The Weekly Wrap | “Live life a little dangerously”

In this edition, we talk about Air India’s multi-billion-dollar aircraft deal and how the US and the UK could soon develop engines for Indian fighter jets. We also talk about the January inflation data and the latest on Adani Group.


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Living life a little dangerously wasn’t the only thing Air India founder and the legendary former Tata Group chief JRD Tata believed in.


He also believed that “money is like manure—it stinks when you pile it, it grows when you spread it.”


The Tata Group seems to have taken his utterances to heart, as it is set to spend a whopping $70-80 billion to buy as many as 470 aircraft from the US-based Boeing and European aviation giant Airbus. The order could get even bigger if Air India decides to exercise the options to buy another 340 planes over the course of the deal. In other words, the total size of the order could increase to as many as 840 aircraft.


This is the single-biggest deal in global civil aviation history. And after the planes are all delivered a decade or so from now, it would catapult Air India to being one of the biggest commercial carriers in the world.


Ever since the Tatas bought back the airline from the government more than a year ago they have been trying to restructure it in a bid to win back lost market share. The Tatas will soon merge their other carriers, Vistara into Air India and AirAsia India into its low-cost wing Air India Express, which mainly serves the Gulf routes.





What about Air India’s competition? IndiGo, the market leader in Indian aviation, is not sitting idle. The low-cost carrier, which controls half the country’s commercial skies, is reportedly looking to buy 500 new aircraft.


Apart from IndiGo, Akasa, which was launched by the late stock market veteran Rakesh Jhunjhunwala just a week before he died, has placed an order for 72 planes of which 16 have already been delivered. Go First also has an order of 72 planes while Tata’s own Vistara is getting 17 new ones.


In all, Indian carriers have ordered more than 1,100 aircraft.


The battle for the Indian skies seems to be heating up once again. And this can only be good news for the customer. So, happy flying!


Another battle for the skies



It isn’t just the civil aviation space that’s seeing all the action. On the defence front, too, India may be set to get leaner, meaner flying machines.


The US and the UK are reportedly making strong bids for collaboration to power the next generation of Indian combat aircraft, as India’s talks with France to co-develop a new fighter jet engine have reportedly gone nowhere.


India has reportedly been looking for foreign partners to develop an engine that provides at least 110 kilo newton of thrust. This engine will be used in future projects, including the one to develop the proposed advanced medium combat aircraft and a twin-engine deck-based fighter plane.


When it comes to developing engines for the Tejas light combat aircraft, the Defence Research and Development Organisation is already in talks with Safran of France, GE from the US and Rolls Royce from the UK.


So, will India soon have an indigenously developed fighter aircraft engine? We can’t say that for sure, but when that does happen, it will certainly be a proud moment for our country and we will be the first to tell you all about it. So, keep watching this space!


Cereal Killer


If one was lulled into believing that the Reserve Bank of India had firmly controlled inflation and interest rates had peaked, the latest CPI data was a rude shock. Data showed inflation rose to a three-month high of 6.52% in January from 5.72% a month ago.


Most analysts now believe that unless next month’s data show inflation easing, the Monetary Policy Committee may be forced to increase the repo rate to a near eight-year high in April. The last time repo rate was above 6.50% was in September 2015.


But more than the jump in inflation, what has perplexed economists is the 2.6% sequential rise in cereal prices in January. The data left many puzzled because the overall weighted contribution is higher than the sum of its components. In other words, the break-up of the cereal index suggests a much lower increase in cereal prices. Adjusted for this mismatch, January inflation will be about 20 basis points lower at 6.3%, according to economists.


The National Statistical Office, which compiles CPI data, is yet to make any official clarification on this, but has unofficially maintained that the data is correct and the seeming mismatch is because of an adjustment in weight for the numbers that are not available.


Pay tax to Invest


The fine print of the FY24 Budget had revealed a not so palatable change in tax on foreign remittances. For now, up to Rs 7 lakh investment in US stocks is made under the liberalised remittance scheme and no tax is collected at source (TCS) on this. Even on higher investment, the TCS is just 5%. The budget has proposed to hike the TCS to 20% and remove the relief that was so far given for investment up to Rs 7 lakh.


While this money can be claimed back as credit or refund later, not many would like to wait that long. The proposal is seen creating a mental block if one wants to invest in shares abroad.


Now, Indian stock investment platforms had approached the finance ministry for relief under the proposal as it may jeopardise their wealth investment plans offered to clients. It has been reported that around eight companies are likely to jointly approach the government on the issue and have also sought support from industry bodies.


Rushing to deleverage


Meanwhile, billionaire Gautam Adani seems to be going all out to contain the damage from the allegations made in the Hindenburg Research report that have been reverberating globally.



Adani, it appears, is in a rush for deleveraging, to delink his group’s shares and borrowings. The Adani Group is reportedly looking to refinance two dollar-denominated bonds and prepay share pledges.


According to news reports, the group will look to refinance about $1.2 billion worth of foreign currency bonds ahead of maturity, even as it looks to cut back on discretionary capital expenditure.


Company executives reportedly told a group of investors earlier in the week that the Adani group will prepay all loans against shares over the next few weeks.


Some news reports also say that the group’s management will come up with a plan to refinance Adani Green Energy Ltd.’s bonds due in 2024 by the end of June.


Separately, Adani Power scrapped an $850-million deal to buy a power plant from DB Power.


From layoffs to hiring


Over the past few months, the scenario has turned gloomy with news of layoffs almost every day and an impending recession in developed economies. But things could well change soon.


India, it seems, will soon go on a hiring spree. A survey by the recruitment website has said that around 46% of recruiters expect new and replacement hiring in the first half of 2023.


The maximum hiring is expected for IT roles, given the demand for tech skills, as per the jobsite’s Hiring Outlook Survey which covered 1,400 recruiters from key industries. Other functional areas where significant hiring is anticipated during January-June 2023 are business development, marketing, HR and administration, and finance.


While the IT sector is expected to see the maximum impact of hiring corrections, nearly half the recruiters think that attrition rates of higher than 15% will be seen in the first six months, indicating that employees will remain on the lookout for greener pastures.


So, if you are looking for a job, there may be no better time than now to get that hike you think you deserve! But remember, the more you earn, the more you should invest, for your future.


Market Wrap


The two benchmark indices, the BSE Sensex and the NSE Nifty 50, ended flat during the week. Tech Mahindra led the Nifty pack, gaining more than 10% during the week, followed by UPL, ONGC, Reliance Industries, Tata Steel, and ITC.

Other counters that ended the week in the positive territory included Coal India, Larsen & Toubro, Ultratech Cement, NTPC, and Bajaj Auto.

The stocks that made their investors poorer during the week included Adani Enterprises, State Bank of India, and IndusInd Bank. Other stocks that fell were HDFC Life, SBI Life, Hindustan Unilever, Britannia Industries and Infosys.



Other headlines


  • Google said to fire 453 employees in India
  • Indian-American Neal Mohan appointed YouTube’s new CEO
  • Tesla recalls more than 3 lakh cars over self-driving crash risk
  • Byju’s in funding talks with TPG, sovereign funds as debt weighs
  • India’s FY23 current account deficit seen under $100 billion on services boost, import slump
  • India to blacklist renewable energy companies for missing deadlines
  • Godrej Properties acquires Raj Kapoor’s bungalow in Chembur for Rs 100 crore


Until next week, happy investing!


Interested in how we think about the markets? Read more: Zen And The Art Of Investing    


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