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  • West Bengal announces fresh curbs, restricts flights from Mumbai, Delhi

    The West Bengal government on Sunday said flights from Mumbai and Delhi were being restricted to twice a week from January 5 as new Covid cases in the state mounted to 6,153 from 1,089 on December 29.

    In a letter to the civil aviation ministry, the state government said that in view of the rising Covid cases it had decided that with effect from January 5, all incoming domestic flights from Mumbai and Delhi to West Bengal will be temporarily allowed only twice a week on Monday and Friday till further orders.

    This is among a set of fresh curbs announced by Chief Secretary H K Dwivedi after a panel of the state disaster management authority recommended review of the current restrictions and relaxations amid concerns of “high rate of infectivity” and multiple cases of the Omicron variant.

    The restrictions are effective Monday and will be in force till January 15.

    Dwivedi said direct flights from the UK were being temporarily suspended from tomorrow. The Civil Aviation Ministry had already been informed, the chief secretary said.

    Till January 1, 19 had tested positive for Omicron, and 15 were active. Dwivedi, however, reassured on hospital bed availability and said the total bed occupancy was around 1.5 per cent. Those who are asymptomatic or have mild symptoms can isolate at home, he said.

    The order includes an advisory to the management of industries, factories, mills, tea gardens, and other establishments to ensure strict compliance of Covid-appropriate norms and “only double vaccinated workers” to be allowed to enter the work sites.

    All academic activities in schools, colleges, and universities are to remain closed and only administrative activities will be permitted with 50 per cent employees at a time.

    Government offices, including public undertakings, will function with 50 per cent of employees at a time, and work from home is encouraged. The same holds for private offices and establishments.

    Swimming pools, spas, gyms, beauty parlors, saloons, wellness centres, entertainment parks, zoos, and tourist places will be closed.

    Shopping malls and market complexes will, however, function with capacity not exceeding 50 per cent and till 10 pm. Similarly, restaurants and bars have been allowed to operate with 50 per cent capacity and till 10 pm.

    Cinema halls and theatre halls, too, will operate with 50 per cent seating capacity and up to 10 pm.

    The maximum number of people at meetings and conferences has been limited to 200 people at a time or 50 per cent seating capacity of the hall. The number of people at social, religious and cultural gatherings has been capped at 50.

    As far as public transport is concerned, local trains will operate with 50 per cent seating capacity and up to 7 pm; metro services will operate with 50 per cent seating capacity and as per usual operational time.

    Further, the movement of people and vehicles and public gatherings is prohibited between 10 pm to 5 am and only essential and emergency services are permitted.

  • Industrial and logistics sector top investment chart in 2021, touch new highs

    The industrial and logistics sector was the most sought-after, and investments rose to a five-year high of $1.1 billion, a five-fold increase from 2020.

    The sector has been drawing strong operator and investor interest due to increased demand from e-commerce and 3PL players post-pandemic.

    This growth momentum is likely to continue in 2022, as major global investors and developers continue to expand their footprint in proximity to high consumption areas across Tier I and II cities, said Colliers.

    “The pandemic has accelerated several structural trends and will have lasting changes on the nature of real estate business in India. The Investments across asset classes saw promising inflows in 2021, reflecting several opportunities for investors to recalibrate their strategy towards growth sectors. This is already evident in the rapid investment being allocated towards the residential, increasing development of data centres, alternatives, industrial, office, and the evolution of the life science sector. There is a reflection of confidence in the industry to participate in the growth story and hence develop, build and own real assets in the long term.” said Piyush Gupta, Managing Director, Capital Markets and Investment Services, Colliers India.

    Overall the real estate institutional investment volumes closed at $4 billion in 2021, a 17% dip yoy. However, capital flows came on a broad-based recovery across most asset classes, geographies and doubled in the number of deals compared to 2020, mentioned the report.

    The industrial and warehousing sector accounted for half of 2021 investment, while the office sector attracted the highest investments at $1.2 billion, accounting for 31% of the total investments in 2021. This reaffirms the resilience and the long-term growth story of the sector.

