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Nationalists cross with Infy
Also in this edition: Chinese wall crumbling, Flashy cars only, Green is the colour for investors.
Good morning! Transport Minister Nitin Gadkari was irked that he could not do his breathing exercises in peace in his 11th-floor apartment in Nagpur because of vehicle horns. He has ordered new rules to be framed for vehicle makers. The “right kind of horns” will be musical, producing the sound of Indian instruments. Music, OK Please.
Also, Ola to all our new readers.
The Market Signal
Stocks: Indian benchmarks had another record-breaking week, with the Sensex crossing the 58,000-point mark for the first time. They were well supported by the broader market which saw all-round buying. Trading in the upcoming week could be influenced by industrial output data, automobile supply chain issues, and the spread-rate of Covid-19 variants.
No Entry For Cheap Cars
Fewer Indians are buying entry-level cars and carmakers could stop producing vehicles that cost less than ₹500,000, reports the Economic Times. While the Tata Nano and Hyundai Eon have gone out of production, Nissan may stop making the Datsun Go.
Falling numbers: Between January 2016 and January 2021, the number of variants that cost less than ₹500,000 dropped from 142 to 66. Five years ago, the entry car segment accounted for a third of the overall market but it is now only about 17%.
Falling buying power: One reason is that car buyers are opting for used vehicles. Some might be willing to spend more on feature-rich models rather than no-frills, entry-level vehicles. Another likely cause could be the declining purchasing power at the lower end of the market. The demonetisation in 2016, the introduction of GST in 2017, and the Covid-19 pandemic since early last year have hit incomes and livelihoods across the country.
China’s Crumbling Bricks
The mortar in China’s property market is coming loose, raising the spectre of a slowdown in the world’s second-largest economy. A string of corporate defaults and bailouts have gone under-reported compared to the headline-grabbing Big Tech crackdown.
Grande debt: Evergrande, one of its largest developers, is reeling under cumulative debt in excess of $350 billion. Its property sales are slowing down while it struggles to complete houses that have been paid for.
WeOU: Investment group HNA with a significant portion of its holdings in aviation and real estate has taken a mighty fall. The conglomerate now owes $187 billion and bankruptcy proceedings have been initiated. Huarong, the ‘bad bank’ established in 1999 was also recently bailed out after posting a record $15.9 billion loss in 2020. Meanwhile, retailer Suning’s offline push has it on the verge of default.
While the crackdown has largely impacted the market cap of technology firms and eroded their owners’ notional wealth, other companies have made real losses and could have real consequences on the economy.
Infy Gets Tagged Anti-national
Is India’s most famous software company anti-national? Panchajanya, a publication affiliated with Prime Minister Narendra Modi’s ideological mentor, the Rashtriya Swayamsevak Sangh (RSS), thinks so.
The broadside: In a cover story, the Hindi magazine alleged that the company was deliberately trying to destabilise the Indian economy and accused it of helping “Naxals, Leftists and tukde tukde gang”, the Indian Express reported. While the first refers to armed guerillas, and the second to communists and left liberals, the last one is a reference to a conspiracy theory that some people are deliberately plotting to break up the country. The RSS distanced itself from the report.
The glitch: Infosys has been in the government’s cross-hairs for snags in the new Income Tax e-filing portal which it developed. The income tax department had taken to Twitter to announce that finance minister Nirmala Sitharaman had summoned Infosys CEO Salil Parekh to explain why the site was not functioning properly.
The Signal
The nationalist vs anti-nationalist narrative that has been building up in India in tandem with the BJP’s rise to power has finally ensnared the corporate sector as well. Panchajanya said that it did not have proof but alleged anyway that Infosys was working to destabilize the Indian economy. The publication also asked whether Infosys would offer shoddy services to its foreign clients as it provided (according to Panchajanya) the Indian government. Commerce Minister, Piyush Goyal, came up with the same bogey recently when he took potshots at the Tata Group, asking whether their foreign companies’ interest was greater than national interest. The two companies are India’s flag bearers in global business. This will have a deep impact on Indian corporate sector and it will be interesting to see whether it will stand up to bullying or roll over.
Double Whammy for India’s Virus Hotspot
Even as the rest of the country prepares to open up, there is no respite for Kerala. The state, which currently accounts for over 70% of India’s daily new Covid-19 infections, has also recorded the death of a 12-year-old boy from the Nipah virus.
No herd immunity: The state had successfully fought off Covid-19 last year but that early success made more than half of its population not exposed to the virus extremely vulnerable and helped the Delta variant spread rapidly. The state has still managed to keep its death rate low at 0.5% compared to the national average of 1.34%
What happened now? Relaxed mobility rules during the festive season contributed to the spike. Faster vaccination would be the best way to protect the vulnerable. So far, only 21% of the population has been fully vaccinated. Kerala’s public health system had gone up a steep learning curve in 2018 when a Nipah virus outbreak killed 17 people.
Greenbacks Rush To Green Finance
Last week, Adani Green Energy raised $750 million via green bonds in an issue oversubscribed by 4.7 times. Green bonds are so hot right now that in the first half of 2021, Indian issues grew 643%.
Global surge: The FOMO is rising as countries and corporations rush to raise cheap money for clean initiatives to meet their climate change goals. Germany is set to auction a 10-year sovereign green bond next week while Spain, Colombia, and the UK are issuing their first ones this month.
The fear: Prices of these bonds have been rising but investors are wary of greenwashing too.
What Else Made The Signal?
Will wait: Apple has delayed the launch of a security feature to detect child sexual abuse material on its devices after intense backlash over privacy.
Cooldown: Following an OPEC+ agreement on raising oil output, Saudi Arabia cut prices by more than expected for buyers in its largest market — Asia.
Back to work: After 18 months of WFH, Tata Consultancy Services is ready to bring back its employees to office.
Ola America: Ola CEO Bhavish Aggarwal tweeted he plans to ship electric scooters to the US in early 2022.
Rare bond: A Barclay’s vertical has invested ₹5 billion in an entire zero-coupon bond issue of Rare Equity, a company in which Rakesh Jhunjhunwala has a controlling stake.
Legend-ary: Shang Chi and the Legend of the Ten Rings is set to break the four-day Labor Day weekend box office collections record in North America.
Snapping deal: The latest company to join India’s booming IPO market could be Snapdeal, eyeing a raise of $400 million.
FWIW
Puff of O2: There’s a new fix for the Monday morning pep: oxygen. Companies are selling canned oxygen in peppermint and citrus flavours to tap into the latest health fad.
Flush for your medical report: Soon, mornings may not be the same. That’s because the next level of at-home health tracking involves smart toilets stuffed with sensors. Companies and researchers are working on commodes that can measure vital signs, screen for chronic illnesses, and even diagnose Covid-19.
McBreakdowns: McDonalds’ McFlurry machines have been conking, causing the Federal Trade Commission to send them a letter asking for details on why this is happening. Whoops.
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