Reuters reporting latest inflation data from India this morning: (https://www.reuters.com/world/india/indias-retail-inflation-644-feb-eases-mm-2023-03-13/)

India's annual retail inflation eased to 6.44% in February, helped by a fall in the price of some food items, but remained above the central bank's target, reinforcing expectations for a further interest rate hike at its meeting next month.

The February reading (INCPIY=ECI) was higher than the 6.35% forecast by economists in a Reuters poll, and was above the upper band of the Reserve Bank of India's (RBI) 2%-6% target, data released by the National Statistics Office on Monday showed.

Annual retail inflation was 6.52% in January.

from The Economist this morning... India struggles to cool down inflation

The Reserve Bank of India is feeling the heat from high inflation. Even after a prolonged tightening cycle, prices rose by 6.5% year on year in January. That is higher than the central bank’s upper bound of 6%. But inflation has exceeded this bound for much of the past year. New data released on Monday is expected to show that the target was also breached in February, with forecasters predicting an inflation rate of 6.3%. Rising food prices, which account for more than half of India’s consumer-price index, are a big factor. Prices of cereals increased by 16% in January; milk and dairy costs by 9%. 

More inflationary pressure looms with summer arriving early. Temperatures across the country in February were the hottest in 146 years. Farmers are fretting that a heatwave and a poor monsoon might wilt their crops. And that will get central bankers sweating: poor crop yields will drive up food prices.

From Quartz today...

India's GDP growth outpaced China last quarter

The milestone comes despite high inflation and low consumer demand

India’s economy grew by 4.4% in last fiscal quarter, down from 6.3% the previous quarter. 

Economists had expected closer to 4.6%. But this still puts India’s average annual GDP growth for last year at about 7%, making it one of the world’s best-performing economies.

By comparison, the World Bank projects the global economy will grow just 1.7% this year—the third-weakest pace of global growth in almost three decades.

India’s economy has grown despite rising prices. The year-over-year retail inflation rate in January hit 6.52%. That’s well above the Reserve Bank of India’s stated goal of 6%. In response, the Indian central bank raised interest rates by a quarter of a percent last month, bringing it to 6.5%.

China posts lowest GDP growth in years

Meanwhile, Asia’s largest economy grew slower than India’s for the first time since 2016. China’s National Bureau of Statistics reported the country’s annual GDP to be ¥121.02 trillion ($17.94 trillion), a 3% increase from the previous year. China’s GDP exceeded ¥100 trillion for the first time in 2020.

This marks the weakest performance for China’s economy since 1976, excluding the fiscal year impacted by the onset of the Covid-19 pandemic. The slowdown was primarily blamed on the consequences of China’s zero-Covid strategy and reduced global manufacturing demand.

The country’s annual growth was well-below China’s official target of 5.5%, marking the worst discrepancy in projected growth in the history of modern China.

From The Economist this morning:

On Tuesday the Indian government releases its GDP data for the last quarter of 2022. Forecasts suggest that growth slipped to 4.6% year on year, from 6.3% in the previous quarter. Inflation and the central bank’s interest-rate increases have hurt consumption, while the global slowdown has hit exports.

But India’s economy remains a “relative bright spot” amid the worldwide economic gloom, according to the IMF. It expects India to be the fastest-growing big economy in the world in 2023, accounting for 15% of global growth. The ruling Bharatiya Janata Party has announced investments in infrastructure that it believes will propel the country into “Amrit Kaal”, an auspicious period that heralds prosperity. Such bullishness, though, is not shared by ordinary Indians. According to a survey by the Centre for Monitoring Indian Economy, a research outfit, less than a fifth of households believe their incomes will be higher a year from today. 

You may have seen Hindenburg Research take a large short-sell position in Adani as it dumped a huge bucket of sick on the organisation the last couple of days in this report --> https://hindenburgresearch.com/adani/ . The report alleges significant fraud and share price manipulation across the many Adani controlled organisations. "Today we reveal the findings of our 2-year investigation, presenting evidence that the INR 17.8 trillion (U.S. $218 billion) Indian conglomerate Adani Group has engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades."