    “The year 2021 has seen a strong investor appetite for residential and industrial & logistics sectors while office continues to be dominant. The broad-based recovery signals signs of ebullience amongst investors and expansion of REITs, asset diversification, imminent potential in industrial & logistics will keep them busy in the Indian market. Moreover, niche asset classes such as Data centers, student housing and life science will provide a unique opportunity for investors to diversify their investments.” said Vimal Nadar, Senior Director and Head of Research, Colliers India.

    The report mentioned that the Inflows in the residential segment witnessed a significant uptick with a two-fold increase YoY amid a recovery in the residential sector and increased demand for capital. Private Equity funds are looking at providing capital for fresh investments in residential projects, and also for refinancing/restructuring existing loans of banks and NBFCs. The luxury segment accounted for about 35% of the total investments, with the rest in mid-income and affordable category projects. Luxury residential projects witnessed increased investments in 2021 as demand for bigger homes and gated communities has significantly increased during the past one year.

    As compared to last year, the share of single city deals witnessed a two-fold increase during 2021, indicating investors’ rising preference towards specific high-quality assets in key locations. With increased investments in select luxury residential projects and data centres, Mumbai led the investment pie in 2021 with a 20% share. Foreign private equity investors continued to have the majority share in the investment volumes, but domestic funds have shown higher confidence, compared to last year, led by a steady recovery in the economy.

  • Economists feel an uptick in investment and demand in FY23 will broad-base growth

    The economic recovery is likely to be broad-based and more durable in the next financial year as Covid-battered micro, small and medium enterprises (MSMEs), informal industries and contact-intensive services see a pick-up in capital investments and healthier balance sheets due to revival in demand, say economists. The resurgent Omicron variant, persisting shortages and bottlenecks, and worldwide divergence in policy stances due to inflationary pressures remain a concern, they say.

    “While we are watchful of the economic impact of global spread of Omicron, we are cautiously optimistic economic recovery in India will be more durable and broad-based in the coming year,” said Aditi Nayar, chief economist, Icra NSE 0.37 %.

    The International Monetary Fund (IMF) projected an 8.5% growth for India in FY23 in its October review last year. Overall economic growth is likely to be impressive in the current financial year, statistically boosted by the low base of 7.3% contraction in FY21. The Reserve Bank of India has forecast a 9.5% real GDP growth in the current fiscal, which should be a 1.6% rise over pre-Covid FY20.

    “We also expect broad-basing of growth, with rising contributions from the services sector. Government support has put investments on a stronger footing vis-a-vis private consumption, which is currently fragile,” said Dharmakirti Joshi, chief economist, Crisil.

    MULTIPLE DRIVERS
    Next fiscal could see both investments and consumption drive growth, with exports providing a helping hand. Rising consumption will push capacity utilisation above the crucial threshold of 75% by the end of 2022, which should trigger a broadbased pickup in private sector investment activity, said Nayar. Private consumption — the biggest GDP component — rose by over 8.6% in the second quarter of the fiscal but is yet to cross pre-Covid levels. If the economic recovery continues, private consumption is expected to rebound, too.

    An expected solid expansion in taxes will allow the government to prioritise growth-enhancing capital spending, which is also expected to crowd in private investment. The new tech ecosystem, asset monetisation and expansion of productionlinked scheme are among key drivers that could offset the potential demand slowdown.

    AND HEADWINDS
    The rapid advance of Omicron in the metros remains a concern as it could disrupt the economic recovery. However, economists are optimistic that its impact would not be so severe amid indications that the variant may spread faster but is not likely to be as damaging as earlier ones.

    “Omicron as a wildcard entry has tilted risks to outlook downwards.

    Experience tells us that successive waves, even if they overwhelm the health infrastructure, are less damaging to the economy,” said Joshi. Other risks that could weigh on growth include actions of the US Federal Reserve and other central banks, and domestic inflation dynamics. A rapid rise in US interest rates could disrupt financial markets.

    “Rising input prices (WPI) is bound to find its reflection on retail prices (CPI). This, along with higher deficit, will increase interest. However, exports is a ray of hope, said Devendra Pant, chief economist, India Ratings.

    Economists ET spoke to expect RBI to raise the repo rate by 50 basis points starting next financial year. Another concern is high crude and commodities prices, which could cause a faster-than-expected rise in interest rates if inflation accelerates.

