utilizing both Liquified Natural Gas (LNG) and battery electric technologies, in line with Tata Group's commitment to sustainability.
The event not only paid tribute to Jamsetji Tata's pioneering vision but also demonstrated Tata Sons' ongoing dedication to innovation, social responsibility, and ethical business practices. Through collaborative efforts with the community and investment in cutting-edge technologies, Tata Sons aims to continue Jamsetji Tata's legacy of creating positive impact and driving progress in the industrial landscape of India.
Shares of NMDC surged over 5% following the release of its December quarter financial results, with the state-owned company reporting a notable increase in net profit. The stock price rose by 5.31% to reach Rs 248 per share on the BSE and similarly climbed by 5.29% to the same price on the NSE. During intra-day trading, NMDC's stock hit a 52-week high of Rs 252.65 on the BSE and Rs 252.40 on the NSE.
Meanwhile, the broader market saw a modest uptick, with the BSE Sensex gaining 50.28 points (0.07%) and the NSE Nifty rising by 0.1% in the morning session.
In a regulatory filing, NMDC disclosed a significant jump in its consolidated net profit, which increased by 62% to Rs 1,469.73 crore compared to Rs 903.89 crore in the corresponding period last year. This growth was primarily driven by higher income, as the company's total income surged to Rs 5,746.47 crore from Rs 3,924.75 crore a year ago.
Additionally, NMDC's board approved an interim dividend of Rs 5.75 per equity share for the fiscal year 2023-24, with February 27 set as the record date for determining shareholders eligible for the dividend.
As India's largest iron ore mining company, NMDC plays a crucial role in meeting approximately 20% of the country's demand for this vital raw material in steel production.
Shares of Life Insurance Corporation of India (LIC) surged over 6% on Thursday, propelling its market valuation to Rs 6.99 lakh crore, positioning it as the fifth most valued company. The stock soared 5.86% to close at Rs 1,106.25 on the BSE, reaching a record high of Rs 1,144.45 during the day. On the NSE, it rose by 6.46% to Rs 1,112 per share. LIC's market capitalization surged by Rs 38,740.62 crore to Rs 6,99,702.87 crore, surpassing ICICI Bank's valuation.
Prime Minister Narendra Modi highlighted in the Rajya Sabha that despite opposition rumors, LIC's shares are now trading at record levels. Reliance Industries leads as India's most valued firm with a market cap of Rs 19,64,044.94 crore, followed by Tata Consultancy Services, HDFC Bank, Infosys, and LIC.
Last month, LIC overtook State Bank of India to become the country's top-valued PSU by market capitalization. Listed in May 2022, the government divested a 3.5% stake in LIC through an Initial Public Offering (IPO), maintaining a 96.5% stake. LIC's share price surpassed Rs 1,000 for the first time on Monday and has surged nearly 33% year-to-date.
In a historic shift in global markets, investors are diverting billions of dollars away from China's slowing economy towards India, marking a significant departure from the previous two decades when China was viewed as the world's premier growth story. Wall Street titans such as Goldman Sachs Group Inc. and Morgan Stanley are championing India as the primary investment destination for the next decade, underscoring a pivotal moment in investment trends.
This seismic movement of capital towards India has sparked a veritable gold rush among investors. Marshall Wace, a $62 billion hedge fund, has designated India as its largest net long bet after the United States in its flagship hedge fund. Vontobel Holding AG, headquartered in Zurich, has elevated India to its top emerging-market holding, while Janus Henderson Group Plc is exploring acquisitions in the Indian fund-house arena. Even traditionally conservative retail investors in Japan are embracing India while reducing their exposure to China.
The focal point of this shift lies in the divergent paths of two Asian powerhouses. India, hailed as the world's fastest-growing major economy, has undergone significant infrastructural development under the leadership of Prime Minister Narendra Modi, aiming to attract global capital and divert supply chains away from Beijing. Conversely, China grapples with persistent economic challenges and a deepening schism with the Western-led global order.
