In this edition, we talk about how Apple can provide direct and indirect employment to lakhs of more people in India over the next three years. We also talk about how Merc’s sales in India are surging, why gold prices are at an all-time high, and the reasons behind a decline in equity mutual fund inflows in March this year.
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“It always seems impossible until it is done,” the great Nelson Mandela once said.
Now, there’s nothing common between the South African statesman and American tech giant Apple Inc.
But dig a little deeper, and you may begin to think differently. Both Mandela and executives at the Cupertino-headquartered company have one essential trait in common—persistence.
Mandela spent a lifetime fighting apartheid and had to endure three decades in prison before tasting victory.
Apple first began selling its products in India in the late 1990s but it was not until 2017 that the company managed to gain enough traction to be able to begin assembling the iPhone in the country.
And in 2023, Apple’s India revenue surged 42% to $8.7 billion, according to Morgan Stanley, as Indians finally went crazy for the iPhone. Moreover, Apple assembled iPhones worth $14 billion in India in fiscal year 2023-24, as per a Bloomberg report. The company now makes as much as 14% of its marquee smartphones from India and intends to ramp it up to 25% in coming years.
This is not all. Apple says that, over the next three years, its ecosystem of component manufacturers and suppliers is set to employ three times as many people in India as they do today. This, as the company looks to move at least half its existing supply chain from China to India.
Indeed, India is becoming an important market both for exports as well as for local sale of Apple products. This will trigger a vibrant supplier ecosystem and also make India a potential R&D hub for software-to-silicon design.
In fact, Apple has already reportedly emerged as one of the country’s largest blue-collar job creator with 1.5 lakh jobs created across the phone maker’s supplier network, since the start of the production-linked incentive (PLI) scheme for smartphones in August 2021. In addition, about three lakh people are estimated to be employed indirectly.
Apple contractors such as Foxconn, Tata Group and Salcomp will provide residential facilities to factory employees with a total of 78,000 units to be constructed, of which 58,000 will be in Tamil Nadu.
But even as its market expands in India, Apple remains a distant second to South Korean giant Samsung, as far as smartphone sales are concerned. In 2022, Samsung shipped more than 26 million units to India while Apple managed to ship 6.5 million units. Even in 2023, Apple’s iPhone shipments to India were a little more than 10 million units.
So, while India may still not match China, the country is definitely becoming one of Apple’s most important markets. Besides manufacturing, Apple is also ramping up its retail presence. All these measures could push the company’s revenue to $40 billion by 2032, says Morgan Stanley. Now that would be a target worth striving for.
Luxury on wheels
Apple is not the only luxury brand that Indians are taking to in droves. Wealthy SUV-obsessed Indians are now buying high-end luxury cars in the thousands every month. And their top brand of choice appears to be Mercedes Benz.
The German carmaker reported its highest-ever retail sales in a fiscal year in India in 2023-24, driven by a surge in demand for its SUV range. The company sold 18,123 units last fiscal year, up 10% from 16,497 units in 2022-23.
In fact, latest data show that in the January-March period this year, the automaker sold 5,412 units, an increase of 15% from a year earlier.
The automaker plans to introduce nine new models this year in the country, including three new battery-electric vehicles (BEVs). The company said it will strengthen its AMG performance range with the launch of the AMG S 63 e-Performance sedan and the AMG C 63 e-Performance in the second quarter of this calendar year.
The automaker also plans to inaugurate two luxury MAR 20X outlets in key customer hubs of New Delhi and Mumbai in April. In all, 20 New MAR 20X luxury workshops will come up in across 10 new cities this year.
Gold rush
Phones and cars are not the only glitzy things Indians swoon on. Gold has traditionally been the go-to lux item for Indian families who tend to park a significant proportion of their savings in the form of jewellery.
