IndusInd announced its third quarter results on Tuesday with the company flattering on top-line and bottom-line growth. Net profit for the quarter was up by 29% at Rs.751 crore. Net interest income (NII) expanded by 34.5% for the quarter to Rs.1578 crore. NII represents the difference between the interest earned and the interest paid and is a good indicator of the long term sustainability of spreads in the banking business. Asset quality weakened marginal as gross NPAs slipped from 0.90% to 0.94% even as net NPAs slipped from 0.37% to 0.39%. Even in absolute terms the situation on the NPA front is extremely comfortable.
Year 2017 could be the year when steel could see a revival in fortunes. The year 2016 was marked by the government imposing import quotas and minimum import prices (MIP), which helped Indian steel companies to beat the competition from China. However, year 2017 could also see a revival in the domestic demand for steel due to pick up in construction activity in the Indian economy as well as a pick-up in auto demand. A combination of the government’s focus on low-cost housing and easier housing credit available will provide a boost to construction activity in India. The net beneficiary may be the steel producers. Additionally, pick up in construction activity in China will mean that more of Chinese steel will consumed domestically and hence cannot be exported.
The Union Budget on February 01st may have some interesting sops for the start-up sector in India. To begin with, the government may widen the tax free limit from 3 years to 5 years and also ensure quicker start-up clearances. The original 3 year tax-break was not welcomed as most start-ups take much longer to break even. Hence five years may be a good starting point. The budget may also announce an easier exit policy for start-ups. Today, start-up companies find it really difficult to exit a business that fails. This is unlike the situation in the US and Europe where companies are encouraged to take risk even it means failure.
In what could be one of the biggest mergers in the online start-up space, Proptiger, Housing.com and Makaan have decided to merge into a single entity. The combined entity will provide an end-to-end experience to anyone seeking a house and includes search based on criteria, comparison of alternatives, execution of transaction as well as registration and other documentation. The merger had been done through an all-stock deal. The real estate sector in India has been hit badly by the demonetization drive and the online housing portals have also been proportionately hit. To begin with, these 3 brands will continue to hold their distinct identity. While PropTiger will be used for transaction services, Makaan will be the marketplace while Housing.com will be the demand and supply aggregator.
According to a half-yearly report by Knight Frank demonetization may have taken the sheen out of the retail housing industry. According to Knight Frank, the year 2016 will see the lowest levels of new launches and sales since 2010. In the last quarter ended December 2016, sales volume dropped by 44% while new launches fell by 61%. This was a direct outcome of the liquidity crunch caused by the demonetization drive. Knight Frank believes that the impact of the demonetization may be felt for a couple of quarters more till the time the liquidity imbalance in the system is fully addressed.
Anand Mahindra of the M&M group has expressed hope that the H1-B visa controversy could become the Y2K moment for the Indian IT industry. Back in 1999, due to systemic level adjustments required to shift to a new millennium, it was expected that global software may come to a standstill at midnight. However, Indian software industry took the challenge and saw through the transition without any hiccups. Since then the Indian software industry has not looked b ack. Mr. Mahindra was speaking on the sidelines of the Vibrant Gujarat Summit in Gandhinagar.
One of the immediate impacts of demonetization was visible on the fortunes of the automobile industry. According to data put out by SIAM, automobile sales growth rate in December 2016 dipped to a 16-year low falling by 18.66% on a MOM basis. Only the light commercial vehicles (LCV) segment saw a marginal positive growth of 1.5% even as all the other sub-groups saw sales get pressured. Back in December 2000, SIAM had reported a 21.81% fall in automobile sales and was a direct outcome of the slowdown caused by the bursting of the tech bubble.
According to the recent RBI data, only Rs.69,000 crore ($10 billion) worth of old notes may be left to be surrendered. This is much lower than was originally anticipated. The proportion of new notes to old notes is still around 50% which means that it will take another couple of months before the liquidity imbalance in the system can be corrected. This surely raises questions over what the demonetization actually achieved, but that will be a different debate altogether.
Markets globally were nervous ahead of Trump’s press conference wherein he is likely to enunciate his broad economic policy as well as his diplomatic take on China, Russia and the NATO. Even as the dollar rally paused, it was commodities that showed smart gains on hopes that a revival in demand from the US and higher demand from China Railways will spur demand for commodities across the board.
The India International Exchange at the GIFT city in Gandhinagar will start trading single stock futures and index futures from the 16th of January. Eventually, the exchange will also add trading in gold, silver and the INR too. Over the last few years, the Indian financial markets have lost some of their market share. The Nifty futures trade more volumes on the SGX rather than on the NSE. Similarly, currency futures trade more on the DGCX rather than on the Indian exchanges. The idea of the international market is to permit foreign investors to hedge their risk in India itself instead of going to other countries.
