In this edition, we talk about the RBI’s latest policy meeting and the difficult choices it has had to make. We also talk about the growing list of Indian billionaires, what the Mahindra-IndiGo dispute is all about, and upcoming IPOs.
Welcome to Kuvera’s weekly digest on the most critical developments related to business, finance, and the markets.
tl;dr Hear the article in brief instead?
Exactly forty years ago, Daniel LaRusso asked Mr Miyagi when would he learn how to punch his opponents in a fistfight. Mr Miyagi told him to learn something else first.
“Better learn balance,” Mr Miyagi said in ‘The Karate Kid’, the 1984 American movie that went on to become a cult. “Balance is key. Balance good, karate good. Everything good. Balance bad, better pack up, go home. Understand?”
Why are we talking about karate, the Japanese martial art? Well, we are not. We are talking about balance.
And balance is what Reserve Bank of India governor Shaktikanta Das and his peers in the monetary policy committee have been trying to achieve for the past few months. Balance between the need to boost economic growth and controlling inflation. Balance between expectations and reality.
And this week, too, the RBI tried to do just that. The RBI on Friday left its benchmark repo rate unchanged at 6.50% for the 11th consecutive policy meeting. In doing so, it defied calls for a rate cut from Finance Minister Nirmala Sitharaman and Commerce Minister Piyush Goyal as well as expectations from some analysts and industry executives.
The status quo was widely expected after retail inflation accelerated to 6.21% in October, exceeding the RBI’s 6% upper limit for the first time in more than a year. But expectations of a rate cut had risen after government data last week showed that India’s GDP growth slowed to a seven-quarter low of 5.4% in the July-September period.
With growth slowing, inflation rising and the rupee hitting all-time lows, the RBI faced a difficult decision. In the end, it prioritized controlling prices even though it acknowledged the slowdown in the economy. The RBI lowered its GDP forecast for the current fiscal year to 6.6% from 7.2% earlier and raised its inflation projections to 4.8% from 4.5%.
But the balance the growth-inflation concerns, the RBI slashed the cash reserve ratio (CRR) for banks to 4% from 4.5%. This effectively eases liquidity conditions in the banking system and allows them greater flexibility to lend. The CRR cut—the first since March 2020—will inject Rs 1.16 trillion into the system and help in lowering interest rates.
While announcing the RBI’s decision, Das said price stability is important to people as it impacts their purchasing power. Moreover, ensuring “durable” price stability is critical to ensuring high economic growth.
But he added that policy support may be required if the growth slowdown lingers for a longer period. For now, however, India’s economy remains resilient and domestic conditions are on a balanced path, he said.
How long will the conditions remain balanced? We can’t really say, but we do hope that policymakers remain watchful as ever to strike a balance between growth and inflation.
Billionaires Club
While common folk like us worry about interest rates and economic growth, there is one section of people who is probably oblivious to such issues. Who, you may ask? Well, they are the richest of the rich—the billionaires. And the list of billionaires in India is growing.
According to a report released by the Swiss bank UBS this week, the number of billionaires in India jumped over 20% to 185 in 2024 from 153 last year while their total wealth surged by 42.1% to $905.6 billion. As many as 40 people became billionaires thanks to rising equity prices and rapid economic expansion. Indian billionaires now have the third-highest total wealth of any country, behind the US and China, per the UBS Billionaire Ambitions Report for 2024.
The report had several other interesting titbits. It noted that in the 10 years to April 2024—its study period that coincided with the two completed terms of Prime Minister Narendra Modi-led National Democratic Alliance government—the number of Indian billionaires jumped 123% and their total wealth soared 263%.
Family-owned businesses have played a big part in this phenomenon. These include established family-backed conglomerates as well as new economy businesses in areas such as pharmaceuticals, edtech, fintech and food delivery.
The report said that rising urbanization, digitalization, growing manufacturing and preparation for the energy transition may well help India’s billionaire entrepreneurs multiply over the next 10 years just as China’s did in the years until 2020.
While billionaires’ wealth is growing in India, it is shrinking or stagnating in several other countries including China.
Globally, the total number of billionaires rose to 2,682 from 2,544 a year earlier, and their worth increased to $14 trillion from $12 trillion. In the US, the number of billionaires surged to 835 from 751 and their total wealth climbed to $5.8 trillion from $4.6 trillion. In mainland China, however, the number of billionaires dropped to 427 from 520 and their wealth fell to $1.4 trillion from $1.8 trillion.
What’s In A Name?
Moving on to developments in the corporate sector, India’s biggest maker of sport-utility vehicles (SUVs) ran into India’s biggest airline this week. Figuratively, of course.
Mahindra & Mahindra recently launched new electric vehicles under the “BE 6e” and “XEV 9e” badges, as it looks to gain a bigger share of India’s small but rapidly growing EV market that is currently dominated by Tata Motors.
However, IndiGo moved the Delhi High Court this week suing M&M for trademark infringement over the use of “6E” in branding. IndiGo, India’s biggest airline with a 60% market share, says it has used “6E” as its call sign and across all its branding for 18 years, including its rewards programme, co-branded credit cards and in-flight magazine.
The airline said that it is now “at risk of losing its distinctiveness” due to M&M’s actions and that the automaker was trying to associate itself with the airline industry by claiming that its car was shaped like an aircraft’s cockpit.
In its defence, M&M said that it had the necessary trademark registrations for the new EVs and that there was no conflict with IndiGo’s standalone “6E” branding. It also said it was in talks with IndiGo to find “an amicable solution”.
To be sure, trademark disputes are common in India. But legal fights between big publicly listed companies are very uncommon. So, what happens now? Will M&M stick to its guns or will IndiGo get what it wants?
