China is  set to  release its final big  data dump for 2023, capping a difficult year after  emerging  from Covid Zero and  drawing  attention to  its ability to maintain growth  momentum this year. 

  China is  set to  release its final big  data dump for 2023, capping a difficult year after  emerging  from Covid Zero and  drawing  attention to  its ability to maintain growth  momentum this year. 

  Figures  for gross domestic product, industrial production and retail sales are  expected  to  improve year-on-year  in 2022,  thanks to  a  weak comparative  base  as  pandemic restrictions  hinder  economic activity.  According  to economists surveyed by Bloomberg,  GDP likely grew 5.2% for all of last year,  in line with the  government’s  target of  about  5%.  

 Beijing is  predicted  to  reset its  growth target at around 5%  this year, although  that  will  be much more ambitious  due to  the higher base.  According  to a Bloomberg  survey, without stronger stimulus measures, economists predict growth will slow to 4.5%.  

  Here’s  what  to expect when the statistics  office releases the  data on Wednesday: 

 Data Guide 

 The start of 2024  brings  negative news for the economy, as recent data  shows  continued declines in consumer prices,  stagnant  import  growth  and  slowing lending rates – all  of  which suggest Weak  domestic demand will again  be one of  the  country’s  economic  challenges.  in 2024. 

 In the final quarter of 2023,  consensus  forecasts  GDP growth to accelerate to 5.3%.  They said  Bloomberg  Economics’ current broadcast  model estimates the rate could be  slightly  higher at 5.4%, although the margin of error  the  day  before  the NBS  was released was about  0.4  points percent, they said.  

  However, compared  with the previous quarter,  China’s  growth  may  have actually slowed.  Outlook  2024  

 Real estate, which once accounted for a fifth of  China’s  economy along with related  sectors,  remains the biggest threat to growth  prospects  in 2024. 

  Wang Tao, head of  research  Asia Economics Director  at UBS Group AG, said  during  an  event: “If the real estate market cannot stabilize and its decline becomes more severe, then the real estate price correction could worsen, dealing another blow to household confidence.”  last week.  .  

 She said  it’s unclear  when  housing starts,  an indicator  of developer confidence, will  recover. He added that housing  supply will remain abundant as previously unfinished projects  have been  completed and  many property  owners may want to sell,  reducing  demand for new  housing among households. family.  

 Infrastructure spending,  supported  by the government, will  have  to  increase  to counter the  downturn in the  real estate  market. Economists at  Citigroup Inc.  Expect  infrastructure investment growth to  increase  to  about  8.5% this  year,  from an estimated 5.8% in 2023. 

  Consumption  is likely to recover  only  marginally due to  the lack of strong government incentives  such as  direct subsidies to households,  an unstable labor  market  and falling  real estate  prices. Deflationary pressures  are  likely  to continue  due to weak confidence, even if  pork and energy  prices are able to recover.  

 Exports could stabilize in 2024 after  recording  the first annual decline since  2016.  This will be supported by  a recovery in  global  semiconductor demand,  but trade tensions  are  likely  to increase  with major partners  for  products  such as  electric vehicles. 

  More  support  

  Macquarie Group  economists,  including Larry  Hu,  wrote in a note in early  January that policymakers must take “decisive” action to turn around the real estate sector.  One  option, they said,  would be to create a “lender/buyer of last resort” to bail out developers, similar to what the  United States  did during the  global financial crisis.  

 Yao Wei,  chief Asia-Pacific economist at  Societe Generale  SA,  predicts  that  the  People’s  Bank of China will  provide  an additional 650 billion yuan ($91 billion)  in  low-cost funds  this year  under  additional loans are promised  to finance  social  housing  projects.  

 Economists are calling for stronger fiscal policy to  support  growth. Authorities have stepped up fiscal stimulus  measures  by  mobilizing  the central government,  creating breathing space for debt-ridden  local  governments. It’s  a strategy  that  economists  say  will continue  until 2024,  as the government seeks to  restore  confidence.  

 The PBOC  should  also  maintain enough  liquidity  to help banks buy government bonds. A senior official  suggested  the central bank  could reduce  the amount of cash banks must  hold  in reserve, known as the  required  reserve  ratio or RRR. 

 The  People’s Bank of China  maintained  interest rates  on  one-year policy loans on Monday, disappointing investors  who expected  the first  cut  since August. However, there  may  be more room to  cut interest  rates if the US Federal Reserve starts cutting  interest  rates this  year,  as that would ease  downward  pressure on the yuan. 

