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India's manufacturing activity improved in August, although S&P Global's Purchasing Managers' Index (PMI) edged down to 56.2 from eight-month high of 56.4 recorded in July.

A reading above 50 indicates expansion in activity, while a sub-50 print is a sign of contraction.

This is the 14th consecutive 50-plus print for the manufacturing PMI.

Firms were at their most optimistic for six years," S&P Global said.

India’s economy probably grew at the fastest rate in a year last quarter driven by healthy consumption, but the pace of expansion is seen slowing as policymakers prioritize rising prices over growth.

Gross domestic product is estimated to rise 15.4% in the three months to June from a year ago, according to a Bloomberg survey of economists. That’s the fastest reading since the April-June quarter of 2021 and compares with a 4.09% expansion in the previous three months.

The Statistics Ministry is due to release the data for the first quarter of the fiscal year that started April 1 at 5:30 p.m. India time on Wednesday. Stock and bond markets will be shut on the day for a local holiday.

Resumption of activity in India’s dominant services sector, following the lifting of pandemic curbs, and a record jump in exports added to the momentum. The pace will likely moderate in coming quarters as the central bank raised rates by 140 basis points  this year to bring price gains under its 6% target ceiling.

The resilient growth backdrop means the RBI will retain its focus on containing inflation,” said Rahul Bajoria, an economist with Barclays Bank Plc. “That makes its policy choices relatively clear, in the short term,” he said, projecting another 50 basis points of rate hikes over two meetings in September and December.

The International Monetary Fund sees Asia’s third-largest economy sustaining its world-beating growth tag as the lender estimates a growth of 7.4% this year and 6.1% thereafter. A fast pace of expansion is crucial for India to attract investors and create jobs for its growing population.

Risk Factors

Besides rate hikes, a global slowdown will also weigh on the Indian economy. The US Federal Reserve’s resolve to keep raising rates until inflation comes under control may hurt Indian exports and thus drive domestic output lower.

The Indian rupee Tuesday dropped to a fresh record low and key stock gauges declined amid a global surge in risk-off sentiment after central bankers delivered a hawkish message at Jackson Hole.

Challenges also remain on the domestic front from rising prices of key staples such as rice and wheat amid factors such as climate change. If not contained, this could again fuel food inflation, which comprises about half of India’s consumer price index basket.

Exogenous forces will act as counterweights, including impact of the heatwave on farm output followed by uneven start to the monsoon, sharp rise in commodity prices impinging on corporate margins and an uncertain global environment,” said Radhika Rao, an economist with DBS Bank Ltd.

For now, indicators are giving mixed signals on activity going forward. While global demand is softening, government spending and a possible pick up in private investment is stoking hopes of a revival.

Shares of information technology (IT) companies fell up to 6 per cent on the National Stock Exchange (NSE) in Monday's intra-day trade after the US Federal Reserve Chairman Jerome Powell said that higher inflation is likely to inflict pain across households and businesses.

At 09:23 am, the Nifty IT index was the top loser among sectoral indices, and was down 4.5 per cent, as compared to 2 per cent decline in Nifty 50. Meanwhile, in the past eight days, the index has slipped 10 per cent, as compared to 4 per cent decline in the Nifty 50 index.

Shares of Tech Mahindra, Infosys, Tata Consultancy Services (TCS), Mindtree, Larsen & Toubro Infotech, Coforge, HCL Technologies, Wipro and L&T Technology Services fell up to 6 per cent intoday's intra-day trade.

The April-June quarter (Q1FY23) saw execution pick up for IT companies as it is a first full quarter of execution (barring company specific seasonality) after full/partial impact of furlough in Q3 and Q4. Operating margins, however, were impacted due to wage hikes rolled out in the quarter for few companies, while for others, supply side challenges, increase in sub-contractor expenses, travel & visa related expenses acted as major headwinds.

Despite minor pain in select verticals of IT companies, analysts at ICICI Securities remain optimistic of no downward revision in revenue growth guidance for FY23.

