The NIIF managed by the government of India and Dubai’s DP World have set up an investment platform to invest in ports terminals, transportation and logistics business in India. The platform will invest up to $3 billion in these assets. The platform will also look at opportunities beyond sea ports and will include river ports, transportation, freight corridors, inland container terminals, logistics infrastructure and port-led SEZ. Efficient logistics and sound infrastructure is expected to give a boost of up to 2% to the annual GDP growth, which will also have strong externalities and downstream effects.
While there was never any doubt about the FPI appetite for government bond, the corporate bond limits auctioned today attracted buying interest to the tune of $2.2 billion. FPIs have almost exhausted their limit to buy G-Secs and are now taking interest in buying up corporate bonds. The interest rate differential with the US is still high and with a strong rupee, the appetite for Indian debt paper remains high. FPI investments in corporate debt amount to a little above Rs.215,000 crore and these FPIs have already exhausted 96% of their total corporate bond limits.
Tata Sons, the holding company of the Tata Group, is now looking at ways and means of buying out the stake of the Shapoorji Pallonji Group in Tata Sons. The Tata Group has already made a representation to the NCLT stating that it would be in the best interests of the Tata Group to buying out the stake of the Pallonji group since they had been allegedly acting in a manner that was disruptive to the group as a whole. The Pallonji family holds 18.4% stake in Tata Sons but this has become a contentious issue after Mistry was ousted from the post of Tata Sons Chairman in October 2016.
Axis Bank Q3 earnings came in 25% higher at Rs.726 crore but the numbers were still below the street expectation. However, the stock reacted positively to the news that gross NPAs in percentage terms had gone down. However, the gross NPAs in absolute terms had gone up during the quarter to touch the level of Rs.25,000 crore indicating that the bank had essentially benefited from a 22% growth in the loan book. For now the concerns surrounding the rising NPAs of Axis Bank appear to be history as the NPA cycle seems to have bottomed out at Axis Bank.
The IMF sees global growth picking up largely led by the US driven corporate tax rate cuts. In fact, IMF expects global growth rate to accelerate to the fastest rate in the last 7 years and has projected the global GDP to grow at 3.9% in the current calendar year. The last time the global growth rate had crossed had been in 2011 and the world GDP is likely to sustain the 3.9% growth in 2019 too. In the last few quarters we have seen a sharp revival in the European Union growth as well as in Japan even as China appears to have bottomed out after a sharp fall in growth since the last 8 years. In fact, IMF expects that the corporate tax cuts could propel US growth to a level of 2.7%. However, IMF has expressed concerns about asset valuations and has not ruled out a violent correction.
After a gap of 21 years, we finally have an Indian prime minister making a visit to the World Economic Forum at Davos. Ahead of the Davos meet, Mr. Modi will also be meeting with Swiss President Alain Berset and will also be hosting a dinner for global CEOs. Modi is also scheduled to deliver the keynote address as Davos. The prime minister’s visit to Davos assumes special significance considering that Indian growth rate has been faltering in the last year due to a mix of GST and demonetization. Having said that India is the fastest growing large economy and is surely a voice to be heard!
