The Signal: The Week Highlights

1. A US Company (Apple) And An Indian Leader (VP) – The Pattern Prints Itself Again!

Apple: In 2 years, Apple went from being the 1st $ Trillion company to being the most valued company at $2 Tn! The 50%+ surge in apple stocks has them valued at 2 Facebooks, 7 Netflixes or 42 Twitter’s! From being nearly bankrupt in 1997, to equaling Indonesia’s GDP, Apple has been it’s own doctor in troubled times!
Kamala Harris: Indians were always the helm of US tech & finance companies, in Microsoft, Google and Mastercard! Now, politics is added to the list as Kamala Harris could be the next VP of the strongest country in the world!

In times, where everything looks bleak, the leaders of tomorrow, in institution (Apple) and individual (Harris) are breaking barriers! As 20+ years’ worth of yesterday’s effort takes epicenter, we await excitedly to see what tomorrow’s 20 years has in store for us!

2. Here’s a 2017 Recap in 2020! Banks Recap Program Revives

Moody’s Investors Service has estimated that PSBs will need ₹1.9 lakh crore to ₹2.1 lakh crore ($25 billion-$28 billion) in external capital over next 2 years under to restore loss absorbing buffers. As NPA and credit costs increase, the profitability wound is sure to rupture, adding stress to current conservative credit climate.

All, but one voice, cheered when the moratorium was announced, and that was the banks. Knowing of the impending doom, in economic contractions, and bending will to satiate central govt. policies, those who lend money are themselves in dire need of it. 3 years later, and banks find themselves 4 years behind! But as is always, Banks will navigate through this crisis too, maybe limping more than ever before.

3. The Crude Oil Import Crash

India’s crude oil imports fell in July to their lowest since March 2010 as fuel demand slowed, at -36.4%! Marking a fourth straight monthly decline, fuel demand in the world’s third-biggest oil importer and consumer also fell, posting a fifth consecutive year-on-year drop.

Covid has not spared India’s most beloved import item in crude! Even after honing world’s largest refinery complex, and being 3rd biggest Asian economy, the cry for crude turned dry. Well, in hindsight and after, this means our already strong macros just got stronger. FYI, our current reserve level can fund a year’s worth of imports!

4. In Giving / Receiving, Covid 19 Has Trillions Valued As Pennies

In Giving: Banks and non-bank lenders lent only Rs.1/Rs.3 Tn loan under to MSMEs in the last 3 months, under the credit-guarantees offered by the Govt. Loan bodies are being pushed to lend aggressively in order for sanctioned loans to realize any material effects in the medium-to-long term.
In Receiving: The contraction in housing credit growth to 5-8% in FY21, has significantly pushed HFCs to garner ₹3.8-4.5 tn to meet refinancing requirements. The single digit growth is starkly underwhelmed w.r.t last 3 14% CAGR figure. 

As institutions grapple with the after-effect of Covid 19, those who lend find themselves in similar waters with those they lend to! Even post policy support from the top, money flow is working like a malfunctioned pipe. However, as we continue developing into the New Normal, the temporary stop-gates will be weeded out, allowing us to bid adieu to current conservative climate.