In this edition, we talk about the general elections that kicked off this week as well as the Israel-Iran crisis and their impact on the economy and the stock markets. We also talk about Tesla’s and Tata Motors’ EV plans for India, and the business settlement that the Godrej family is trying to stitch.
Welcome to Kuvera’s weekly digest on the most critical developments related to business, finance, and the markets.
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“I would like to die on Mars. Just not on impact,” Elon Musk said in 2013.
The American billionaire is well-known for his ambitious—and audacious—space exploration endevours through his company SpaceX and his desire to establish a human colony on the Red Planet.
Now, another one of his space-related businesses may get a shot in the arm from India with the government close to finalising approvals for Musk’s satellite internet project Starlink.
And just as Musk prepares to land in India for a visit on April 21-22 to meet with Prime Minister Narendra Modi as well as executives of Indian space companies, the Indian government this week amended its foreign direct investment (FDI) policy in the space sector to attract investors in the satellite manufacturing and launch vehicles segments.
The government has allowed up to 74% FDI for satellite manufacturing and operation, and satellite data products under the automatic route. FDI beyond 74% for these activities will require prior government approval.
The government has also permitted FDI up to 49% for launch vehicles and associated systems, creation of spaceports for launching and receiving spacecraft under the automatic route. Again, FDI beyond 49% will require government permission. Besides, the government has allowed 100% FDI for manufacturing of components and systems or sub- systems for satellites, ground segment and user segment without prior approval.
Previously, India allowed FDI for satellite operations through the government approval route only.
Musk’s association with India is likely to go beyond space, into the fast-growing sector of electric vehicles where his company Tesla dominates the world and is now about to enter the South Asian nation.
Musk, who is also CEO of electric vehicle maker Tesla, could announce a $2-3 billon investment in setting up a manufacturing unit in India during his visit, if all goes well.
Tesla has expressed interest in entering the Indian market over the past few years, but was reluctant due to steep import duties. However, with the government recently easing its EV policy, it is now presumed that Tesla will finally make its much-awaited India entry. The new policy reduced import tariffs on EVs priced above $35,000, provided the manufacturer invests at least $500 million and sets up a factory within three years.
But Tesla is not the only carmaker eyeing India’s fast-growing EV market. China’s MG Motor and BYD have already established a presence in India. Vietnam-based VinFast has announced plans to set up a Rs 16,000 crore EV manufacturing plant in Tamil Nadu. And now, Tata Motors is doubling down on India.
Tata Motors, India’s top EV maker thanks to its Nexon sub-compact SUV, plans to import EVs from its Jaguar Land Rover luxury brand into India. That would pitch it in direct competition with Tesla.
While the US automaker may not be too happy about it, it would be excellent news for Indian car buyers.
One for the Future
“The best argument against democracy is a five-minute conversation with the average voter,” former British Prime Minister Winston Churchill had once said.
Churchill, a man who evoked extreme reactions, was not just an ordinary politician, and certainly not an ordinary man. For not only did he come from one of the most influential British political families of the last century, he was also one of the sharpest political minds the world has seen in at least the last 100 years.
His quote sums up what it means to have a good democracy. For a democratic system to work, those who install and bring governments down—the average voters—need to know what is going on. Only then will they be able to make an informed choice, one that could determine their future and that of the country they call home.
Starting this Friday, 97 crore Indians are being given a chance to choose who would govern them for the next five years, as India, the world’s biggest democracy, goes to polls in a long, and rather dreary, seven-phase election.
While the Bharatiya Janata Party, along with its allies that make up the National Democratic Alliance, are eyeing a third five-year term in office, the INDIA bloc, a coalition of a dozen or so opposition parties, is looking to upstage the NDA. And then there are myriad other regional parties and independent candidates that add colour to India’s vibrant democracy.
The voters will decide much more than just who gets to occupy the treasury benches in parliament after results are declared on June 4. They could determine how the Indian economy shapes up in coming years, how business is governed, which sectors will grow the most, how the stock market performs and which stocks will deliver the best returns going forward.
While we cannot tell you who you should vote for, we can certainly implore you to go out and vote, for that is not just your constitutional right, but also a moral obligation.
So, please, go out and exercise your right!
Oil Boils
Even as India gets busy with domestic politics, geopolitics seems to be hotting up once again, in a way that could even have serious ramifications for us.