Investors are closely monitoring the contrasting trajectories of India and China, finding renewed interest in India for several reasons, foremost among them being its distinction from China. Vikas Pershad, Asian equities portfolio manager at M&G Investments in Singapore, notes that India offers a genuine long-term growth narrative, contrasting with the uncertainties surrounding China's economic landscape.
While India's investment potential has been recognized in the past, investors now view the country through a lens reminiscent of China's earlier years—a vast, dynamic economy opening up to global capital in innovative ways. Despite acknowledging potential challenges, such as a predominantly poor population and expensive stock markets, investors perceive the risks of betting against India as outweighing the benefits.
Historical data underscores the close correlation between India's economic growth and the value of its stock market. An average growth rate of 7% could result in a proportional increase in market size. Over the past two decades, India's GDP and market capitalization have surged in tandem from $500 billion to $3.5 trillion, illustrating the profound economic transformation.
Aniket Shah, global head of environment, social, and governance practice at Jefferies Group LLC, highlights the heightened interest in India among investors, noting a surge in attendance during recent investor calls focused on the country.
As India emerges as a beacon of investment potential, global investors are recalibrating their portfolios to capitalize on the country's growth trajectory. This shift represents a watershed moment in global markets, signaling a significant reorientation of investment preferences towards India and away from China. With India poised to play an increasingly pivotal role in the global economy, investors are positioning themselves to harness the opportunities presented by this dynamic market.
Reliance Industries witnessed significant demand for its shares, surging over 7 percent in late afternoon trading on Monday, pushing its market valuation beyond the Rs 19.56 lakh crore mark.
Continuing its upward trend for the third consecutive day, the blue-chip stock soared by 6.81 percent, reaching an unprecedented high of Rs 2,895.10 per share on the BSE. On the NSE, it surged by 7.16 percent, hitting a record peak of Rs 2,900 per share.
In just three days, the shares of India's most valuable company by market capitalization surged by over 9 percent. The company's market capitalization skyrocketed to Rs 19,56,771.59 crore during the late afternoon trading session.
The remarkable rally in Reliance Industries' stock also ignited a surge in the overall equity market. The 30-share BSE Sensex surged by 1,203.90 points to reach 71,904.57, while the Nifty climbed by 375.40 points to reach 21,715.60.
This surge in Reliance Industries' share price and market valuation not only reflects investor confidence in the company but also contributed significantly to the overall bullish sentiment in the equity market, driving indices to new highs.
In a remarkable achievement, India's stock market has surpassed Hong Kong's for the first time, marking another milestone for the South Asian nation, acclaimed for its growth prospects and policy reforms that have made it an attractive destination for investors. According to Bloomberg data, the combined value of shares listed on Indian exchanges reached $4.33 trillion as of Monday's close, outpacing Hong Kong's $4.29 trillion. This elevates India to the position of the fourth-largest equity market globally, with its stock market capitalization exceeding $4 trillion for the first time on December 5.
India's equity market surge is attributed to a burgeoning retail investor base and robust corporate earnings. The country, with its stable political environment and a consumption-driven economy among the world's fastest-growing, has positioned itself as an alternative to China. The nation has been successful in attracting substantial capital from global investors and companies alike.
Ashish Gupta, Chief Investment Officer at Axis Mutual Fund in Mumbai, expressed confidence in India's growth momentum, citing the favorable conditions in place. The ongoing rally in Indian stocks contrasts sharply with the historic slump in Hong Kong, where influential Chinese firms are listed. Stringent anti-COVID-19 measures, regulatory crackdowns, a property-sector crisis, and geopolitical tensions have contributed to eroding China's appeal and triggering an equities rout.
While some strategists anticipate a turnaround in Chinese stocks, UBS Group AG suggests that Chinese stocks may outperform Indian peers in 2024 due to battered valuations in the former. Meanwhile, Bernstein expects the Chinese market to recover and advises profit-taking on Indian stocks, considering them expensive.
