Business Today

hope and despair

Worrisome Dip BCI Falls to Record Low Level in October-December Quarter Macro Update Gap between exports and imports shrinks, inflation another bright spot First things first! Business Confidence Index (BCI) has changed. For over nine years since BCI started, the survey has set the benchmark for gauging the mood of corporate India. But to improve upon the survey, we have tweaked the methodology in the latest survey. The good news is that in a sea of similar confidence surveys (most of which were commissioned after Business Today’s BCI), the new methodology has raised the game by measuring the sentiments with sheer precision. The bad news is that corporate India seems to remain largely despondent about their business prospects and economy per se. On a scale of 100, BCI fell sharply to 43.8, its lowest point…

the growth recipe

FINANCE MINISTER NIRMALA SITHARAMAN will present Budget 2021 in the backdrop of an exceptionally chaotic 2020. In Q1 of FY21, India’s lockdown-struck gross domestic product (GDP) contracted an unprecedented 23.9 per cent, the worst among major economies. When the economy opened up, pent-up demand pushed up consumption, but GDP still shrank 7.5 per cent in Q2. And even though the RBI predicts that the economic shrinkage is over and GDP will grow 0.1 per cent and 0.7 per cent in third and fourth quarters, respectively, FY21 is destined to go down in history as India’s fifth recession. It is in this backdrop of extreme stress that Sitharaman sought growth inducing ideas with the promise to deliver “a Budget like never before”. Under the circumstances, that’s a herculean task. After all, the…

warning signals

Very often, headline numbers do not divulge too many details. To let the numbers do the talking, it is important to dive deeper. Also, it is difficult to accurately estimate any measure without studying its long-term trend and comparing it with other relevant indicators. Business Today looks at some such indicators such as price-to-earnings (P/E) ratio, market cap-to-GDP ratio and corporate fundraising to gauge market sentiment and portray the state of the economy. Fundamental statistics such as P/E ratio are popularly studied in two forms, trailing and forward, to determine the valuation of a stock or an index. Trailing P/E is calculated by dividing the current market value by earnings per share over the previous 12 months. Forward P/E looks at a company’s likely earnings per share for the next 12…

bulls to rule for now

A YEAR THAT STARTED with dashed hopes is ending with building expectations. The year 2020 was spoiled by the worst pandemic in a century and huge economic losses. Revival of equity markets in the second half was a pleasant surprise. The year 2021 looks promising. The bulls are raring to go, reflecting expectations about Covid-19 vaccine launch, promising corporate earnings, accommodative monetary policy, flush of liquidity and 15 per cent Nifty returns seen in CY20. Investors are all strapped and set to ride the bulls, although with some caution. “2021 will be a year of recovery. We have already ridden the roller coaster. With government increasing spending and earnings of companies improving, we have added new clients. It’s time to get returns in the first half of this year than the…

the fab challenge

INDIA’S LARGEST AUTOMOTIVE component maker Bosch faced an unforeseen situation in early December — shortage of semiconductor components. The reason was surge in demand for consumer electronics globally due to work from home and rise in adoption of 5G in household appliances. This could not have come at a more inappropriate time. Demand for automobiles was just beginning to rebound after a torrid first half of the year when production was disrupted due to lockdown in April-May. Another disruption can impair the recovery, which is what Bosch warned in a letter to market regulator Sebi. “Imports of Bosch Ltd have been impacted with severe shortage of imported microprocessors (semiconductors), leading to reduced ability to deliver to the automotive market demand in India,” it said. Disruption in supply of even a single…

why it is tough to build fab units

Capital intensive. It takes over $ 3 billion to set up a FAB unit. Then there is a high recurring cost for upgrades. Few companies in India have the required balance sheet strength or risk appetite Policy uncertainty. The industry needs capital as well as interest subsidy on investment, tax holiday and sovereign guarantee on demand aggregation Ecosystem. Chip manufacturing cannot take off unless the supplier industry is in place. That requires top-notch infrastructure, including uninterrupted power and abundant pure water Exports. India has to be part of multi lateral trade agreements to ensure it becomes competitive for export of chips. For investors, domestic demand is not enough…