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Good morning. In today's edition — how Amazon’s Tez could impact India’s consumer habits; a rural-urban divide in vehicle sales; and why a stock broking firm has done well despite the markets being flat.

JANUS VIEW

Traditional FMCGs Can’t Afford To Lag Behind Big Retail Like Amazon

A development this week that is likely to have the largest impact on society is the move by the world’s biggest online retailer to join India’s burgeoning quick commerce business. Amazon has started a pilot, dubbed Tez, for the time being, in Bengaluru. Flipkart and Reliance Retail have also joined the race. Big Basket has transformed itself into a quick commerce platform.

This has implications for retail trade, obviously. It also has implications for the logistics industry, possibly for the food processing industry, for branded food products, consolidation and better organisation of the fresh produce business and faster adoption of artificial intelligence (AI) by the retail business, and also by established fast-moving consumer goods businesses. The quick commerce business launched in the US with the promise to make the home refrigerator superfluous. If that promise has a chance to turn realistic anywhere in the world, it is in India.

The traditional small stores, known as kiranas in North India, would face serious competition in places where Big Retail starts quick commerce. Quick delivery of orders offsets the proximity of the corner store to the consumer. 

In the long run, if it succeeds to obliterate the need for a refrigerator, it would also drastically change what Indian consumers buy and how. 

Markets Slip Again, Wait For Bottom Up Santa Rally

On Episode 457 of The Core Report, financial journalist Govindraj Ethiraj talks to Hemindra Hazari, veteran banking analyst.

• Markets slip again, wait for bottom up.

• Santa rally Inflation drops from 14 month high to 5.48%

• OPEC has once again cut oil demand forecasts for next year

• Gold, silver futures rise on speculation, US may put tariffs on their imports too

• Is India’s bank credit growth hitting a wall?

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CORE CONVERSATIONS

Rural India Doing Well, Urban Sales Have Lost Steam: FADA President CS Vigneshwar On Auto Sales Trends

The November auto sales numbers have yet again brought bad news for the industry that has seen a difficult year. After a great October, thanks to the festive season, passenger vehicle sales dipped 13.72% year-on-year in November while commercial vehicle sales also were down 6.08%. This is according to data from the Federation of Automobile Dealership Associations (FADA).

Two-wheelers, however, did well growing 15.8% YoY, achieving a record-high November registrations that even surpassed November levels. FADA president CS Vigneshwar said, “Whilst Bharat is great and we're quite happy for it, we've also seen that urban India loses a little bit of steam.” 

It isn’t all bad news though. Inventory levels are finally falling, to around 60-65 days after crossing 80-85 days in earlier months. The industry had expected more from the festive season. In the last one year, while entry-level cars have not done well in sales, SUVs have been a category that has done well. 

Vigneshwar said, “I think manufacturers are taking cognisance of the situation, but still we had about 65 days worth of stock, which is crazy. Because for us, in the industry, we think 21-day stock would be the perfect stocking levels given the kind of inventory we have, and the kind of margins we have.”

To bring down inventory levels further, automakers have doled out massive discounts. But this may not last long. 

CO:RELATION

Angel One Up

The spread of the equity cult is unstoppable. More and more people are keen to invest in the stock market. According to the latest business update published by Angel One, a new-age stockbroker, the client base jumped 56% in November 2024 over last year. Mutual fund systematic investment plans registered jumped 130% during the same period. Angel's overall average daily turnover in the cash market fell marginally from October 2024 but grew 42% over last November.

The latest National Stock Exchange data shows the number of individual investor participation is already higher at 3.13 crore in 2024-25 as of October 2024 than the financial year 2023-24 (3 crore people). That is the number of people who traded at least once during the financial year. Unique investor accounts have crossed ten crore, but not everyone trades. The consistent surge in stock market participation enthuses investors. Angel One's share price continues to improve even in a flat-to-adverse market.

CORE NUMBER

$1 million

This is the amount donated by Meta Platforms Inc, owner of Facebook, Instagram, and WhatsApp, to US President-elect Donald Trump's inaugural fund. Bloomberg reported that the donation aims to build a "positive relationship" with the new administration, marking a departure from Meta's approach during Joe Biden or Trump's terms. It follows a 2023 reinstatement of Trump’s accounts, which were previously banned by Meta over concerns about inciting violence after the 2020 election. Despite this, Trump has criticised Meta, calling it the "enemy of the people" and accusing Mark Zuckerberg of election interference. With this donation, Meta seems to be perhaps hoping to reset ties and soften the strained relationship with Trump.

FROM THE PERIPHERY

—🧑‍⚖️ India's market regulator, the Securities and Exchange Board of India (SEBI), has issued an administrative warning letter to HDFC Bank regarding non-compliance with certain regulations. The warning pertains to provisions of the SEBI (Merchant Bankers) Regulations, 1992, SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, and SEBI (Prohibition of Insider Trading) Regulations, 2015.  HDFC Bank disclosed this information in a regulatory filing on Thursday, but the filing did not provide details on the specific nature of the non-compliance. However, the bank said that there is "no impact" on its operations or financials due to this warning.

—🚂 Minister of Railways Ashwini Vaishnaw informed Parliament on Wednesday that Indian Railways is developing a “super app” to integrate unreserved ticket booking, complaint lodging, train tracking, and other passenger services. While the app aims to simplify train bookings and other allied services, the minister did not specify a timeline for its launch. Earlier reports suggested it would be rolled out within 100 days of the government’s swearing-in, a deadline that lapsed in mid-September. The absence of a clear roadmap for the promised super app raises concerns about potential delays, especially in light of Indian Railways' earlier commitment to modernize its systems with an investment of Rs 10-12 lakh crore over the next five years.

—📈 India's retail inflation dipped to 5.48% in November, down from a 14-month high of 6.21% in October. However, this still exceeds the Reserve Bank of India's (RBI) target range of 2-6%, with a medium-term goal of 4%. Notably, India's retail inflation peaked at 7.79% in April 2022.  Food inflation, a key driver of overall inflation, remains elevated at 9.04% in November, down from 10.87% in October. This persistent rise in food prices is primarily due to high prices of vegetables, fruits, oils, and fats, impacting household budgets and overall economic stability. The data also reveals a disparity between rural and urban inflation, with rural areas experiencing a higher inflation rate of 5.95% compared to 4.83% in urban areas.

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