  Keeping interest rates on  hold means  “the chances  of an RRR cut in February  are higher,” said  Xing Zhaopeng, senior China strategist at  Australia & New Zealand Banking Group Ltd. 

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  In the last financial year,  commercial banks  accounted for  72% of  total credit disbursed, followed by  cooperative  banks (13%) and RRBs (15%). 

  The government is  expected  to set  an  agriculture credit target of Rs  22,000 crore  for the next  financial  year,  a 10 per cent increase over  the current  year’s  target  and possibly exceed,  sources said.  

 Of the current  year’s agricultural  credit target of Rs  20,000 crore,  commercial banks, cooperative banks and regional rural banks (RRBs) have disbursed Rs  16,370 crore, or 81 per cent  of the target in  first three quarters of FY24. 

  “Credit demand  and  disbursement  for agriculture and  related sectors are very  encouraging,” an official said. 

  In FY23,  agriculture credit  growth  was  “strong”  with  disbursements  of  Rs  21.55 trillion, 16%  higher  than the target of Rs 18.5 trillion.  During  FY23,  agriculture credit worth  Rs 1.19 trillion (12%)  was  provided to  allied sectors such as  livestock,  dairy,  poultry  and  fisheries,  out of  a  total  disbursement  of  Rs.18,500 billion.  In the current  financial year,  a sub-target of  Rs 2,930 crore in  credit has been  given to  the  livestock  sector. 

  In the last financial year,  commercial banks  accounted for  72% of  total credit disbursed, followed by  cooperative  banks (13%) and RRBs (15%). 

  However, despite  the  growth  of  agricultural credit, there are  still  institutional challenges such as  disparities  in credit  flows between regions,  lack of land  records,  especially for  cultivators  and  farmers.  tenant  farmer.  Besides, loan waivers announced by  state governments have created willful defaulters,  an official  note said.  In  fiscal year 2023,  agricultural credit  flows  to the southern region  accounted for  48% of  total disbursement while  this  region  only  accounted for  17% of the  country’s total planted area. The  Northern region  receives  about 17% of  total credit  flows  to agriculture and  related sectors, compared to  a  total cultivated  area of  ​​over  20%.  

 However, the eastern  region  received only 8% of the total agricultural credit flow  in the  last  financial year, compared to  the  cultivated  area of  ​​12%. “The proportion of agricultural credit in the Northeast,  East,  Central and  West  regions  is  not  commensurate  with the  proportion of the corresponding regions  in  the total crop area  due to limited credit absorption capacity,”  notes for know.  

 It  also  identifies  factors such as limited  reach  of financial institutions, lack of financial literacy and infrastructure bottlenecks  that explain  regional  disparities  in  credit disbursement.  According to officials,  in  the total credit  disbursed  to agriculture, the share of small and marginal farmers in the total  account  increased from 48.6 million (57%) to 116.6 million (76%) during  the period. period from  FY15  to  FY22.  Total loans  to small farmers  increased  from Rs 3.4 trillion to Rs 10.59 trillion during the same  period,  implying that  capital  investment and  training  are also  progressing  in the  agricultural sector.  

 Under  the Modified Interest Subsidy Scheme  (MISS) of  the Ministry  of  Agriculture,  farmers holding  Kisan Credit Cards (KCC)  are  entitled to borrow up to  Rs  300  at 7%  interest  per annum  to meet  their working capital  needs. Surname.  Currently,  of  the  73.6 million KCC holders, 23.7 million  are in agriculture-related fields.  

  This program  provides  an  additional interest  subsidy  of 3% for  quick loan repayment,  thereby reducing the effective  interest  rate  to 4%. The  Agriculture Ministry  in FY23  released Rs 17,997 crore under MISS to RBI and Nabard against the revised estimate of Rs 19,700 crore for 2022-23. 

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 Data released  Friday showed core CPI inflation  eased  to a 48-month low of 3.9% in December from 4.1% in November, while CPI inflation rose to a  high. highest in 4 months was  5.69% from 5.55%. 

  Economists say the  Reserve Bank of  India’s  (RBI) monetary policy action may be credited  with bringing down  core Consumer Price Index (CPI) inflation in  recent months, but  the The lower  core  number at 4%  also  indicates  weak demand conditions in the country at an  overall level. speak.

