News Nook: Dec 18, 2024

 Indian Sector Specific News:

A) BFSI:

1) Larger Banks and NBFCs to Perform Well in 2025: HSBC

• HSBC Securities expects strong performance from larger banks like HDFC and ICICI due to their solid deposit base, while Axis, Kotak, and IndusInd may see improved deposit growth.
• Among NBFCs, diversified and well-rated companies like Bajaj Finance and Shriram Finance are likely to grow, with expected stock gains of 13-32% in 2025.
• Source: Economic Times

2) Loan Write-offs by Banks Hit 7-Year Low in 2024

• Indian banks wrote off ₹1.62 lakh crore in loans in 2024, the lowest since 2017, driven by better asset quality and cleanup post-RBI's 2015 Asset Quality Review (AQR). Public sector banks accounted for 73% of the total write-offs.
• Analysts expect loan write-offs to reduce further by 2025-26, potentially reaching pre-AQR levels, as banks maintain healthier balance sheets and improved non-performing asset (NPA) ratios.
• Source: Moneycontrol

3) SEBI Clarifies ODI Restrictions for FPIs

• SEBI stated that FPIs are not prohibited from issuing Overseas Derivative Instruments (ODIs) but are barred from using derivatives as the underlying. ODIs referencing cash market securities can still be issued.
• FPIs must issue ODIs only via dedicated FPI registrations under the same PAN, except for ODIs with government securities as the underlying.
• Source: Moneycontrol

4) SEBI Introduces Specialized Investment Funds (SIFs)

• SEBI launched SIFs, a new asset class between PMS and mutual funds, requiring a minimum investment of ₹10 lakh. Accredited investors are exempt from this limit.
• SIF fund managers must hold relevant NISM certifications and adhere to specific investment and fee regulations.
• Source: ETMarkets

B) Automobile:

1) Maruti Suzuki Hits Historic Production Milestone

• Maruti Suzuki produced 2 million passenger vehicles in 2024, becoming the first OEM in India and among Suzuki’s global facilities to achieve this feat.
• The milestone vehicle was an Ertiga, rolled out from the Manesar facility. Around 60% of production occurred in Haryana and 40% in Gujarat.
• Top models manufactured were Baleno, Fronx, Ertiga, WagonR, and Brezza. Maruti's facilities have a combined annual capacity of 2.35 million units.
• Source: India Today

2) Government Push for EV Production Incentives

• The Ministry of Heavy Industries is addressing challenges in electric vehicle (EV) adoption, including high costs, battery expenses, range anxiety, and charging infrastructure.
• Steps include offering production incentives and enhancing infrastructure to make EVs more accessible and affordable compared to internal combustion engine vehicles.
• Source: Republic World

C) Pharma:

1) India’s Pharmaceutical Growth and R&D Initiatives

• India’s pharma market for FY 2023-24 is valued at $50 billion, with strong domestic consumption and exports. The sector ranks third globally in volume.
• The government promotes R&D through seven National Institutes of Pharmaceutical Education & Research and a $5 billion scheme to foster innovation in pharmaceuticals and MedTech.
• Source: PIB Delhi

D) Agriculture:

1) Financial Pressure on Agricultural Households

• A report highlights that, while farmer incomes rose by 57.6%, expenses increased more sharply, leading to higher borrowing among rural families.
• The Standing Committee on Agriculture recommends renaming the Department of Agriculture to include farm laborers, emphasizing their critical role in agriculture.
• Source: Down to Earth

E) Energy:

1) Trump to Push for Domestic Oil and Gas Development

• President-elect Donald Trump plans to prioritize domestic energy production, issuing executive orders to expedite drilling permits and fracking to reduce living costs.
• He aims to revise policies like offshore leasing plans and federal land drilling rights, focusing on boosting energy development, particularly in oil-rich states like Alaska.
• Source: Business Standard

2) ONGC Green's IPO Not Planned for Now

• ONGC has no immediate plans to list its renewable energy subsidiary, ONGC Green Limited (OGL), on the stock exchange. 
• The company clarified that any such decision will be made after careful evaluation in the future.
• Source: Construction World

F) IT:

1) Growth in Digital Transformation Deals for Indian IT Firms

• The top four Indian IT companies (TCS, Infosys, HCLTech, Wipro) have signed 18 digital transformation deals in the last 7-8 months of FY25, signaling a recovery in demand.
• Revenue from digital transformation deals is expected to increase by at least 10 percentage points by FY25, as clients renew tech spending after a cautious period.
• Source: Moneycontrol

Indian Economy and Government Initiatives:

• Rahul Gandhi criticized the government's economic policies, accusing them of favoring select businesses over fair competition.
• He highlighted issues like a weak manufacturing sector, high trade deficits, rising inflation, and poor GDP growth.
• Gandhi raised concerns about the sustainability of economic plans that seem to benefit a few while leaving the majority struggling.

Bonus Briefs:

• Japan aims to achieve 40-50% of its power supply from renewable energy by 2040, with nuclear power contributing 20% and thermal power (including coal) decreasing to 30-40%. 
• The country also plans to secure long-term LNG contracts while addressing rising electricity demand and will submit its net-zero plan to the UN in February 2025.
• 2024 saw mixed challenges and opportunities in global financial markets, influenced by inflation and shifting monetary policies.
• The Chinese economy's performance significantly impacted the oil market, with OPEC+ delaying production increases.
• European stocks hit two-week lows amid stagnating crude prices and global economic uncertainties.