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The intricate dance of global trade and geopolitics has taken a dramatic turn for India. The United States has announced an additional 25% tariff on a wide range of Indian goods, a move that is making headlines and sending ripples through the financial world. This new levy, which comes on top of an existing 25% duty, effectively doubles the tariff on many products to a combined 50%. The primary reason cited by the US administration for this action is India's continued procurement of Russian crude oil, a decision New Delhi has defended as being crucial for its national energy security.
For businesses, policymakers, and especially for Indian investors, understanding the full scope of this additional 25% tariff on India is vital. This is not just a diplomatic spat; it has real economic consequences that can influence the performance of various sectors and the overall market sentiment. This post will delve into what the tariff means, which sectors are most at risk, and how the Indian government and the financial markets are likely to respond.
The US and its allies have sought to impose economic sanctions on Russia following the conflict in Ukraine. While many nations complied, India, as the world's third-largest oil consumer, seized the opportunity to purchase discounted crude from Russia. This strategic move helped India manage its energy costs, a critical factor for an economy of 1.4 billion people. The US, however, views this as indirectly supporting Russia's economy.
The new tariff is a direct punitive action aimed at pressuring India to reduce or halt its Russian oil imports. The timing and scale of this tariff have placed India at a significant competitive disadvantage in the American market, a market that is India's largest export destination. The Federation of Indian Export Organisations (FIEO) has highlighted that this sudden duty hike could place Indian exporters at a 30-35% competitive disadvantage compared to peers from countries like Vietnam and Bangladesh, which face lower tariffs.
The fallout from these tariffs is not uniform. While some sectors may remain relatively unscathed, many of India's key export industries, particularly those that are labor-intensive, are expected to bear the brunt of the new duties. A think tank, Global Trade Research Initiative (GTRI), has warned that Indian exports to the US could plummet by nearly 30% in the current fiscal year if the tariffs are fully implemented.
Here is a closer look at the sectors most vulnerable:
It's important to note that some sectors, such as pharmaceuticals and critical minerals, have been exempted. However, the overall impact on the export economy is expected to be significant.
The Indian government has reacted to the tariffs by calling them "unjustified and unreasonable," reaffirming its commitment to protecting national interests. The Ministry of External Affairs has made it clear that India's oil imports are based on market factors and are crucial for the country's energy security.
In response to the economic threat, the government is exploring several relief measures for exporters. There is a renewed push for the "Make in India" initiative to strengthen domestic consumption and reduce reliance on foreign markets. The government is also encouraging exporters to build their own brands and diversify their markets to reduce dependency on the US. Furthermore, policy support, such as a possible revival of the Interest Equalisation Scheme to lower borrowing costs for exporters, is also being considered.
From an investor's perspective, the news of the tariff has already led to some short-term market volatility. Stocks of companies with high export exposure to the US may face selling pressure. However, the broader Indian equity market is underpinned by strong domestic demand, and it is more resilient to external shocks than in the past. Long-term investors should exercise caution and conduct a detailed analysis of their portfolio's exposure to affected sectors. Diversifying your investments and focusing on companies with sound fundamentals and a domestic-centric business model is a prudent strategy in these uncertain times.
Q1: Why is the US imposing these tariffs on India but not on other countries?A: The US has stated that these tariffs are a response to India’s continued purchase of Russian crude oil. While other countries also trade with Russia, the US administration has decided to specifically target India with these measures, a move that the Indian government has highlighted as being "unjustified."
Q2: What is the estimated economic impact of these tariffs on India?A: According to some experts, if the tariffs remain in place, India's exports to the US could fall by as much as 30%, which would have a notable impact on India's GDP growth. However, the Indian government is working on mitigation strategies to reduce the overall economic damage.
Q3: How can a normal investor protect their portfolio from this volatility?A: Investors should consider the potential for short-term volatility and avoid making knee-jerk decisions. Diversifying your portfolio across different sectors and geographies, and focusing on high-quality companies with strong financials, can help mitigate risks. Consulting a financial advisor for a personalized strategy is always a good idea.
The new tariffs from the US represent a significant challenge for India's export economy. While the immediate focus is on managing the fallout in key sectors, this development also underscores the need for India to continue building a resilient and self-reliant economy. The government's proactive response and the inherent strengths of India’s domestic market provide a degree of confidence.
For investors, this is a moment that demands a cool head and a well-thought-out strategy. Navigating the complexities of global trade requires reliable insights and a trusted partner. Swastika Investmart, a well-regarded and SEBI-registered financial firm, provides the expertise and robust research tools to help you make sense of such events. Our commitment to investor education and our seamless, tech-enabled platform ensure you have the necessary support to make informed decisions and manage your investments with confidence.
Start your investment journey with confidence. Open an account with Swastika Investmart today.
