Indian industry has been getting aggressive demanding a dovish monetary policy from the RBI. In fact, CII has requested the RBI governor to consider a repo rate cut of 50 bps as well as CRR cut of 50 bps to give a big boost to Indian industry. According to a report, CII suggested aggressive rate cuts and liquidity infusion considering that IIP growth had faltered and the CPI inflation had come in at just 2.19% in December. Normally, the combination of weak inflation and tepid growth is considered to be a textbook case for a rate cut and business wants Das to bite the bullet.
If you imagined that BREXIT could be nasty, then the confirmation has just come in from the IMF. In fact, the IMF has warned of the severe impact on UK economy in the absence of a BREXIT deal. IMF pointed out that all BREXIT outcomes would have a negative impact due to the economic disruption that it will cause. However, the worst case scenario will be if Britain exits the EU without a deal in place. According to the IMF, it will not only lead to London ceding its leadership position but also sharply reduce the GDP growth rate of UK for at least a couple of years. That could really put the UK back.
Reliance continued to flatter the street with its latest quarter results. In fact, RIL becomes the first Indian company to scale Rs.10,000 crore quarterly profits as it reported an 8.82% growth in net profits for the third quarter to Rs.10,251 crore. According to a report, the company reported 55% growth in revenues and a 20% growth in EBITDA. The gross refining margins (GRM) for the quarter stood at $8.8/bbl as against the Singapore benchmark of $4.5/bbl. Reliance Jio reported a 65% growth in quarterly profits. Jio continues to be the big growth engine for the Reliance group.
Hindustan Unilever reported 9% growth in net profits at Rs.1,444 crore for Q3. According to a report, the HUVR profits are in line with street expectations. The good news for Hindustan Unilever was in the 12% growth in the top-line although higher input costs during the quarter put pressure on profits. It may be recollected that during the last quarter, crude had scaled a peak of $86/bbl before scaling down. In the coming quarter, HUVR and other FMCG companies are likely to derive the full benefits of sharply lower crude prices that should substantially depress their input costs.
If you thought the US-China trade war was receding, the truth is far from it. The US has stepped up pressure on Chinese technology companies with its pet peeve of technology stealing. In what would be seen as worsening of the trade war, US lawmakers introduced a bill that would ban the sale of US chips and other components to Chinese companies like Huawei and ZTE that violate US sanctions or export control laws. China has condemned this move as a deliberate attempt to thwart the growth of Chinese tech companies. However, the damage was down as oil prices tumbled on worsening trade war situation and higher US shale supply. The impact was much sharper on the WTI crude than on Brent crude. US oil production scaled 12 million bpd and this shale glut put downward pressure on oil prices.
Copper edged higher on hopes of aggressive Chinese stimulus. After the weak Chinese trade data, China announced an $85 billion stimulus to prop up the sagging economy. With economists estimating Chinese growth at just 6.3% for the full year, China really needs a big push. In addition, the tax reductions proposed by the Chinese government could also aid commodity demand. That optimism was reflected in Copper prices. In fact, all prices of non-ferrous metals and other industrial commodities are likely to benefit from the China stimulus.