  Interestingly,  this  also  somewhat contradicts  the  RBI’s assessment  in its November bulletin that  “investment  demand appears  resilient due  to  government  infrastructure spending,  rise  in private  investment  and  digitization”. The central bank  even expressed  concern  about  a  possible  new round  of  demand-driven  inflation.

 Data released  Friday showed core CPI inflation  eased  to a 48-month low of 3.9% in December from 4.1% in November, while CPI inflation rose to a  high. highest in 4 months was  5.69% from 5.55%. 

  “While India’s tightening  monetary policy  can be  attributed to  weakening core inflation, we also see clear signs of  stress,”  said Kunal Kundu, India  economist at Société Générale. Prolonged family tensions also play a role.  The Reserve Bank of India has kept the policy repo rate unchanged  from  February 2022 at 6.50%. In  its  December monetary policy  meeting, the  RBI  said  underlying deflation was “stable,” reflecting  the impact of past monetary policy  measures.  

 ICICI Bank said  the fall in  core inflation  was due to fall  in global  energy and  commodity  prices and  resulted in a  pass-through  effect to  the economy  as well as “moderate consumption”.  

  Weak  demand  can  also be  measured  by  weak  growth in  the production of  consumer durables (goods  used  directly  by consumers  with a  long  life  of  2 to 3  years)  –  in  8 months beginning of fiscal 2024, up only 0.8% year-on-year. compared to  the  8.9% growth recorded in  2024. in  the  same  period of  fiscal 2023.  In November,  growth  in durable consumption in manufactured goods was  at a  five-month low, at level  (-)5.4%.  Additionally,  private final consumption expenditure (PFCE) is expected to grow  4.4%  year-on-year  in FY24  – according to the  National  Bureau of Statistics’  first  preliminary estimate – here  is  The fastest and  slowest  speeds  in the current series  date back to  2011-12. This  does not include  the pandemic year FY21, where PFCE  fell  5.2%. 

  High-frequency  demand  indices  reflect bleaker conditions in rural areas  than in  urban  areas. What is interesting to note is that  this situation  comes against the backdrop of a higher than expected  GDP growth  rate, i.e.  7.3%  for  the current  financial year.  

  In general,  economists  argue  that  high  economic growth  increases  demand,  which then leads  to higher core inflation. However, the  current  state of the core CPI has left some economists  confused. 

  “The decline in  core inflation at a time of strong economic growth is a  headache,”  said Sunil Sinha,  senior economist at  India Ratings and Research. 

  But  Ashima Goyal, an external member of the RBI’s monetary policy committee, answered  this  question  to some  extent, saying  there  was  no  second-order impact on  wages from  previous shocks. for commodity prices, because  the  Indian  labor market is “loose”.

  According to  the  Regular Labor  Force Survey,  earnings  growth  of regular workers in  the first quarter of  FY24  increased  to 7.8% from 6.1% in the previous year. But for  seasonal  workers,  income  growth  dropped  sharply,  from 17.1% during  this period to 5.2%.  Goyal also said  some  companies  have reversed earlier price increases that  led to  higher  costs  and  that supply-side measures by the  government  have  limited short-term  price  increases. Furthermore, India’s major  oil  companies can  pass on the benefits of lower oil prices to consumers. 

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  As  the  “Future  of the Skills Landscape  2024” report reveals, 82% of employed people expressed concern about the possibility of their roles becoming obsolete. 

 It is believed that the integration of  artificial intelligence  and automation  will lead to significant  unemployment. Contrary to this  idea,  the  “Future  of  Jobs” report  published by the World Economic Forum (with TCS as a strategic partner),  predicts  the creation of 12 million more jobs  thanks to  AI by  2025,compared to  the number  of displaced people.  In  reality,  only those  who  fail  to  acquire  new skills and  adapt  to the  changing  needs  of the job market  will lose their  jobs.  Sumit Kumar, strategy director at TeamLease Degree Apprenticeship, told FE Education, from  computers and software to the  internet  and now AI, these  advances  have  continuously created  more  job opportunities. “Manufacturing industries are  expected to benefit the most from  AI-driven  job  expansion, especially in  supply chain, quality control,  predictive capabilities,” he said. market,  customer service and  sales”.  