  • NPS to allow 4 changes per fiscal in investment pattern

    Pension fund regulator PFRDA will soon allow subscribers of the National Pension System (NPS) scheme to change investment pattern as many as four times during a financial year as there has been a demand to increase the limit, its chairman Supratim Bandyopadhyay said Tuesday.

    Currently, NPS subscribers are allowed to change the investment pattern twice in a financial year. “One can change the investment choice twice in a year. Now, in a very short period of time, we are going to increase it to four times because there are requests that you allow more number of times (to change the investment pattern),” he said, addressing a webinar on NPS scheme organised by industry body Assocham.

    The only cautionary note PFRDA wants is that it is a long-term investment (product) to build a pension corpus, and it should not be treated akin to a mutual fund scheme, he said.

    “People sometimes mix it up with some mutual fund kind of thing that can give good returns. You have to give it some time and thereafter, only you can use it (changing option). Use it judiciously, we are going to increase it to four times in a year (financial year),” Pension Fund Regulatory and Development Authority’s chairman said.

    Subscribers are allowed to allocate their investments in a mix of instruments such as government securities, debt instruments, asset-backed and trust-structured investments, short-term debt investments, and equities and related investments.

    Currently, pension fund managers under NPS are – ICICI Prudential Pension Funds Management Company, LIC Pension Fund, Kotak Mahindra Pension Fund, SBI Pension Fund, UTI Retirement Solutions, HDFC Pension Management Co, and Birla Sun Life Pension Management.

    Bandyopadhyay also said the PFRDA wants to offer a variable annuity product to the subscribers after retirement, aimed at shielding them against inflation. “Once the annuity starts, that remains constant for your lifetime. Of course, there is one annuity (product) that gives a simple rise of three per cent per year but obviously, that will not take care of the risk of inflation.

    “We have been talking to the insurance regulator (Irdai) …and we have been talking to the annuity service providers also if they can think of this kind of variable annuity which can give some cushion against the rise of inflation,” he said.

    The PFRDA chairman said the Insurance Regulatory and Development Authority of India (Irdai) has made a working committee and a report has also been submitted by the committee.

    “We are in discussion with Irdai to ensure that those kinds of products are released as quickly as possible,” he added.

  • Investment via P-notes drop to Rs 94,826 crore in November

    Investments in Indian capital market through participatory notes (P-notes) dropped to Rs 94,826 crore till November-end after hitting 43-month high in the preceding month.

    P-notes are issued by registered foreign portfolio investors (FPIs) to overseas investors who wish to be a part of the Indian stock market without registering themselves directly. They, however, need to go through a due diligence process.

    According to Securities and Exchange Board of India data, the value of P-note investments in Indian markets — equity, debt and hybrid securities — was at Rs 94,826 crore by November end as compared to Rs 1,02,553 crore by October end.

    The month of October saw the highest level since March 2018, when P-notes had invested to the tune of Rs 1,06,403 crore. Abhay Agarwal, Founder and Fund Manager, Piper Serica, a Sebi-registered PMS, said there was a net sale of more than Rs 8,000 crore in November in the equity segment by P-note holders reversing the October inflow of more than Rs 5,000 crore.

    This is consistent with the FPI sales that have been seen in the current quarter to lock-in their gains for the year. “We expect to see a negative number in the month of December also. There was a marginal net inflow in the debt segment, but the number is too small to read much into,” he added.

    At the end of September this year, the investment level was at 97,751 crore, Rs 97,744 crore by August-end. The figure for July was revised to Rs 85,799 crore from Rs 1,01,798 crore posted earlier.

    Prior to that, investment level was at Rs 92,261 crore by June-end, Rs 89,743 crore by May-end, Rs 88,447 crore at April-end and Rs 89,100 crore by March-end.

    Of the total Rs 94,826 crore invested through the route till November, Rs 84,915 crore was invested in equities, Rs 9,605 crore in debt, Rs 306 crore in hybrid securities.