I haven't read all of the very detailed report but have skimmed through it. Like all of these things, interesting read. Adani denies the allegations and claims that the report is a "malicious combination of selective misinformation and stale, baseless and discredited allegations" and an attempt to undermine an upcoming Adani FPO --> https://www.outlookindia.com/business/hindenburg-report-is-malicious-attempt-to-damage-adani-enterprises-fpo-says-adani-group-news-256635

The one significant Adani company in the IIND portfolio is Adani Power at about 2% of the portfolio.

Of more general concern may be the sense that one gains from the report of the potential for high-level corruption in India and a regulatory framework that might lack teeth.

Disc: I hold IIND both here and in my SMSF and remain strongly bullish on the India opportunity over the next 10 years

In 2023 (on or around April 14th, guesses the UN) India will seize China’s crown as the world’s most populous country. The crown itself has little value, but it is a signal of things that matter. China’s population is poised for a steep decline; India’s will continue to grow for decades. 

The growth in India’s working-age population should help its economy narrow the gap with China’s, which is six times larger. But to get the full benefit of its demographic advantage India will have to boost the productivity of its youthful people. Less than half of adult Indians are in the workforce, compared with two-thirds in China. Chinese aged 25 and older have on average 1.5 years more schooling than Indians of the same age. China is not about to fade into insignificance. But it will have to contend with India as an emerging superpower on its doorstep.

Source: The Economist

India’s central bank raised its key interest rate by 35 basis points to 6.25% in a further bid to restrain inflation; it is the fifth such hike since May. Retail inflation is currently running at almost 7%, well above the bank’s target. The bank also lowered the country’s growth forecast for this financial year from 7% to 6.8%.

A quick look at rates and inflation (and general bureaucratic malaise) in India from The Economist this morning. I'm long-term bullish on India and hold IIND here and SMSF. It will be a bumpy ride at times but my view is India remains a true long term growth global growth opportunity,

For more than two weeks Indians have been waking to announcements of fuel-price rises. As state-owned oil companies belatedly adjust for the soaring cost of oil, inflation, already above the central bank’s ceiling of 6%, will surge. But the bank is expected to hold its fire when it meets from Friday to Sunday. Indeed, it wants to stave off rate rises until August. That would mean two years without an increase. Few central banks have been so accommodating. 

India’s central bankers insist that unchanged rates reflect their commitment to growth, which slumped during the covid-19 pandemic and now faces new challenges, such as global supply-chain disruptions. But low rates also reduce the cost of public borrowing, which helps the government. An investigation by the Reporters’ Collective, a group of journalists, published on Monday highlighted the extent of ministerial meddling with the central bank’s supposedly independent decision-making. That may explain its unexpectedly dovish stance.

India finally looks to be getting serious about digitisation in the public sector which will have a significant impact on the private sector. (for The Economist today... highlighting mine)

Paytm, India’s leading digital-wallet platform, made a disappointing debut on the stockmarket last year. Investors felt the company was overvalued; its shares fell sharply thereafter. But help is at hand. The share price rose by 6% on Tuesday after the finance minister, Nirmala Sitharaman, declared that the Reserve Bank of India will soon introduce a central bank digital currency. This bodes well for Paytm, which reports quarterly results on Friday. Goldman Sachs, an investment bank, expects the company to post a 70% rise in revenues in the fourth quarter compared with a year ago.

Under the government’s scheme, public-sector banks will set up 75 digital banking units in the boondocks to speed up the adoption of digital payments. Demand is clearly there: last month the volume of transactions on Unified Payments Interface, an interbank money-transfer system, was 4.6bn, 3.7 times more than in March 2020, when the pandemic struck. For Paytm, which benefits from the speedy adoption of UPI, it’s a welcome break in an otherwise bumpy ride.

from The Economist:

Inflation adds to India’s Omicron woes

Not just Omicron cases are surging in India. On Wednesday the government released data showing that retail inflation in December climbed to a five-month high of 5.6%, up from 4.9% in November (but slightly below analysts’ forecast of 5.8%). For more than two years now, thanks to rising fuel and food costs, inflation has hovered above the central bank’s target of 4%. So far the Reserve Bank of India has not flinched. It has left interest rates untouched through nine consecutive meetings, insisting that the priority is economic recovery. 