Well, we can’t say whether the two companies will continue to fight legally or if they will reach some kind of out-of-court settlement. But perhaps what doesn’t help IndiGo’s case is another bit of news that came out this week.
AirHelp, a Germany-based company that helps airline passengers get compensation for flight delays and lost luggage, has ranked IndiGo as one of the world’s worst performing airlines.
IndiGo was ranked 103 out of 109 airlines in the 2024 AirHelp Score report, an annual analysis of the best and worst airlines globally based on passenger feedback, customer claims and flight timings. IndiGo, of course, dismissed the report.
The worst performing airline in the list was Tunisair. It was joined by Poland’s Buzz, Tunisia’s Nouvelair, Bulgaria Air, El Al Israel Airlines and Turkish carrier Pegasus.
As for the top-ranking airline, Brussels Airlines, part of Germany’s Lufthansa, took the crown. Qatar Airways was at No. 2, slipping from the top spot for the first time since 2018. US-based United Airlines and American Airlines, Iceland’s Play and Austrian Airlines were the other top-ranking carriers.
IPO Rush
Shifting from SUVs to stocks, equity investors will have three more options to choose from next week as retailer Vishal Mega Mart Ltd, pharmaceutical company Sai Life Sciences Ltd and digital payments company One Mobikwik Systems Ltd launch their initial public offerings.
Interestingly, all three IPOs will open, close and list on the same dates. The anchor allotment book will open on Dec. 10 while public subscription will be from Dec. 11 to Dec. 13. Shares of all three companies will list on Dec. 18.
Vishal Mega Mart’s IPO is the biggest of the lot. It will raise Rs 8,000 crore through an offer for sale by its promoters. The company has fixed a price band of Rs 74-78 per share for the IPO. At the upper end of the price band, the company will command a market capitalisation of about Rs 36,120 crore.
Hyderabad-based Sai Life Sciences has fixed a price band of Rs 522-549 apiece. The IPO consists of a fresh issue of Rs 950 crore and an offer for sale of 38.12 million shares by its promoters and other shareholders including US-based private equity firm TPG. At the upper end of the price band, the offer-for-sale portion will be around Rs 2,093 crore and the total IPO size will be Rs 3,043 crore. The company’s market cap at the upper end will be around Rs 11,400 crore.
Mobikwik will raise Rs 572 crore in the IPO through a fresh issue and none of its shareholders are selling any stake. The company has set the price band at Rs 265-279 per share. The company, founded by Bipin Preet Singh and Upasana Taku, will command a market value of about Rs 2,165 crore at the upper end of the band. The IPO will be keenly watched as it is the first digital payments firm to go public after the Paytm fiasco three years ago.
Market Wrap
Indian stock markets ended higher in four of the five sessions this week and ended with gains over the five-day period as investors shrugged off concerns of slowing economic growth and as foreign institutional investors returned.
Overall, the 30-stock BSE Sensex closed the week with gains of almost 2.4% and the 50-stock Nifty ended about 2.3% higher. Buying by foreign portfolio investors helped sentiment.
FPIs had been net sellers in October and November, offloading shares worth over $13.6 billion. In December, however, FPIs are net buyers of Indian equities worth about $1.77 billion till date, according to NSDL data.
Market breadth was positive this week, with nearly 40 Nifty stock clocking gains. The top gainers included Tata Group’s watch and jewellery arm Titan, Apollo Hospitals, Adani Ports, UltraTech and drugmaker Dr Reddy’s Labs.
IT stocks Tech Mahindra, TCS and HCL Tech rose nearly 4% each over the week. Financials stocks were driven higher by Axis Bank and Bajaj Finance. JSW Steel, Tata Motors, L&T, Grasim, and M&M were the other major winners.
The stocks that were a drag on the Nifty included drugmaker Cipla, HDFC Life Insurance, Hero MotoCorp, Asian Paints and Bharti Airtel. FMCG companies Britannia, ITC and Hindustan Unilever also ended in the red.
Other Headlines
- Maruti, Hyundai, Audi to raise car prices from January 1 due to higher costs.
- Indian govt alleges Volkswagen evaded $1.4 billion in taxes over component imports.
- SFIO probes Hero Electric, Benling, Okinawa Autotech for fraudulently availing EV subsidies totalling ₹297 crore.
- Bharti Airtel says it has signed a ‘multi-billion-dollar’ pact with Ericsson for 4G, 5G equipment.
- India services growth stays strong with Purchasing Managers’ Index at 58.4 in November vs 58.5 in October.
- India manufacturing PMI falls to 56.5 in November from 57.5 in October.
- Solar Energy Corporation of India lifts ban on Reliance Power after court directive.
- Swiggy Q2 loss narrows to Rs 626 crore vs a loss of ₹657 crore a year earlier.
- Suraksha Diagnostic’s shares list at a discount after IPO.
- RBI lifts ban on Flipkart co-founder Sachin Bansal’s NBFC Navi Finserv from sanctioning new loans.
- Govt to update GDP base year to fiscal 2022-23 from 2011-12.
- Govt scraps windfall tax on crude products, aviation fuel, and petrol and diesel exports.
- Uber starts boat hailing service on Kashmir’s iconic Dal Lake.
That’s all for this week. Until next week, happy investing!
Interested in how we think about the markets?
Read more: Zen And The Art Of Investing
Watch here: Investing in International Markets
Start investing through a platform that brings goal planning and investing to your fingertips. Visit kuvera.in to discover Direct Plans and Fixed Deposits and start investing today. #MutualFundSahiHai #KuveraSabseSahiHai