    P-notes flows have been volatile over the last four months in line with the volatility of the global and Indian markets. Divam Sharma, Co-founder, Green Portfolio, a Sebi-registered PMS, said that November 2021 has witnessed slight change in course of FPI inflows and this negative trajectory has also continued in the month of December 2021.

    The key reasons for FPI withdrawal from equity markets include expectations of monetary tightening by federal banks, high inflation levels, uncertainty around Omicron variant spread, and higher valuation levels in equity markets, he said.

    “This is also considering that most FPI’s go on year-end holidays for 2-4 weeks and had lightened positions before their vacations. This is a global trend as emerging markets across the globe along with developed markets have witnessed selling in November and December,” he added.

    The assets under the custody of FPIs declined to Rs 52.24 lakh crore in November-end from Rs 53.6 lakh crore in October-end. Piper Serica’s Agarwal expect the net flows to be anemic in the near future till FPIs start deploying their 2022 allocations.

    There are no big IPOs slated in the near term so the primary market inflows from P-note holders will be weak. Piper Serica’s Agarwal expect the net flows to be anemic in the near future till FPIs start deploying their 2022 allocations.”At the same time, market valuations have become quite reasonable after the recent correction. If the Omicron cases do not lead to national level lock downs and CPI inflation does not cross 6 per cent we expect the flows to be positive in the next quarter,” he added.

  • Beat the market in 2022 with focused investment in three sectors

    Unprecedented retail participation and cheap money have come together to push most markets to record highs in 2021. The strength of the mother market, the US, is imparting resilience to other developed markets and emerging markets like India. The exuberant retail participation is a totally new development that has made market prediction extremely complex.

    A couple of data points that throw light on the unprecedented retail exuberance and its impact on markets would help us to get the issue in perspective. In 2021 alone, US investors have downloaded 15 million trading apps and invested $1 trillion in equity. This investment is higher than the cumulative investment made during the last 20 years. Retail investors in the US now own 12 times more stocks than hedge funds. Cheap money has provided a favorable context for investing/ trading in stocks .

    This explosion in retail participation is a global phenomenon triggered by the pandemic. In emerging markets, this trend is conspicuous in India. Retail participation is desirable but the concern is about exuberance and total disregard for valuations.

    An important lesson from stock market history is that a sharp crash is followed, more often than not, by a sharp rebound. Stock market often overreacts: both on the upside and the downside. During the euphoria of a bull market, valuations reach unsustainable levels, leading to a sharp correction. The panic during a crash takes valuation to very low levels, which in turn leads to buying, triggering recovery. This pattern repeats. This has implications for investors.

  • Market LIVE Updates: Indices at day’s high led by IT, realty, banks; RBL Bank most active

    Active pharmaceutical ingredients manufacturer Supriya Lifescience, the 64th listing in 2021, is expected to debut with around 50 percent premium on December 28.

    Experts cited attractive valuations, strong financial track record with maximum income from exports, increasing growth potential in the pharma space and healthy return ratios for the expectations of the healthy listing.

    The initial public offering of Supriya Lifescience received a stellar response from investors, as the issue was subscribed 71.51 times during December 16-20.

    The allotted quota of non-institutional investors was subscribed 161.22 times, followed by retail investors’ 56.01 times. Qualified institutional buyers also showed strong interest in the public issue, as the portion set aside for them was subscribed 31.83 times.

  • Capital investment to pick up in old economy; decent growth expected in FY23: Jayanth R Varma

    Varma, who is also a member of the Monetary Policy Committee (MPC) of the Reserve Bank, in an interview to PTI said that inflation is a matter of concern, but as of now it is the persistence of inflation rather than its level that is a matter of concern.

    According to Varma, the pre-pandemic level of economic activity has already been surpassed, and the rest of this financial year should also see further recovery.

    He noted that calendar year 2021 saw dozens of new economy companies receive large funding both in private and public equity markets and these companies would have positive spillover effects into the rest of the economy as well.

    “I am hopeful that in a few quarters from now, capital investment would also begin to pick up even in the old economy,” the eminent economist said.

    India is contemplating bringing a bill in Parliament to deal with the challenges posed by the unregulated cryptocurrencies. Currently, there are no particular regulations or any ban on use of cryptocurrencies in the country.