"The demand environment continues to be strong, which reflects in healthy order book growth. However, companies did mention about weakness in a few pockets as far as tech spending is concerned due to some impact of macro headwinds. The weakness largely pertains to BFSI and retail verticals. It is also heartening to see no downward revision in revenue growth guidance in FY23 by any of the companies," the brokerage firm said.

On the contrary, a media report by the Economic Times stated that the revenue of the IT service providers may be impacted by up to 33 per cent due to a fall in the growth rate of three platforms - Amazon Web Services, Microsoft Azure and Google Cloud. In the first half of 2022, the three platforms have reported a 7 per cent fall in incremental revenues

The Congress on Monday slammed Ghulam Nabi Azad for his latest attack on its top leadership, saying he has been tasked to "slander" the party and by doing so he diminishes himself further.

Launching a fresh attack on the Congress three days after he quit the party, Azad said the party needs medicines for treating it which are being provided by compounders instead of doctors. He also accused the Congress leadership of not having time for setting the organisation right.

Speaking to reporters at his residence here, Azad who quit the party on Friday last, alleged that the leaders being projected in the party in states are making party members leave instead of uniting them.

Hitting back at Azad, Congress general secretary in-charge communications Jairam Ramesh said, "After such a long career, courtesy entirely the party he's been tasked to slander, by giving interviews indiscriminately, Mr. Azad diminishes himself further."

"What's he afraid of that he's justifying his treachery every minute? He can be easily exposed but why stoop to his level?" he said on Twitter. Azad on Friday had ended his five-decade association with the party, terming it "comprehensively destroyed" and lashing out at Rahul Gandhi for "demolishing" its entire consultative mechanism.

The rupee weakened to a new low against the US dollar on Monday as the greenback surged globally following Federal Reserve Chair Jerome Powell’s firm commitment to tackling high inflation even at the cost of economic growth.

The rupee weakened to a low of 80.14 per US dollar in the first few minutes of trade on Monday as the US dollar index strengthened well past the 109 mark.

The previous lifetime low for the rupee was 80.06 per dollar on July 19. The domestic currency, which had settled at 79.87 per dollar on Friday, regained some ground due to the Reserve Bank of India’s market interventions through dollar sales, dealers said. The local unit was at 80.02 per dollar at 9:30 am IST.

At the Jackson Hole Economic Symposium on Friday, Powell said that “restoring price stability will likely require maintaining a restrictive policy stance for some time. The historical record cautions strongly against prematurely loosening policy.”

The US dollar index, which measures the currency against six major rival currencies, was last at 109.33 as against 108.20 at the end of Indian market hours on Friday. The index has strengthened more than 14 per cent so far in 2022.

A stronger US dollar exerts pressure on emerging market currencies such as the rupee and weakens the appetite of overseas investors for Indian assets.

“The rupee has breached the recent lifetime low in line with the fall in other Asian currencies and is expected to now test 80.60 to 80.75 levels in the next one month,” Ritesh Bhansali, vice-president at Mecklai Financial Services, said.

The rupee has weakened a little more than 7 per cent in 2022.

Dealers said that the RBI had intervened in the market around the 80.05-80.10 per dollar mark and would prevent excessive volatility in the exchange rate.

“Now, it would be all about RBI’s tolerance or intolerance of these record levels. If they think to curb the same, then we could see easing up to 79.70-80 levels or else pressure will take the pair towards 80.30 levels,” CR Forex Advisors MD Amit Pabari said.

“For confirmation of the technical breakout, one should wait for initial hours and check whether the pair is holding 80.05 or not,” he said. He sees the rupee in a band of 79.70-80.30 per dollar for the day.

Petrol and diesel prices held steady on August 29, the latest price notification issued by fuel retailers showed. The prices have stayed unchanged for more than a month.

Petrol in Mumbai is being sold for Rs 106.31 per litre and diesel for Rs 94.27. Petrol and diesel in Delhi cost Rs 96.72 and Rs 89.62 a litre respectively. Petrol and diesel are priced at Rs 102.63 and Rs 94.24 in Chennai and at Rs 106.03 and Rs 92.76 in Kolkata respectively.

