China’s trade with the US took a major hit for the month of November with total Chinese exports to the US falling by a whopping 23% for the month on a YOY basis. Imports of goods from the US were down 2.8% even as the tariff war appears to be really hitting China hard. However, total exports from China were only down 2.5% on a YOY basis as China has largely reduced its dependence on the US and has substantially increased its exports to Europe and Asia. Trump had postponed a series of tariff hikes scheduled in October but is yet to commit about the tariff hikes that become effective on Dec-15.
For the week, the IIP and the CPI inflation will be the key numbers to watch out for even as the Nifty closed weak last week on growth concerns. The IIP has been in negative territory for the last 2 months along with core sector growth and the October IIP number will be the key determining how the third quarter GDP grows. Similarly, inflation also assumes importance after it touched a level of 4.6% in the month of October. Food inflation at a 39-month high of 6.9% was the primary reason why the RBI had put off rate cuts in its December policy. Fed is also expected to keep status on rates quo this week.
Maruti finally saw a rise in production for the month of November after nearly 9 successive months of production month-after-month. The big boost to Maruti production came from the production of utility vehicles like the Vitara Brezza, S-Cross and the Ertiga. Auto production in India has been weak for the last few months due to weak demand forcing most auto companies to cut production. The month of November saw some improvement on the back of elevated festival demand coming from India. However, markets will be keen to evaluate if this production bounce is sustainable or not.
Foreign portfolio investors (FPIs) turned net sellers in the month of December selling nearly Rs.1700 crore worth of equities in the first week of trade. This marks a distinct departure in trend from the previous there months. While December is normally a month of portfolio adjustments for the FPIs, this time around there also concerns over the tepid pace of GDP growth as well as of rising inflation and IIP and core sector dipping into negative territory. Portfolio investors were also unhappy with the RBI refusal to cut repo rates in December as it would mean pressure on banks and rate sensitives.
Despite the weakness in the Nifty and the Sensex during the week, the top five out of 10 companies managed to add close to Rs.57,000 crore to market capitalization during the week ended December 06th. The clearly big wealth creator was TCS, which accounted for nearly half of this wealth creation even as most banks and financials came under pressure after the RBI opted to hold the repo rates at 5.15% despite maintaining an accommodative stance on the policy front. The other gainers for the week among the heavyweights included ICICI Bank, Reliance Industrie and Kotak Bank. On the other hand, stocks like HDFC, HDFC Bank, Hindustan Unilever, ITC and SBI had to take a hit. While banks were hit by RBI status quo, consumption stories took a hit due to the 5% full-year GDP projection by RBI.
Bharti Airtel has sought government permission to infuse Rs.4,900 crore FDI into India, effectively making Bharti Airtel a foreign company. The infusion is expected to come from existing shareholder, SingTel, and some other marquee foreign investors which will result in a majority stake in Bharti Telecom being held by foreigners. Since this will be a shift in control, it will require the approval of the DOT as well as the government of India. Currently, Bharti Telecom holds 41% stake in Bharti Airtel and 37% is already foreign holding. Post this shift, Airtel will become 84% foreign owned company.