However, current momentum appears to favor India. Pessimism toward China and Hong Kong deepened in the new year amid a lack of major economic stimulus measures. The Hang Seng China Enterprises Index is already down about 13%, hurtling toward its lowest level in almost two decades. In contrast, India's stock benchmarks are trading near record-high levels.
Foreign investors are redirecting funds from China to India, with global pension and sovereign wealth managers increasingly favoring the latter. In 2023, overseas funds poured more than $21 billion into Indian shares, contributing to the S&P BSE Sensex Index's eighth consecutive year of gains. A recent study by the Official Monetary and Financial Institutions Forum revealed a global consensus that India represents the best long-term investment opportunity, further solidifying its position in the global financial landscape.
Google CEO Sundar Pichai has informed employees to anticipate additional job cuts at the Alphabet-owned company this year, as reported by The Verge on Wednesday, referencing an internal memo. According to the memo, Pichai emphasized that the layoffs in the upcoming year aim to streamline operations by removing layers and fostering agility in certain areas. The strategic focus is on simplifying execution processes and enhancing efficiency.
This move aligns with the broader trend of companies embracing artificial intelligence software and automation to alleviate workloads. While Pichai assured employees that these role eliminations won't match the scale of last year's reductions, he clarified that not every team would be affected by these changes. The objective is to optimize the organizational structure and enhance overall performance, acknowledging the evolving landscape of technology and business practices.
As the tech industry continues to evolve rapidly, Google's decision reflects a strategic response to stay competitive and adaptable in the dynamic market, emphasizing efficiency and innovation amid the ongoing technological transformations.
According to Reuters, Richard Fuld, the former chief executive, declared, "Lehman Brothers in 2008 was not a bankrupt company," in front of 1,300 people at a micro-cap stock convention in Manhattan, seven years after Lehman Brothers filed for bankruptcy.
The bankruptcy of Lehman Brothers on September 15, 2008, was a defining moment that continues to shape the world of finance, regulation, and public perception. It underscored the importance of robust risk management practices within financial institutions. The excessive risk-taking and reliance on complex financial instruments were key factors in Lehman's downfall. And Richard had a different opinion on risk management. No matter what you may have read about Lehman's risk management, he claimed, "I had 27,000 risk managers at the firm because they were all shareholders in the company" at the same event.
Fuld defended the company's risk management procedures and asserted that because of their ownership positions, Lehman Brothers workers had a stake in the company's performance. This was perceived as an effort to minimize the firm's excessive leverage and dangerous exposures. In spite of Fuld's claims, authorities, analysts, and the general public generally believed that Lehman Brothers had taken on excessive risks and had a sizable exposure to subprime mortgages and related instruments. In the end, Lehman Brothers' bankruptcy brought to light the inadequate risk management of the company as well as more general problems throughout the financial sector in the run-up to the crisis. The firm's demise had a significant impact on the world financial system and prompted a review of risk management procedures in the banking industry.
The causes of Lehman Brothers' collapse in 2008 are well-known and comprehensible to a large portion of the population. Lehman's failure was primarily attributed to its excessive exposure to subprime mortgage assets, insufficient capital reserves, and a heavy reliance on short-term borrowing to finance its operations. These risky practices left the firm vulnerable when the U.S. housing market began to decline, leading to a sharp decline in the value of its assets. But what came next is really what counts.
Governments, central banks, and financial regulators worldwide adopted a number of actions to stabilize financial markets, avert additional economic unrest, and address the crisis' underlying causes after Lehman Brothers' collapse and the start of the global financial crisis in 2008. Following the collapse of Lehman Brothers, the following significant actions were taken like, Government Bailouts and Capital Injections, Interest Rate Reductions, Financial Regulation and Oversight, Increased Transparency, Consumer Protection, Global Coordination, Deleveraging, etc. But the most important action was Stress Testing. Stress tests are thorough evaluations of a financial institution's resilience to challenging economic conditions. These situations frequently include significant economic downturns, shocks to the financial system, and other stressors. Stress tests have become a crucial tool for regulators and central banks in assessing the health of financial institutions, particularly large systemic banks. In the United States, for example, the Federal Reserve conducts annual stress tests on the largest U.S. banks as part of its Comprehensive Capital Analysis and Review (CCAR) program.