Oil marketing companies are reportedly incurring a loss of Rs 13.08 a litre on petrol and Rs 24.09 on diesel. India meets 80 percent of its fuel needs through imports.

The Meghalaya government on August 25 hiked the prices of petrol and diesel.

Oil mixed as OPEC supply cut prospect offsets demand fears

Oil prices were mixed on Monday as investors balanced expectations the OPEC will cut output to support prices against concerns sparked by Federal Reserve Chairman Jerome Powell saying the United States will face slow growth "for some time".

U.S. West Texas Intermediate (WTI) crude futures rose 2 cents to $93.08 a barrel at 0003 GMT, adding to Friday's gain.

Brent crude futures were down 27 cents, or 0.3%, at $100.72 a barrel, trimming gains from the previous session.

In a speech on Friday, Powell said curbing inflation "is likely to require a sustained period of below-trend growth" and would "bring some pain to households and businesses", which rattled equity markets while boosting the dollar.

The dollar index continued to climb on Monday to 109.16, up 0.3% in early trade. A stronger dollar weighs on oil as it makes crude more costly for buyers holding other currencies.

Mukesh Ambani’s once-a-year speech to investors has over time evolved into an eagerly-awaited pronouncement on his $222 billion empire akin to Warren Buffett’s annual letters to Berkshire Hathaway shareholders.

This year, Reliance Industries Ltd.’s investors will be looking for insight on Monday around the company’s 5G rollout, how he plans to unlock the value of his telecom and retail units through separate listings, and when and how his children will take over the reins.

Anticipation is high as the 65-year-old billionaire, who built Reliance into India’s largest company by market value and a powerhouse conglomerate, has used the speech for a series of big announcements. These include the launch of his disruptive telecom service in 2016, Saudi Arabian Oil Co.’s proposed investment in Reliance’s energy business in 2019 and a strategic shift to green energy last year.

This year’s shareholder meeting comes as the refining-to-retail group faces the twin challenges of a global recession and the blistering rise of Gautam Adani, who eclipsed Ambani as Asia’s richest man earlier this year and is emerging as an alternative power center on the corporate landscape.

Reliance investors will have in mind how Adani’s conglomerate split its business into different listings years ago, unlocking value, and will expect “clarity and specific time lines for the next big things” from Ambani’s more-centralized holdings, Kranthi Bathini, equity strategist at WealthMills Securities Pvt Ltd. in Mumbai. Adani’s wealth has surged $58 billion this year riding the stocks rally compared to $3.3 billion rise in Ambani’s.

Here’s where investors are expecting news:

Succession

The patriarch signaled that succession planning atop Reliance will be expedited in last year’s shareholder meet and reiterated it explicitly in December. His three children -- daughter Isha and sons Akash and Anant -- are already holding various directorships in the group’s unlisted firms and are becoming more visible in their leadership.

Ambani stepped down as the chairman of Reliance Jio Infocomm Ltd. in June, making way for his elder son, Akash, who took over the helm at India’s largest wireless operator. As rumors keep swirling around Ambani’s health, investors will look for more concrete steps to be taken in leadership transition, with Isha, Anant and possibly his wife, Nita, taking on more responsibility.

5G Rollout

Reliance Jio Infocomm bought airwaves worth over $11 billion at a local spectrum auction as it sought to cement its edge over the smaller rivals -- Bharti Airtel Ltd. and Vodafone Idea Ltd. -- in the rollout of speedier 5G networks. That will be key to boosting revenues and luring high-value users.

Investors will be looking for proof of the pudding here. The technology is yet to return profits for Asian wireless operations despite investing billions of dollars, even for those in China which have been offering 5G service since 2019. Details like a nationwide rollout date, tariff plans for 5G services as well as where demand lies for the service will be crucial for Reliance Jio to reveal.

The Ambani children may demonstrate some of the key features of the 5G services at the meeting, just as they’ve showcased new telecoms products in the past.