 Amid technological  advances,  82% of employed  people  expressed concern about the  possibility  of their  roles becoming obsolete,  as revealed in the  report “The Future  of the Skills Landscape  2024”.  The report  highlights growing concerns among  the  Indian  workforce  about  the  risk  of job  loss  due to  technological advances, thereby emphasizing  the need for  continued  reskilling. “Continuous reskilling and upskilling  is  essential  to prepare today’s  workforce. It is imperative for both  livelihoods  and  employment  to  systematically  invest in these  activities.  While  organizations need to  focus on talent development, individuals  have  the responsibility  to continuously improve  their  skills  to  maintain employment,”  Kumar said.  

 Additionally, NASSCOM has introduced  programs tailored to  roles and  skills, keeping in mind the  jobs of the future. Successful  implementation of a program  requires collaboration between  industry and academia.  Further,  the government, through the  NSDC-led  Skill India  Mission,  is promoting digital literacy to address skill  generation  in AI and related technologies, he said  in response  to a  question. of  collaborative efforts between  industry, universities  and government  agencies.  facilitate the positive impact of AI on job creation. 

  As of August 2023, the  number of  AI  professionals in India reached  4.16  lakh,  ready to  meet  the  growing  demand  expected  to  reach  one million by 2026.  According to ‘India Skills Report 2024’,  India faces a  significant supply  gap  of 60-73%  in  key roles such as  Machine Learning (ML)  Engineers, Data Scientists, Engineering  DevOps engineer and data  architect.  “These job opportunities will  include  a variety of roles, spanning both technical and non-technical  sectors,  across  a variety of  functions and  sectors.  Sectors  like  healthcare, retail, BFSI,  logistics,  supply chain management and manufacturing will see a  combination  of  basic  and advanced  level  AI  roles, Kumar explains. affecting  both direct and indirect  impacts  on the  industry.  

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  However, trade  sources are  skeptical about the  effectiveness  of  government-subsidized sales.  

  Sources said the  government is likely to  meet its  plan to sell rice at  subsidized  prices in  retail markets  due to excess rice inventory  within a  week.

 Currently, the scope of the  Bharat Rice initiative,  including pricing and  retail  pack  sizes,  is being discussed. The  scheme aims  to  rein in  retail prices of  mass-market  rice varieties, which have remained  high despite  restrictions  on certain exports and open market sales by the Food Corporation of India.  

  However, trade  sources are  skeptical about the  effectiveness  of  government-subsidized sales. Currently,  the government  sells  chana dal and atta  (wheat flour)  at  a subsidized rate  of Rs 60/kg and Rs  27.50/kg  through  agricultural  cooperative Nafed and NCCF  stores as well as  Kendriya Bhandars  under  the initiative ​​Bharat  Dal and Bharat  Atta. 

  The  food ministry said  domestic  rice  prices  are  high  despite  record output,  adequate reserves  with  the  FCI  and various restrictions and  taxes  imposed on grain exports. 

  The  sale of surplus rice  in the open market  to bulk buyers by the Food Corporation of India (FCI) at  a subsidized  rate of Rs  2,900 per quintal has been well received, the price being  below the economic cost of  rice. cup in 2022 -2023, or  Rs 3,537/quintal.  As of July 2023,  FCI  has been able to  sell only 0.15 million  tonnes  of rice through weekly e-auctions so  far,  against  the  allocation of 5  tonnes  for the current year. 

  Retail rice prices  increased  by 12.33% in December and rice prices  have been  at  a high  level since October 2022. This is despite the  government’s efforts  to sell surplus rice  from FCI stocks  in the open  market. 

 “Let me  look into  the issue of  rice price hike and I will take appropriate steps to resolve  the  issue,”  Food  Minister  Piyush Goyal  said  on Saturday. 

  The government  banned  white rice  exports  and imposed  a  20% export  tax  on  cooked  rice last year to improve domestic supplies. 

  However, to meet the food security needs  of  developing countries,  governments provide  rice on  demand.  Goyal  said  India  recently supplied  rice to countries like Indonesia,  Senegal  and  Gambia.  Meanwhile, Goyal  said  on Sunday  that  FCI’s  open  sale  program  has  proven  to be an effective tool in  regulating  prices of essential commodities like wheat and rice. 

  “Bharat Atta, Bharat  Dal and onion and tomato  interventions  have  helped the Indian government stabilize prices,”  Goyal said at  the FCI’s  60th foundation  ceremony.  

