There appear to be some positive cues on the global growth front. After China, the US may also give a positive GDP surprise in the first quarter. It may be recollected that China had reported first-quarter GDP growth of 6.4% as against street expectations of just 6.3%. While estimates vary, the average expectation for the US growth is 2.1% in the first quarter. However, Fed data suggests that the actual growth may be 2.2% or more. This will be a dual positive trigger for the markets. This is likely to be an outcome of enhanced investments by US companies. China has already initiated an economic boost.
The second round of the RBI dollar swap auctions attracted more than 3 times the bids despite the RBI setting a higher cut-off for the second round of Dollar Swap auction. The second round of dollar swap auctions to absorb dollars to the tune of $5 billion was put through by RBI on 23rd April at a premium of Rs.8.38 for the 3-year auction. Despite the higher auction price, the $5 billion dollar swap got bids worth $18.5 billion but RBI accepted only $5 billion. Most banks are flush with dollar liquidity and were willing to convert to rupees even at a higher cost. This led to a sharp spike in the forward premiums.
It was a story of crude oil prices all over again. Sensex fell for the 3rd day in succession as Iranian sanctions weighed on markets and the Sensex has lost over 700 points in the last 3 sessions. While the crude oil prices did not exactly rally on Tuesday, the 3.32% rally on Monday was sufficient to keep the markets under pressure. The Sensex lost 80 points and closed in the red for the third day in succession. The Iranian sanctions waiver expires on May 02nd and Donald Trump has ruled out any extension of the waiver. India and other nations will have to look for alternate sources of crude to make up for the gap.
There seems to be some order returning to the February 12th circular issued by the RBI. The central bank may offer more time for bank-led resolution of bad loans. With the Supreme Court striking down the RBI circular dated February 12th, the RBI may look to extend the time frame offered. Instead of the 1-day deadline, RBI may now offer 30 days from the date of default before the mandatory 180 day period kicks in. If the resolution is not managed within these 180 days, then the company goes into liquidation under the NCLT. In the current circumstances, that appears to be a more practical solution.
India has asserted that it is not overly worried about losing supply lines of crude from Iran as it had robust supply plans and commitments even after the end of the Iran sanctions waiver. Indian oil refining companies, including Reliance Industries, were heavily depending on Iran for their crude supply. India is confident it will not have a problem post-May 01st as it has started procuring oil supplies from other countries too. The US had granted a waiver from Iran sanctions to India in November for a period of 6 months ending May 02nd. With no extension likely, India may rely on the US, Mexico, and Saudi Arabia. Of course, costs could be an issue because Iranian oil was working out cheaper for India due to its flexible pricing plans and the lower transportation costs making it more economical.
Indian telecom emerges as a 3-player oligopoly, according to CLSA report. As per the CLSA report, India’s 3G and 4G subscriber base increased to 53.2 crore subscribers while the total mobile subscribers stood at 118 crores. As per the report, while Bharti was holding its share stable, Vodafone lost market share heavily while Jio was the big market share gainer. Most players have made efforts to improve their ARPUs by focusing more on the higher value customers. In the last 30 months, Indian telecom has been disrupted on service parameters, voice costs and data costs by the entry of Reliance Jio.