The Comprehensive Capital Analysis and Review (CCAR) program is a regulatory framework to assess the capital adequacy and overall financial health of large, systemically important financial institutions (SIFIs) in the United States. CCAR is part of the broader supervisory and regulatory framework aimed at maintaining the stability and soundness of the U.S. banking system. The Fed must receive yearly capital plans from bank holding companies that detail their internal procedures for establishing capital adequacy, projected capital distributions, and the regulations governing them. These businesses must have consolidated assets of at least $50 billion.
The results of these tests determine whether banks can return capital to shareholders through dividends and share buybacks. Stress tests have been instrumental in promoting financial stability and reducing the likelihood of future financial crises.
While this American financial giant's fall from grace occurred thousands of miles away from the Indian subcontinent, its reverberations were felt across the Indian economy.
Global investors sought safety by returning their money home as they grew concerned about the developing global crisis. As a result, India experienced massive financial outflows. The withdrawal of funds by Foreign Institutional Investors (FIIs) from Indian markets led to a decline in the value of the Indian rupee relative to the US dollar. The trade balance and inflation dynamics of the nation were impacted, posing problems for policymakers.
International banks have been more wary of lending to emerging markets, particularly India, as a result of the global financial crisis. External commercial borrowings (ECBs) and loans in foreign currencies were difficult for Indian enterprises to obtain. The financing of projects and aspirations for corporate growth were impacted by this credit crunch.
India's economic growth slowed down as the world economy collapsed. Global demand was weaker, which hurt exports, while domestic spending declined. Concerns about the sustainability of India's strong economic progress arose when GDP growth rates declined.
The Reserve Bank of India (RBI) and the Indian government implemented a number of policy changes in reaction to the global financial crisis. To boost economic activity, the RBI lowered interest rates and started monetary easing programs. The administration unveiled stimulus plans intended to spur economic expansion, particularly in areas negatively impacted by the crisis.
India's outsourcing and information technology (IT) industries were heavily involved with the American banking sector. These industries, which were initially worried about how the crisis would affect their financial sector clients, showed extraordinary resiliency. They increased their services, diversified their clientele, and responded to changing conditions by making adjustments, finally growing stronger.
India had to review its financial regulatory structure in light of the demise of Lehman Brothers and the ensuing global financial crisis. The nation implemented measures aimed at increasing transparency, upgrading risk management procedures, and bolstering financial institution supervision. These changes were made to protect the financial sector from potential shocks.
The crisis and other significant global financial crises changed how investors perceived risk. It made clear how crucial careful risk management and diversification are. India's economy has proven to be resilient over time. India's consistent economic growth was facilitated by robust domestic consumption, a burgeoning middle class, and a strong services industry.
Fast forward to 2023, and the Bank Nifty soars to reach the 20,000 milestone which signifies economic confidence, strong corporate performance, and investment opportunities. While it bodes well for India's financial landscape, prudent monitoring and regulation are vital to sustain a healthy and stable market environment.
The failure of Lehman Brothers serves as a sobering reminder of the flaws in the international financial system. The financial sector was completely transformed, significant regulatory reforms resulted, and the cultural memory was forever altered. As we consider the 15 years that have passed since that critical day, we must continue to be dedicated to the lessons discovered and work towards a more robust and secure financial system that can resist present and future difficulties.
Arnab Sarkar, Business Analyst, Societe Generale Global Solution Center
Negotiations for the proposed Free Trade Agreement (FTA) between India and Oman are advancing rapidly, with expectations of signing the pact in the upcoming month, according to a senior government official. The FTA is anticipated to significantly benefit various export sectors, including motor gasoline, iron and steel products, electronics, machinery, textiles, plastics, boneless meat, essential oils, and motor cars. A recent report by the think-tank GTRI indicates that these goods currently face a 5% import duty in Oman.