    Asked about the impact of ‘taper tantrum’ or withdrawal of monetary stimulus by the US Federal Reserve on India, he said the Indian economy is a lot more resilient on the external front than it was in 2013.

    Varma opined that in any case, using the interest rate to achieve an exchange rate objective would be inconsistent with the inflation targeting framework that is in place today.

    The taper tantrum had started in mid-2013 when the Fed hinted at reversing its easy monetary policy.

  • Asia stocks, oil struggle as Omicron worries weigh

    TOKYO (Reuters) – Asian stock markets were generally weaker  in holiday-thinned trading on Monday, as uncertainty over the economic impact of the Omicron coronavirus variant weighed on investor sentiment.

    U.S. airlines have cancelled or delayed thousands of flights over the past three days due to COVID-19-related staff shortages, while several cruise ships had to cancel stops after outbreaks on-board.

    In Asia, China reported its highest daily rise in local COVID-19 cases in 21 months over the weekend as infections more than doubled in the northwestern city of Xian, the country’s latest COVID hot spot.

    Mainland Chinese shares, though, were mixed, with Shanghai’s benchmark sliding 0.37% but an index of blue chips edged 0.05% higher.

    Australia, Hong Kong and Britain are among markets closed Monday for holidays.

    “There is concern over the widening spread of the Omicron variant, which is overall making people cautious about taking stocks higher” in Japan, said a market participant at a Japanese securities firm.

    Wall Street trading resumes later in the global day following a holiday on Friday. U.S. stocks closed at records on Thursday amid signs Omicron may cause a milder level of illness, even as the highly transmissible strain led to a surge in case numbers around the world.

    In the foreign exchange markets, the U.S. dollar continued to languish near the bottom of its range of the past month against a basket of major peers, after hitting a 16-month high in November as Federal Reserve policymakers turned more hawkish.

    Thet flat at 96.116, towards the bottom of the range from 95.544 to the 16-month peak at 96.938 reached on Nov. 24.

    In the crude market, U.S. West Texas Intermediate futures fell 59 cents to $73.20 a barrel. The contract did not trade on Friday because of the U.S. market holiday.

  • India in talks with Taiwan for domestic semiconductor-manufacturing hub; trade, investment pacts also discussed

    India is in talks with Taiwan over the possibility of setting up a domestic semiconductor manufacturing hub, a report citing sources claimed on December 16. The two sides are also reportedly discussing agreements related to free trade and investments.

    Taiwan is home to two of the world’s biggest semiconductor giants–Taiwan Semiconductor Manufacturing Company (TSMC) and United Microelectronics Corporation (UMC).

    New Delhi and Taipei are exploring the possibility of bringing either of the two companies to set up a manufacturing plant in India learnt from two persons familiar to the development.

    The Indian side has also proposed a number of sites where the production plant could be set up, the persons said. They, however, noted that the process is “complicated”.

    “It is a very complicated process because a company like TSMC uses components from hundreds of other firms. Setting up a hub in India means convincing those firms to also set up a facility in India to ensure the supply of components,” the newspaper quoted one of the source as saying.

    If the talks end up being successful, this will be only the second instance when a Taiwanese semiconductor maker will launch a manufacturing unit in another country. Earlier, TSMC, which has a market value above $550 billion, had unveiled a $12-billion fabrication plant in the United States.

    Investment, free-trade pacts

    According to the report, India and Taiwan had set up four groups earlier this year to discuss an investment agreement and a free-trade agreement, apart from creating a domestic semiconductor-manufacturing hub and the training required for the purpose.

    The investment and free trade pacts, which Taiwan is discussing with a number of countries, are likely to be used by it to diplomatically counter China at a time when tensions between the two neighbours are on a rise.

    One of the groups set up by India and Taiwan met virtually earlier this year to discuss the free-trade agreement, Hindustan Times learnt from the sources. However, the group that is discussing semiconductor manufacturing has met twice in the same period, the report said.

    Semiconductor manufacturing key for India

    For India, semiconductor manufacturing is of utmost importance as the country’s requirement of electronic chips–essential in the production of an array of items ranging from cars to smartphones–is expected to meteorically shoot up over the next couple of years.