The Indian equity markets continued their fall with the 30-scrip key index, the BSE Sensex, closing the week at 27,011.31 points – its lowest level in almost four months. This is a drop of 426.63 points or 1.55 percent over the previous weekly closing at 27,437.94 points and about 3.4 percent through the month of April. The 50-scrip CNX Nifty did not register a better performance either as it closed the week at 8,181.50 points, down by 123.75 points or 1.49 percent from last week’s close at 8,305.25 points.
The Nifty lost about 3.7 percent in April. This has been the first successive monthly decline of the key indices since August 2013. Blue chip companies such as Wipro, Infosys, Sun Pharma, HDFC, and Tata Steel dragged the market. On a year-to-date basis, the Sensex has lost all its gains of the past year and is down two percent.
As per provisional data provided by the market authorities, on the last day of weekly trading, FPIs (Foreign Portfolio Investment) sold shares amounting to about INR 718.31 crore. Experts believe that the volatility of the market is likely to continue till Diwali. Both the BSE and the NSE remained closed on 1 May on account of the Maharashtra Day. The Finance Minister (FM) said this week that the domestic currency remained stable over the past few months, given the high forex reserves held by the country.
Bills on Black Money, GST to Hit Parliament Floor
The Finance Minister had mentioned a number of additional checks and regulations necessary to curb black money during his 2015 budget speech. The Black money bill will be tabled in the parliament next week for approval by the legislature. “Next week, I intend to take up before Parliament the law with regard to taxation of undisclosed assets and incomes abroad”, said the FM. The government intends to curb illegal money and assets abroad while also making significant changes to the Prevention of Money Laundering Act (PMLA). The intended changes will prescribe stiff punishments for offenders and black money hoarders.
Apart from the Black Money Bill, the government also plans to take up the Goods and Services Tax (GST) Constitutional Amendment Bill for discussion at the parliament next week. The GST reforms are touted to be the biggest tax reform since independence. The intended reform of the Goods and Services Tax has been the Modi government’s greatest challenge since it came to power. Negotiations with the states are on and this looks like a culmination of several months of labour.
India’s Forex Reserves at Record High
According to data released by the RBI this week, India’s foreign exchange reserves rose by about USD 1.4 billion to reach an all-time high of USD 344.6 billion in the week that ended on 24 April. Forex reserves have climbed by about USD 34.69 billion since 2014. In an effort to rescue the domestic currency from its volatility, India’s central bank has been aggressively buying dollars over the past year. FIIs have also invested considerably in Indian shares and bonds. Between January and April 2015 FIIs have bought Indian securities worth USD 14.6 billion.
Automobile Sector Registers Significant Sales Growth
The automobile sector of India started FY 2015-16 on a cheerful note, news reports say. Maruti Suzuki, Honda, and Hyundai have reported a significant boost in sales in April. Maruti Suzuki India reported an increase in growth of about 27.3 percent over April 2014 (1,00,709 units in April 2015 against 79,119 units in April 2014). Honda Cars India also saw a significant jump in sales numbers registering a 14 percent growth in April 2015 over the same month in 2014. Their sales grew from 11,040 units (Apr 2014) to 12,636 units (Apr 2015). Similarly, Hyundai Motor India reported a 9.5 percent increase in sales (38,601 units sold) over the same month in 2014 (35,248 units sold).
Other car makers such as Mahindra & Mahindra and General Motors, however, were far from ecstatic. The former registered a mere 1 percent increase in sales over the same month in 2014, while General Motors India’s sales numbers declined by about 31.87 percent, selling only 3,612 units in April 2015. Market experts believe that the wedding season, new product launches, active marketing campaigns, and a general increase in urban demand have contributed significantly towards this car sales rush.
Ratan Tata Invests in Xiaomi
India is the second largest smartphone market in the world and is likely to have over 650 million smartphones by 2020. It is not surprising, then, that brands such as Xiaomi are focusing on the Indian market. Speaking at the Mi 4i launch event in New Delhi, the Xiaomi CEO Lei Jun revealed that Indian corporate honcho Ratan Tata has made an investment in the company. While the exact amount of the stake was not disclosed, it seems that Tata is likely to act both as an investor and an advisor to the Chinese phone maker.
Mi 4i is Xiaomi’s first phone to be launched outside China. The Mi 4i model smartphone supports six Indian languages and other India-centric features. Xiaomi is the third largest smartphone maker in the world and was valued at USD 45 billion after having raised USD 1.1 billion in a venture capital funding round in 2014. The phone manufacturer has plans of taking its sales figure from 61 million (2014) to 100 million (by end of 2015). The Indian market is likely to play a key role in the realisation of this dream.