But now with inflation approaching its 6% upper limit, that stance will be tested. The government is concerned. It has slashed taxes on petrol to rein in fuel prices. Last month it banned trading in agricultural futures. The policy is mostly a cosmetic move but, with five major state elections looming, appearances may matter.

DISC: I hold IIND in both my SM and SMSF and am long-term bullish on India but am expecting significant volatility the next while

This today from Quartz --> https://qz.com/india/2092970/reliance-aramco-deal-paytm-trigger-indias-stock-market-plunge/?utm_source=email&utm_medium=daily-brief&utm_content=9f431f24-4bd9-11ec-8a5c-6acca095b46d

Published November 23, 2021

India’s stocks are sliding down after two major business disappointments.

On Nov. 18, India’s biggest IPO tanked. The overhyped $2.5 billionPaytm stock market debut closed 27% lower on listing day. It plunged another 13% today (Nov. 22). Paytm’s “subdued listing” and subsequent “weak trading” are a “big sentimental setback,” saysVinod Nair, head of research at Geojit Financial Services. “It will impact the inflow of money from the retail segment, which has been a key player during the year.”

A day after the Paytm listing, Reliance Industries’ 2019 deal with Saudi Arabia’s state-controlled energy giant Aramco was called off. As India’s largest company eyes a greener future, Aramco’s plan to buy a 20% stake worth $15 billion is off the table. Shares of the Mukesh Ambani-led company fell more than 4% on the news.

The two events together created a cocktail of chaos for domestic public markets. “Re-evaluation of the index heavyweight RIL’s deal with Saudi Aramco and continued selling pressure on shares of India’s largest IPO Paytm are bearing heavy on indices,” Nirav Karkera, head of research at investment advisory Fisdom, told daily newspaper Mint.

The benchmark S&P BSE Sensex, which includes Reliance among its 30 stocks, plunged more than 1,000 points, or 1.96%, to 58,465.89.

BSE INDIA/S&P BSE SENSEX 30

S&P BSE Sensex 30 on Nov. 22, 2021.

The broader NSE Nifty index, which comprises 50 of India’s largest companies, also fell 1.96%, ending 348 points lower at 17,416.55.

Of course, Reliance and Paytm alone haven’t derailed the country’s public markets. There are slew of other local and international factors eroding investor sentiment, including:

• A global chip shortage that is weighing heavy on auto stocks; India’s biggest auto manufacturer Maruti Suzuki’s stock slid more than 3% after it ruled out entering the diesel segment again.
• Nifty’s public sector banks, realty, mining, and FMCG indices falling; index heavyweights like Kotak Bank and Bajaj Finance are trending down.
• The impact of prime minister Narendra Modi’s decision to repeal farm laws on agriculture and logistics players.
• The return of covid-19 restrictions in part of Europe.
• The risk of rising inflation around the world.

Meanwhile, the brightest spot in an otherwise troubled market is the telecom sector. Bharti Airtel and its rival Vodafone Idea both rallied 6% after Airtel raised tariffs.

Disc: I hold IIND in my SMSF and here.  I'm long-term bullish on India - starting to privatise some terribly run state orgs, gradually removing bureaucracy and there's still a long way to go with  lifting people out of poverty...

From today's Economist... 

India’s economy grew by 20.1% year-on-year in the quarter to June, as business bounced back strongly from a 24.4% decline in the same period last year. Manufacturing output was stronger than expected despite the country’s devastating second wave of covid-19. The IMF predicts that India will be the fastest growing big economy in the world this year.