In this edition, we talk about how Samvat 2080 turned out to be for investors and what the year ahead could have in store. We also talk about the new milestone in India’s defence manufacturing industry, the macroeconomic situation, and quarterly earnings by some of the world’s biggest tech companies.
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Good drivers watch the road ahead carefully, avoid the potholes, and steer through the crowded traffic. Better ones keep an eye on the rearview mirror, too.
No, this is not a driving lesson and we are not talking about cars and bikes. We are talking about life, in general, and investing, in particular, as we come to the end of Samvat 2080 and start a new year.
For investors, Samvat 2080 was a blockbuster year. And this was true for all asset classes—equity, gold and silver, and even fixed income.
Equity investors minted money with the Sensex climbing 22.3% and the Nifty surging 24.6%. The BSE Midcap and Smallcap indices jumped even higher—41.1% and 43.3%, respectively.
In fact, this turned out to be the second-best year for equity investors in a decade as domestic retail investors as well as institutions, including mutual funds and insurance companies, poured billions of dollars into the stock market.
As more and more investors joined the bandwagon and more and more companies launched initial public offerings, the market capitalisation of BSE-listed companies soared passed $5 trillion for the first time. The total market cap touched an all-time high of $5.71 trillion in September, before a correction pulled it lower at $5.29 trillion as of Oct. 31.
Fixed-income investors also had a reason to smile, with bank deposits giving out 7-8% interest and many debt funds offering an even higher return.
As for precious metals, gold and silver gained 32% and 39%, respectively, despite an unexpected import duty cut by the government in July that pulled down the prices. To be sure, these are the highest returns after Samvat 2067, or 2011, when gold jumped 36% and silver surged nearly 40%.
So, what’s in store for Samvat 2081? Will the markets offer similar gains in the year ahead?
Well, as always, it’s difficult to make predictions, and we wouldn’t want to hazard a guess. But, in general, investors should keep their expectations in check given the macroeconomic conditions and the geopolitical situation. For instance, the US will vote for its next president in the coming week while tensions in the Middle East remain as high as ever. At home, economic growth is slowing and corporate earnings have been struggling to keep pace with elevated valuations.
What should investors do then? As we always say, identify your goals, gauge your risk appetite, diversify your bets, stick to your asset allocation plan, and keep investing. Here’s a happy Samvat 2081 to all of you!
With Flying Colours
Talking about the new, the Indian aerospace and defence industry touched a big milestone in the week gone by with the inauguration of a facility that will manufacture the country’s first private defence aircraft from the ground up.
The Final Assembly Line in Vadodara has been set up by Tata Advanced Systems Ltd (TASL) in partnership with European plane maker Airbus. TASL and Airbus will deliver 40 C295 transport aircraft to the Indian Air Force from this facility. In addition, Airbus is delivering another 16 such aircraft to the Indian Air Force from its facility in Seville, Spain.
The Vadodara facility will complement the Main Component Assembly facility in Hyderabad, which has already started making certain parts for the aircraft and is shipping those to Vadodara for the final assembly.
So, when will the Vadodara facility start rolling out the aircraft? Well, the first ‘Make in India’ C295 will come out in September 2026 and the facility will deliver all 40 planes by August 2031.
The new facility helps Airbus to cement its presence in India. Airbus invests more than $1 billion a year in India in activities related to aircraft assembly, component manufacturing, engineering design and development, and pilot and maintenance training.
As for the Tata Group company, the new facility is indeed a giant step forward. It is also a big boost to India’s efforts to become self-reliant in defence manufacturing and lower dependence on the state-run Hindustan Aeronautics Ltd.
Watch the Economy
Moving on to macroeconomic news, the government this week warned that worsening geopolitical conflicts, uncertainty about international trade policies and elevated stock market valuations in some countries could pose risks to the Indian economy.
In its monthly economic report, the government maintained its growth forecast of between 6.5% and 7% for the current fiscal year, down from 8.2% last year. It said that economic performance had been “satisfactory” during the first half of FY25, supported by strengthened rural demand and farm activity, an improving services sector and a stable external sector. But it cautioned that global risk factors could affect household sentiment in India and curtail consumer spending.
Separately, US government data showed this week that the world’s largest economy grew 2.8% in the July-September quarter, weaker than the 3.1% expected by analysts. This could have ramifications for India’s export-oriented sectors such as IT and pharmaceuticals.
Back home, the government said despite global risk factors, the outlook for the Indian economy was good due to a positive farm outlook and expectations of strong demand during the ongoing festive season.
The report also said that retail inflation had been under control, though it cautioned that the food inflation path in the near term will largely depend on the price trends in tomato, onion and potato in the coming months. Retail inflation in September was at 5.49%, the highest in nine months, due to higher food prices.