Tensions in the Middle East, which flared following Hamas’ deadly attacks on Israel and the latter’s unprecedented reprisals on Gaza, have taken a potentially even more deadly turn with Iran officially getting into conflict. Following an Israeli strike on an Iranian consulate in Syria, Tehran launched strikes on Tel Aviv.
The fact that both Iran and Israel have undeclared nuclear capabilities, have sent alarm bells ringing across the world, including in countries like India that depend on a bulk of their energy supplies from the Middle East.
Following these developments, US stocks have been vacillating and gold has been climbing. Apart from geopolitics, global investors have been contending with the push-pull of a strong economy and restrictive US Federal Reserve policy. The Fed is widely expected to implement its first rate cut in September, and cut perhaps once more this year.
In what would be the most worrying sign for India, which imports nearly 80% of its crude oil requirements, oil prices jumped $3 a barrel on Friday in reaction to unconfirmed reports that explosions had occurred in Iran, sparking concerns that Middle East oil supply could be disrupted.
Higher oil prices could widen India’s already ballooning trade deficit, adversely affect the balance of payments and even put pressure on the rupee, which fell to a new record low this week.
So, will fuel pump prices rise and pinch your pocket? Perhaps not immediately, but if global prices keep climbing, India may have to brace for impact.
Divided We Stand
One of India’s oldest business families is out to split its empire among its two branches, with Adi Godrej and his brother Nadir on one side and their cousins Jamshyd Godrej and his sister Smita Godrej Crishna on the other.
Earlier this year, Adi and Nadir Godrej resigned from the Godrej & Boyce Board and Jamshyd Godrej relinquished his seat on the boards of Godrej Consumer Products Ltd and Godrej Properties. Godrej Industries & Associates, led by Adi and Nadir Godrej, and Godrej & Boyce (G&B), led by Jamshyd Godrej and his sister are the two main groups.
A news report said this week that Adi and Nadir Godrej will divest their stakes in Godrej & Boyce to the other branch. Jamshyd Godrej and his side of the family will transfer interests in Godrej Consumer and Godrej Properties to their cousins through a family arrangement.
Real estate worth Rs 3,400 crore, mostly in prime land of Mumbai suburbs, will remain under Godrej & Boyce (G&B), and a separate agreement will be worked out to govern the ownership rights, the report said.
The Godrej Group has five publicly listed companies: Godrej Consumer, Godrej Properties, Godrej Industries, Godrej Agrovet, and Astec Lifesciences. Godrej and Boyce is a private company. The conglomerate operates businesses in engineering, appliances, security solutions, agricultural products, real estate and more.
Market Wrap
Geographical tensions and the prospects of rising oil prices pushed both the benchmark indices—Sensex and Nifty 50—into the red for the first time in five weeks. Both the Sensex and the Nifty were down 1.6% each in the holiday- shortened week; stock markets were closed on Wednesday due to Ram Navami.
The selloff in the Nifty was led by Adani Enterprises, Tata Motors and Hero MotoCorp. Infosys, HCL Tech, Wipro, TCS, Tech Mahindra and LTIMindtree fell on muted quarterly earnings.
Other stocks that lost ground were Nestle, Larsen & Toubro, Cipla, Bajaj Finserv, Axis Bank, Apollo Hospitals and Sun Pharma.
Stocks that ended higher amid a sea of red included Bharti Airtel, Maruti Suzuki, Hindalco, Eicher Motors, ONGC, and Reliance Industries.
Other headlines
- NSE to launch Nifty Next 50 F&O
- BSE cautions investors on CEO’s deepfake videos
- Infosys reports flat net profit in Q4, missed revenue estimate; issues modest guidance for FY25
- Wipro Q4 consolidated revenue, profit fall but still exceed market estimates
- Bajaj Auto Q4 profit jumps 35% to Rs 1,936 crore
- Adani family lifts stake in Ambuja Cements to 70.3% from 66.7% with a Rs 8,339 crore investment
- Nestlé India ensures compliance amid allegations of high sugar in baby food
- Hindustan Zinc Q4 profit falls for sixth straight quarter on lower prices
- Biocon developing its own version of weight-loss drug Wegovy
- Bharti Airtel sells telecom operations in Sri Lanka to Dialog Axiata
- Zee undertakes organisational restructuring after deal with Sony fails
- Government kicks off revision of direct tax code
- Centre to decide on Vodafone Idea’s debt conversion after moratorium
That’s all for this week. Until next week, happy investing!
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