 He  called on  FCI to  embrace  technology and  digitalization  to improve operational efficiency. “We should  embrace  technology and  digitalization  to improve  our  operational efficiency and  how much  we  spend, and  how we can control  and reduce  costs,”  Goyal said. 

  He  believes that FCI’s operating costs can  be reduced through route  optimization, mechanized  loading and unloading and  application  of  modern storage  systems.  Goyal  proposed organizing  a hackathon to  seek  ideas in these areas. 

  FCI  processes  more than 70 million  tons  of rice and  wheat each year. Of the  food expenditure of  about  Rs 2 trillion in the current  financial year,  Rs 1.37 trillion is  channeled  through FCI. 

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 India,  currently  the world’s fifth largest economy, is  expected  to become the third largest by 2027,  according to  the International Monetary Fund. 

  India’s  wealthy  class is expected to  number  100 million by 2027, a  Goldman Sachs  report said  on Friday, adding that  indigenous companies selling premium  products  will outperform  their  broad-based  competitors.  According to  a  Goldman report, the purchasing power of  higher-income  Indians has increased  over  the past  decade thanks  to  strong economic growth, stable monetary policy and  strong  credit growth.  

 As a result, the number of  wealthy  Indians  earning more than  $10,000  (8.28  lakh)  per  year has  increased  from 24 million in 2015 to 60 million  today.  India,  currently  the world’s fifth largest economy, is  expected  to become the third largest by 2027,  according to  the International Monetary Fund.  According to Bloomberg citing a Goldman report,  India has  seen the purchasing  power  of  the middle class  increase,  which benefits  companies  with premium brands in  entertainment, jewelry, products outdoor  and  health.  

 The significant  increase  in  the  value of  the country’s  financial and physical assets  over  the past three years is  leading to growing  wealth.  Gold  and property are  considered  important  means  of  storing  wealth. There has been a  major  shift in households investing in  stocks through  direct stocks or mutual funds over the  past  five years, the report added.

  According to  Goldman  Sachs,  the  gap  between the  purchasing  power of the  highest  and middle income groups remains  a problem  in India. More than 96  million  debit cards have been issued in the country and 9.30  million  Indians have postpaid  phone connections. But  the report adds that  only 3  million  Indians can afford  to buy  a  car.  

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 According to a Bloomberg report, the  $110/$130 call  spread  on Brent  crude in  May and June  attracted bets equivalent to  about  30 million  barrels. 

 By Bhavik Patel 

 Oil  prices are  in the range of  5800-6200,  but there  are  also  fluctuations within this  narrow range.  Prices react to  every geopolitical event in the Middle  East,  especially in the Red Sea. We have seen crude  oil prices fall due to higher-than-expected US inventories and falling demand, but in the face  of  opposition, Houthi attacks  on ships in  the  Red Sea have  created a favorable tailwind. which they need  to  maintain. floating prices.  

 Recent attacks on Yemen by US and  British  forces will also  escalate  the  conflict,  as  the  Houthis will also retaliate  for  the attack. These events will give any correction in crude  oil prices the  opportunity to take long positions. Hedge funds and other  money  managers ended the  final  week of 2023 with the  highest number of  new bearish positions in futures and options  since March and the  second-biggest increase  in  volume.  weekly  short  additions since 2017. 

  The reason  we  like  to  hold a long position is  the  balance between  supply and  demand,  which  indicates an uptrend. January’s huge  surplus  is expected to shrink  thanks to OPEC+  voluntary cuts  and  another  Libyan  oil field  could be closed. US  crude oil supply will continue  to increase  in 2024, but at a slower  rate. Traders are optimistic  that Brent could reach $110 by  April,  although we do not  expect prices to rise as sharply. According to  a  Bloomberg report, the  $110/$130 call  spread  on Brent  crude in  May and June  attracted bets equivalent to  about  30 million  barrels. Buyers  of this  special spread  option  will benefit  if oil prices  reach $110/barrel  by the end of March and  the  end of April, when the May and June  options expire  respectively.

  Therefore,  we believe the downside is limited but the upside will be  limited to  around  $86 to $90. However, fundamentals are  now  pointing  to  an uptrend, whether it’s a smaller  surplus  ahead  or  tensions in the  Red  Sea,  any dip around  5,900  is a buying  opportunity. 

Expected  target  is 6,200 to 6,300  and  stop loss is 5,800 for  MCX.  

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