Today's Stock Market News - 18/12/2024 | Aaj ki Taaza Khabar

Summary

In this informative update, the host, Anush Mukashi, delves into key global and Indian economic news. Topics include the Federal Reserve's potential rate cut in December, better-than-expected US retail sales, growth in India's gold jewelry sector, and a temporary dip in India's Q2 GDP growth. Key developments also cover tax exemptions for life and health insurance policies, a joint venture between LG Energy Solutions and GS Energy for EV batteries, and mergers in the cement industry. Additionally, ITC announces a demerger of its hotel business, expected to take effect in January 2025. Stay tuned for more insights!

Takeaways

• 😀 The Federal Reserve (Fed) meeting is scheduled for January 17-18, where they are expected to announce a 25 basis point rate cut, lowering the federal funds target range from 4.25-4.5%.
• 😀 Retail sales in the U.S. for November exceeded expectations, growing by 0.7% compared to the expected 0.5%. A strong consumer spending momentum is seen, with significant contributions from vehicle purchases.
• 😀 Despite robust consumer spending, concerns about inflation remain due to increased demand and prices. There are debates about whether the Fed should immediately cut rates in response.
• 😀 India's gold jewelry sector is projected to grow 18-20% in FY25, driven by store expansions, higher wedding dates, and improved rural demand, with gold prices seeing a modest increase due to customs duty cuts.
• 😀 The Indian economy's Q2 FY25 GDP growth slowed to 5.4%, but the Finance Minister remains confident of recovery in upcoming quarters. India's overall growth over the last three years has averaged 8.3%.
• 😀 The Indian government’s capital spending for July-October 2024 was 6.4% higher than the previous period, expected to create a multiplier effect and boost overall economic growth in the coming quarters.
• 😀 A proposal for tax exemption on life and health insurance policies, especially for senior citizens, is under consideration. The aim is to increase adoption of insurance products, as India remains significantly underinsured.
• 😀 The proposed revenue impact from GST exemptions on individual term life and health insurance is expected to be significant, with estimates ranging from ₹300 crore to ₹1000 crore depending on the policy category.
• 😀 LG Energy Solutions and JSW Energy are in talks to set up a joint venture for manufacturing batteries for electric vehicles (EVs) and renewable energy storage, with a total investment of $1.5 billion. The plant is expected to be operational by the end of 2026.
• 😀 Ambuja Cements has announced a merger with Sanghi Industries and Penna Cements, with significant expansion in cement production capacities. The deal includes issuing equity shares and is expected to be completed within 9-12 months.
• 😀 ITC has set January 1, 2025, as the effective date for the demerger of its hotel business, following approval from the NCLT. ITC Hotels has shown strong revenue and EBITDA growth in recent years, with positive expectations for its future performance.

Q & A

What are the expectations for the Federal Reserve's meeting on December 17-18?

The Federal Reserve is expected to announce a 25 basis point rate cut, lowering the federal funds target range from 4.5%-4.75% to 4.25%-4.5%. This expectation is supported by recent employment data and inflation readings, indicating a stronger consumer spending trend.

How did the U.S. retail sales perform in November, and what factors contributed to the growth?

U.S. retail sales in November increased by 0.7%, surpassing the expected 0.5% growth. The primary drivers for this growth included strong automobile purchases, consumer spending momentum, and improvements in the labor market, including lower layoffs and higher wage growth.

Why is there concern about inflation despite strong consumer spending in the U.S.?

Increased consumer spending could lead to higher demand, which in turn may drive prices up, potentially causing inflation. While the Federal Reserve is expected to reduce interest rates, there's concern about whether this will further exacerbate inflationary pressures.

What is the outlook for gold jewelry consumption in India, and what factors are influencing this trend?

The organized sector of the gold jewelry market in India is expected to see 18-20% growth in FY25. Factors driving this growth include store expansions in Tier 1, 2, and 3 towns, a higher number of weddings, good monsoon conditions, and increasing rural demand.

What is the projected GDP growth rate for India, and why is it considered a temporary slowdown?

India's GDP growth rate for Q2 FY25 was 5.4%, which is considered a temporary dip. The Finance Minister expressed confidence in a rebound, citing healthy growth in over 50% of industrial sectors and strong government capital spending.

What is the significance of the Group of Ministers (GoM) panel recommendation for life and health insurance in India?

The GoM panel has recommended exempting GST on individual term life and health insurance policies, as well as for senior citizens. This is expected to make insurance more affordable and boost adoption, especially since India remains underinsured.

What impact will the GoM's recommendation on GST exemptions for insurance have on the revenue?

The revenue impact of the GST exemption on individual term life insurance and health insurance is expected to be significant, with estimates ranging around 300 crores for life insurance and over 1000 crores for health insurance, especially for senior citizen policies.

What are the details of the joint venture between LG Energy Solutions and GS Energy?

LG Energy Solutions and GS Energy are in talks to create a joint venture worth 1.5 billion dollars, focusing on manufacturing batteries for electric vehicles and renewable energy storage. LG will provide the technology and equipment, while GS Energy will invest the capital.

What are the details of Ambuja Cements' merger with Sanghi Industries and Penna Cement Industries?

Ambuja Cements announced a merger with Sanghi Industries and Penna Cement Industries. The merger involves Ambuja issuing 12 equity shares for every 100 shares of Sanghi Industries. Penna Cement shareholders will receive 3215 rupees per share. The merger will expand Ambuja's capacity in cement production.

What is the expected timeline for the operationalization of the LG Energy Solutions and GS Energy joint venture?

The joint venture between LG Energy Solutions and GS Energy is expected to be operational by the end of 2026, with a total manufacturing capacity of 10 GWh, which will be used primarily for energy storage and electric vehicles.