The pressure on the oil prices may be back with the latest developments in Norway. Brent Crude scaled $79/bbl as Norway shut oil production after its oil workers went on strike. It may be recollected that Norway runs a $1 trillion sovereign fund that is entirely funded by oil exports. Oil supply is already constrained by Libya, Venezuela and Nigeria and that has taken crude back to near the $80 mark. With the Iran sanctions, even the increased OPEC production is likely to be absorbed, especially considering that the oil inventories are already at a multi-year low level.
The first tech bellwether announces its results today. TCS announces stellar results for the first quarter of 2018-19. TCS saw sales rise by 16% and net profits rise by 23% to Rs.7340 crore. While digital continues to be the star, the profit spurt was led by a stellar performance by TCS on the BFSI front. The recovery of the BFSI space is good news for TCS in particular and for IT sector in general because BFSI continues to be the bread-and-butter business for Indian IT companies. Of course, TCS does not give forward looking guidance and for that investors will have to wait for Infosys on 13th July.
The Samsung plant in Noida may have been the tip of the iceberg for the Indo-Korean partnership. A series of business agreements were signed during the visit of Mr. Moon of South Korea. India and South Korea look to double trade to $50 billion by 2030. This announcement came in the aftermath of Samsung setting up its largest fabrication unit in Noida. India currently runs a $12 billion trade deficit with South Korea. While South Korea will want to go beyond the popularity of LG, Samsung and Hyundai for the Indian markets, India will be looking to scale up its exports to South Korea.
IndusInd has maintained a track record of steady growth in profits over the last 16 quarters and IndusInd Bank continued that trend by reporting Q1 profits up by 24% at Rs.1036 crore. There was a nearly 6% improvement in the CASA ratio in the quarter. However, the Net Interest Margin (NIM) fell marginally to 3.92% while the Gross NPAs also worsened marginally to 1.15%. Within the private banking space, the better managed banks like HDFC Bank, IndusInd and Kotak Bank have enjoyed better valuations compared to the high NPA banks like ICICI Bank and Axis Bank.
There has been a lot of excitement on the back of the higher procurement prices announced by the government for Kharif crops. But how effective will this MSP hike be? Procurement could be the key issue in ensuring MSP for farmers. The centre is unlikely to procure all the 14 Kharif crops on which higher MSP was declared. With procurement now decentralized to states, the success of MSP will predicate on the states. Most of the key states that are strong in agricultural production have already shifted to the decentralized procurement of food grains and hence the centre has a much smaller role to play. Hence managing the procurement could be the key. Higher MSP is likely to be a big trigger for higher rural incomes and the doubling of farm incomes by 2022, as promised by the Modi government.
Elon Musk’s much talked about Tesla production plant may be firming up on China for its decisive fabrication push. Tesla plans a manufacturing plant in China with 500,000 electric car capacities. This will be Elon Musk’s biggest expansion overseas and like Apple, Tesla has also taken the China route. India had also aggressively lobbied with Mr. Musk for an India fabrication unit. One of the big advantages that China has enjoyed over India has been the better level of infrastructure and production capabilities, which has resulted in China emerging as the default factory for the global corporations.