Spinoffs, IPOs

The street has been waiting to get better clarity around the initial public offerings of Reliance Jio and Reliance Retail Ltd. especially after the two consumer businesses raked in $27 billion from marquee global investors in 2020.

Both companies are market leaders in their respective sector with a formidable lead over their rivals. Their listings -- or even spinoffs -- could propel Ambani’s net worth. “The timelines are crucial to get the mojo back for Reliance stock,” Bathini said. Reliance has gained just about 11% this year compared to the more than 40% rise by top performers in S&P BSE Sensex.

New Energy, Old Energy

The $76 billion pivot toward green energy is the biggest transformation that Ambani is helming currently. It’s also a difficult transition given the conglomerate’s roots in petrochemicals and crude oil refining and the continued out-sized contribution of the fossil fuel-led businesses in Reliance’s yearly revenue.

Investors will look for updates around last year’s announced plans to build four giga-factories to make solar modules, hydrogen electrolyzers, fuel cells and storage batteries. Ambani has also been on a tear acquiring small green energy firms globally for expertise and technology. There are also plans to become among the world’s top blue hydrogen makers.

Going Global

Ambani emphasized his vision for the “internationalization of Reliance” in his speech last year.

In the past year, Reliance has made overtures toward big overseas deals like a potential acquisition of the British drugstore chain Boots, which was never completed. Investors will want to see if the appetite for global acquisitions still exists amid a slowing worldwide economy.

Then there’s always the possibility of a curveball at the meeting, said Bathini. “Never underestimate the power of senior Ambani” to surprise the market, he said.

Zomato has started piloting grocery delivery on its app through an integration with the quick commerce company Blinkit, which the Gurugram-based food aggregator acquired recently

The option to order groceries on the Zomato app appeared for customers in the Delhi-NCR region but not for those in Bengaluru or Mumbai on August 27. While the minimum order value on the Blinkit app was Rs 150, the amount was Rs 49 only on the Zomato app.

The grocery category on the Zomato app also showed items from Colgate-Palmolive under a "sponsored" tag, indicating ad monetisation on the platform like other e-commerce companies.

Zomato founder Deepinder Goyal had earlier said that ad sales revenue in quick commerce would be higher than food delivery, given the much larger digital ad spend budgets of the consumer packaged goods (CPG) brands.

Moneycontrol has sent queries to Zomato and Blinkit about the integration and the roadmap for the pilot and the article will be updated when their  responses come in.

Zomato on June 24 said its board had approved the acquisition of Blinkit for Rs 4,447 crore. According to the terms of the agreement, Blinkit shareholders would get a cumulative stake of 6.88 percent in Zomato and the company’s leadership team, including co-founder and CEO Albinder Dhindsa, would stay on.

But questions still remain about how Zomato, a company that registered losses of Rs 1,223 crore in FY22, plans to derive value from acquiring another loss-making delivery startup.

Moneycontrol has reported that Blinkit launched a printout service in Gurugram, charging Rs 9 a page for black and white printing and Rs 19 for coloured printouts.

“Quick commerce will help us increase the customer wallet share spent on our platform and also drive higher frequency and engagement from our customers,” Goyal had said while explaining the rationale behind the deal.

The company believes that quick commerce naturally extends across multiple categories including beauty & personal care, electronics, OTC pharma, stationery, other gift items, etc. Also, categories other than grocery help the quick commerce business make higher margins, and attain higher average order value.

“Total commerce market in India is $1.3 trillion and in the long term, we see quick commerce emerging as a significant channel of demand for customers at least in the top cities,” Goyal had said.

In early August, Zomato said Blinkit delivered an estimated 8.3 million orders in July. This was a 63 percent increase from the 5.1 million orders it delivered in January, which was the first month of its operation after the pivot. During this period, its revenue rose around 239 percent to Rs 75 crore in July.

Blinkit’s annual turnover in FY22 was Rs 263 crore, Rs 200 crore in FY21 and Rs 165 crore in FY20.