The report highlights that about 16.5% of Indian exports to Oman, valued at approximately USD 800 million, encompassing items such as wheat, medicines, basmati rice, tea, coffee, and fish, which already enjoy duty-free access, will not experience additional benefits from the agreement. Presently, more than 80% of Indian goods enter Oman with an average 5% import duty.
Oman's import duties range from 0 to 100%, with specific duties applicable, including a 100% duty on certain meats, wines, and tobacco products. The second round of talks for the Comprehensive Economic Partnership Agreement (CEPA) concluded earlier this month in Muscat, with officials expressing optimism about signing the deal in January 2024.
India holds export potential for products like light oils, preparations of petroleum and bituminous minerals, medicaments, parts and accessories for motor vehicles, iron ores and concentrates, ferrous products obtained by direct reduction of iron ore, and aluminum.
Negotiations on the text of most chapters have been finalized by both countries. Oman ranks as India's third-largest export destination within the Gulf Cooperation Council (GCC) countries. India already has a similar agreement with another GCC member, the UAE, effective since May 2022.
Regarding imports, India's merchandise imports from Oman in 2022-23 amounted to USD 7.9 billion. Key imports include petroleum products (USD 4.6 billion) and urea (USD 1.2 billion), constituting 73% of total imports. Other significant products include propylene and ethylene polymers, pet coke, gypsum, chemicals, and iron and steel.
According to GTRI's report, Oman's products, particularly in sectors like oil and gas, petrochemicals, and specific manufactured goods, are expected to find a more receptive market in India post-implementation of the trade agreement.
India needs 1,000 vehicle scrapping centers and 400 automated fitness test centers, according to Union Road Transport and Highways Minister Nitin Gadkari. During the launch of 'DigiELV,' a platform for trading End of Life Vehicle Certificate of Deposit, Gadkari announced the approval of 85 vehicle scrapping facilities across the country. Emphasizing the significance of the National Vehicle Scrappage Policy, Gadkari stated that it is a mutually beneficial initiative for all stakeholders, positioning India as a scrapping hub in South Asia.
The minister highlighted the policy's role in phasing out unfit and polluting vehicles, promoting a circular economy, and generating employment opportunities. Prime Minister Narendra Modi had inaugurated the National Vehicle Scrappage Policy in August 2021, with the aim of encouraging the responsible disposal of old vehicles.
Under the policy, states and Union Territories offer up to a 25% tax rebate on road tax for newly purchased vehicles after scrapping old ones. Effective from April 1, 2022, the policy mandates fitness tests for personal vehicles after 20 years and for commercial vehicles after 15 years. Gadkari emphasized the importance of embracing a circular economy and reiterated that the scrappage policy aligns with environmental sustainability and economic growth goals.
In the current week's trade, equity investors in India witnessed a surge in wealth, with gains amounting to Rs 2 lakh crore, as the benchmark BSE Sensex breached the 71,000 mark for the first time. This rally was driven by optimistic global market trends following the decision of the US Federal Reserve to maintain its key interest rate and indicate potential rate cuts in the coming year. Continuous inflows of foreign funds have further fueled the upward momentum in stocks.
The 30-share BSE Sensex marked a historic high of 71,084.08, rising by 569.88 points during the morning session, extending a three-day rally. The market capitalization (mcap) of BSE-listed companies also peaked at Rs 357 lakh crore in early trade.
Notable gainers among the Sensex firms included Infosys, Tech Mahindra, HCL Technologies, Tata Consultancy Services, Wipro, and JSW Steel. However, Nestle, Bharti Airtel, Axis Bank, and ITC experienced a lag in performance.
Across Asian markets, positive trends were observed in Seoul, Tokyo, Shanghai, and Hong Kong. In the US, markets closed higher on Thursday. According to exchange data, Foreign Institutional Investors (FIIs) played a significant role, injecting Rs 3,570.07 crore into equities on Thursday. The overall buoyancy in the market reflects domestic and global factors contributing to the growing optimism among investors.