AI Costs
For the past couple of weeks, we have been providing a glimpse of quarterly earnings by Indian companies and what those numbers indicate about broader trends. This week, we look at earnings by some of the world’s biggest tech companies—Apple, Amazon, Alphabet, Meta, and Microsoft.
All five companies exceeded analysts’ expectations for profit and revenue, but their shares dropped after they cautioned about high—and rising—costs related to artificial intelligence and provided weaker-than-expected revenue outlook.
iPhone maker Apple’s quarterly sales came in at $94.93 billion while earnings per share (EPS) after excluding a one-time charge were $1.64. Amazon’s July-September total revenue was $158.9 billion. Net income jumped 55% to $15.3 billion while EPS rose to $1.43 per share.
Facebook owner Meta Platforms reported quarterly profit of $6.03 per share while revenue stood at $40.59 billion. But its shares plunged after it warned of “significant acceleration” in AI-related infrastructure expenses next year.
Microsoft also predicted higher AI spending in the current quarter but slower growth in its cloud business Azure, pulling its shares lower. The company’s EPS was $3.30 while revenue rose 16% to $65.6 billion. Google parent Alphabet’s total revenue grew 15% to $88.27 billion in the July-September period while EPS was $2.12, topping expectations.
Market Wrap
Indian stock markets began the week on a positive note but failed to sustain the momentum and ended broadly flat. The 30-stock Sensex slipped 0.02% while the 50-stock Nifty close about 0.1% higher during the week, excluding Muhurat trading on Friday.
The two benchmark indices lost about 6% in October due to foreign outflows and tepid corporate earnings. This is the worst monthly performance since March 2020, when the Covid-19 pandemic sent markets worldwide into a tailspin. Foreign portfolio investors sold shares worth almost $11 billion in October, the highest monthly outflow on record.
In the broader markets, the small-caps showed greater resilience and lost just 3% in October but the mid-caps fell 6.7%.
IndusInd Bank, IT companies Tech Mahindra, Infosys and HCL Tech, and automakers Maruti Suzuki, Tata Motors, Bajaj Auto and Mahindra & Mahindra were the top losers this week. State-run Coal India and BPCL, Tata Group companies Trent, Titan and TCS, and telecom operator Bharti Airtel were the other major losers.
The winners were led by Larsen & Toubro. India’s biggest engineering and construction company clocked over 5% gain after it maintained FY25 order forecast. Bharat Electronics, Eicher Motors, Adani Enterprises, Cipla, ITC, State Bank of India and ICICI Bank were the other major gainers.
Earnings Snapshot
- Bharti Airtel consolidated net profit soars 168% to Rs 3,593 crore on tariff hikes.
- L&T consolidated net profit rises 5% on-year to Rs 3,395 crore.
- Indian Oil standalone net profit plunges 99% to Rs 180 crore.
- Biocon posts loss of Rs 16 crore on deferred tax charge vs year-ago profit of Rs 126 crore.
- Sun Pharma beats Q2 view as profit jumps 28% to Rs 3,040 crore.
- Cipla consolidated net profit jumps 15.2% to Rs 1,303 crore, tops estimates.
- Tata Power profit rises 5.8% year-on-year rise to Rs 927 crore, misses estimates.
- Adani Enterprises Q2 profit surges to Rs 1,742 crore from Rs 228 crore year ago.
- Adani Ports consolidated net profit climbs 40% to Rs 2,445 crore, misses analysts’ estimate.
- Dabur India profit drops 18% to Rs 425 crore, lags forecast.
- Marico profit jumps 20% to Rs 423 crore, tops estimates.
- GlaxoSmithKline Pharma profit up at Rs 344 crore from Rs 299 crore year ago.
- SBI Cards profit falls to Rs 404 crore from Rs 603 crore a year earlier.
- Maruti Suzuki profit skids 17% to Rs 3,069 crore.
Other Headlines
- SEBI proposes 30-day deadline for mutual funds to use money raised from new schemes.
- Swiggy sets price band for IPO at Rs 371-390 apiece, to raise Rs 11,300 crore.
- Sagility India’s Rs 2,106-crore IPO to open next week, fixes price band at Rs 28-30.
- Maruti Suzuki to supply first-ever EV to Toyota, to begin production next year.
- HDFC Bank unit HDB Financial files for Rs 12,500 crore IPO.
- Brigade Hotel Ventures files draft documents for Rs 900 crore IPO.
- Aegis Vopak Terminals Ltd plans IPO; raises Rs 800 crore from 360 One, others.
- Kenyan court suspends $736 million deal with Adani Group for transmission line.
- India’s April-September fiscal deficit reaches 29% of full-year target.
- India’s infrastructure output grows 2% year-on-year in September.
- JSW Steel signs pact with South Korea’s Posco to establish steel plant.
That’s all for this week. Until next week, happy investing!
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