But gold has been getting out of reach for the average middle-class Indian family as the yellow metal has been soaring to all-time highs. On Friday, gold prices in the Asian bullion markets climbed to a fresh high of $2,390 per ounce. The market expectation that the US Federal Reserve will cut its benchmark interest rate this year is the main driver for the yellow metal.
Additionally, the gold purchase by the Chinese central bank and the ongoing geopolitical tensions in the Middle East have boosted safe-haven flows, benefiting the gold price. The People’s Bank of China purchased gold for the 17th consecutive month in March, adding 160,000 ounces to its reserves of 72.74 million troy ounces.
Even the Reserve Bank of India (RBI) bought 8.7 tonnes of gold in January, its highest purchase in two years.
Bullion rates have surged by 14% since March. In India, too, gold soared past the Rs 71,000 per 10-gram mark, with analysts saying that the wedding season was among the several reasons driving up local prices. Other reasons leading to the surge include global economic uncertainty and geopolitical tensions, rising inflation and low interest rates.
So, should you also be buying gold at such elevated prices? Depends on the reason behind your purchase, say analysts. They say that if the intent is to purchase gold for special occasions like weddings or festivals, an immediate purchase might be required. However, if the goal is purely investment-driven, remaining patient until prices stabilise could be prudent.
Small-cap slowdown
As gold prices surge, inflows into equity mutual funds in India seem to have slowed down since March.
Latest data released by the Association of Mutual Funds in India (AMFI) shows that inflows into equity mutual fund schemes declined 15.8% on a month-on-month basis to Rs 22,633.2 crore in March.
While inflows in large-cap funds more than doubled to Rs 2,127.8 crore in March, from Rs 921.1 crore the previous month, they declined 43.7% to Rs 1,017.7 crore in the midcap category, according to the data.
So, what exactly sent currency traders into a tizzy?
The small-cap category logged outflows to the tune of Rs 94.2 crore in March, as investors continued to avert the segment amid concerns about frothy valuations, as against inflows of Rs 2,922.5 crore in February.
However, investors remain confident about mutual funds as FY24 drew to a close, said the industry body. This was reflected by SIP accounts hitting a record high of 8.4 crore with 42.87 lakh new registrations.
Market Wrap
This was a truncated trading week, with the markets open for only four out of the five trading sessions. The Sensex and the Nifty remained firmly in the green this week, gaining 0.8% and 0.9%, respectively. The Sensex also crossed the psychologically important level of 75,000 this week.
Nifty stocks that gained the most this week included Eicher Motors, Mahindra & Mahindra, NTPC, Hindalco, Bajaj Finserv, Coal India and Divi’s Labs. Other counters that helped the index rally were SBI Life Insurance, ITC, Tata Motors, Tata Consumer and four lenders—Kotak Mahindra Bank, ICICI Bank, Axis Bank and HDFC Bank.
Nifty stocks that lost ground this week included Cipla, Sun Pharma, Titan, Wipro, Asian Paints and Tech Mahindra. Other counters that ended up in the red were Ultratech Cement, Adani Ports, Larsen & Toubro, Bajaj Finance and Hindustan Unilever.
Other headlines
- RBI declines Annapurna Finance’s universal bank request
- ADB raises India’s GDP growth forecast for 2024-25 to 7% from 6.7%
- Elon Musk to meet PM Modi in India next week, may announce Tesla investment
- State-owned National Investment and Infrastructure Fund invests $200 million in iBUS Network
- Essar Power appoints Arun Kumar as CEO of renewables division
- Uday Kotak sounds alarm bells on global economy, says US Fed may postpone rate cuts
- Private equity firm Bain Capital sells its stake in Axis Bank for $429 million
- Paytm Payments Bank CEO Surinder Chawla resigns
- Ola to stop ride-hailing operations in UK, Australia and New Zealand
- India’s silver imports surge 260% in February to a record high of 2,295 metric tons
- Tata Motors says sales of Jaguar, Land Rover rise 11% in Jan-March
That’s all for this week. Until next week, happy investing!
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