The IMF has lowered India’s full year GDP growth to 4.8% for the calendar year 2019. The International Monetary Fund has highlighted some very specific factors in the Indian context like the stress in the NBFC sector, weak growth in rural income, weak industrial growth, slack in manufacturing capacity and lack of private investments as the primary reasons for this growth downgrade. That would put India at least 120 bps lower than China in terms of growth. India’s GDP growth in the last two quarters had been at 5% and 4.5% respectively and the December quarter growth could hold the key to fiscal 2019-20.
The Sensex cracked by close to 400 points and the Nifty lost more than 100 points as the markets reacted to below estimate results announced by a number of heavyweights. While RIL faced pressure on petrochemical margins and the gross refining margins, the software giant TCS had the lowest growth among the software majors. While HDFC Bank sustained growth in profits, markets were not too pleased with the sharp rise in provisioning and the spillage in gross NPAs. On Monday, Kotak quarterly results were below expectations and that negatively hit the sentiments surround the stock markets.
Kotak Bank managed to announce growth in top line and bottom line but these were below estimates and the real worry was on the NPA front. PAT for the December quarter was higher by 24% at Rs.1596 crore, which was well below the consensus estimates of Rs.1650 crore. On the positive side, the net interest margin (NIM) expanded from 4.31% to 4.69%. However, the markets were a tad concerned that gross NPAs at 2.46% had gone up by nearly 40 bps in the last one year. The provisions at Rs.444 crore were also substantially higher than the previous quarter. The stock was nearly 5% down on Monday.
The major telecom players have sought relief on their AGR payouts from the Supreme Court in a revised petition filed. As per the DOT, Bharti owes Rs.23,000 crore, Vodafone owes Rs.19,824 crore while RCOM owes Rs.16,456 crore. The telcos have sought the permission of the Supreme Court to directly approach the DOT to seek relief. Basically, the telecom companies will be arguing for time extension for the same. January 23rd is the deadline as per the SC order. While Bharti has managed to raise funds, Vodafone Idea could be pushed to the point of default if the date is not changed.
As per the data put out by the Directorate General of Civil Aviation (DGCA), the domestic air passenger traffic grew by just 3.74% for the calendar year 2019. This is in stark contrast to the 18.6% growth evinced by the domestic aviation industry in the calendar year 2018. The DGCA confirmed that the headwinds were largely due to the failure of Jet Airways and the combination of problems in the 737 Max resulted in a slowdown in domestic air traffic growth. The aviation industry had been growing at close to 20% in the last four years with the current year being the worst. However, the DGCA expects that the year 2020 should be a lot better. The aviation companies are under pressure due to sharply higher price of aviation turbine fuel (ATF) and limited scope for price hikes in a competitive market.
According to data put out by the United Nations, India was among the top recipients of foreign direct investments (FDI) during 2019 with total inflow of $49 billion. The overall FDI into emerging economies during the year remained low at $643 billion. The FDI for the world overall remained almost static at $1.40 trillion. Indian FDI flows were 16% higher on a YOY basis. Of course, the big 3 in terms of FDI flows are the US with $251 billion, China with $140 billion and Singapore with $110 billion. European FDI slowed sharply during the year due to the ongoing uncertainty over the BREXIT issue.