Devyani International Ltd is the largest Yum Brands franchisee in India and one of the country's leading operators of chain quick-service restaurants (QSR).
As of March 31, 2021, the company had 655 outlets in 155 cities across India. Yum! Brands Inc. owns and runs KFC, Pizza Hut, and Taco Bell restaurants around the world, with over 50,000 locations in more than 150 countries.
Devyani International IPO subscriptions will begin on August 4th and end on August 6th, 2021. The additional offering of up to Rs. 1,838 crores in the Initial Public Offering of Equity Shares.
The new issuance was reported as raising up to Rs 440 crore and offering up to 155,333,330 equity shares for sale.
The offer's price range has been set at Rs 86–90 per share.
The IPO constitutes an offer for sale of up to 155.33 million shares by the existing shareholders and promoters as well as an Rs440 crore fresh issue.
The objectives of the Devyani International IPO are:(i) Repayment of all borrowings(ii) General corporate purposes
RJ Corp Ltd owns the company are up to 90 million. While Dunearn Investments Mauritius Pte is owned the company up to 65.34 million shares, The proceeds of the offering will then be used to repay some or all of the firm's debts.
The total outstanding borrowings of its Company (on a consolidated level) were 541.59 Crores as of June 2021. Devyani is India's largest quick-service restaurant (QSR) company to be listed on Swiggy and Zomato in 2019-2020
Investment bankers that are been appointed for the Issue are as follows :
Devyani International IPO details Subscription Dates 4 – 6 August 2021Price BandINR86 – 90 per share Fresh issueINR440 crore Offer For Sale155,333,330 shares (INR1,335.87 – 1,398 crore)Total IPO sizeINR1,775.87 – 1,838 crore Minimum bid (lot size)165 shares Face Value INR1 per share Retail Allocation 10% Listing On NSE, BSE
Strength
Risks
Company Strategies
IPO Issue Allocation:
The company is a major QSR player with well-known international brands. However, the company has experienced a net loss in recent years as a result of high advertising costs, license fees, and commissions.
With the current euphoria in the stock market and IPO listings, one can subscribe to the IPO. Despite the epidemic, it has continued to develop its shop network, opening 109 outlets in the last six months across its core brand business.
KFC and Pizza Hut were among the first to provide contactless delivery in May 2020 and June 2020, respectively.
It is expected that considerable interest will be seen through this IPO. It also provides listing gains. With an increasing number of individuals ordering food or visiting restaurants, future growth appears to be optimistic.
Krsnaa Diagnostics Ltd provides a comprehensive variety of technology-enabled diagnostic services to public and private hospitals, medical institutions, and community health centres across India, including imaging (including radiology), pathology/clinical laboratory, and teleradiology. Across many divisions, the company delivers high-quality, all-inclusive diagnostic services at reasonable prices. Krsnaa Diagnostics Ltd's Initial Public Offering (IPO) will commence for bidding on August 4, 2021, and end on August 6, 2021. A new offering of Rs 400 crore will be part of the company's IPO. It also includes an offer by the company's existing promoters and shareholders to sell up to 8.53 million or 85.30 lakh shares. PHI Capital Growth Fund will sell 1.6 million or 16 lakh shares, Kitara PIIN 1104 will sell up to 3.34 million or 33.4 lakh shares, Somerset Indus Healthcare Fund I Ltd will sell up to 3.56 million or 35.6 lakh shares, and Lotus Management Solutions will sell up to 21,380 shares in the Offer for Sale (OFS).
About the IPO
Krsnaa Diagnostics plans to raise Rs 1,213.33 crore through its first public offering. The issue is made up of a new issue of Rs 400 crore and an offer for sale (OFS) for Rs 813.33 crore, comprising 8,525,520 equity trading shares having a face value of Rs 5 each. On August 3, a day before the IPO opens for subscription, all anchor reservations will take place. The issue price range was Rs 933 to Rs 954 per equity share, with a face value of Rs 5 per share. It's an IPO with a book-built issue. The offering has a grey market premium of Rs 400, implying that the shares are trading on the unlisted market at a premium of Rs 1,333 to Rs 1,354 per share. The minimum lot size for the Krsnaa Diagnostics IPO is 15 shares, with an associated application fee of Rs 14,310. On the top end of the lot, there are 195 shares with a Rs 186,030 application amount. Retail investors can apply for up to 13 lots at the higher end of the lot size for this issue.
Strength
For starters, it is one of India's most well-known diagnostic chains. The company's financial picture. It also provides a broad and diversified variety of diagnostic services because of its complicated network and presence in 13 locations, it has a large market footprint. In addition, the firm has a solid financial track record.
Objectives
Strategies:
Investment allocation:
When it comes to investment allocations, the retail part is only 10%. The SME IPO has a 75 percent reservation for qualified institutional buyers (QIBs) and a 15% reservation for non-institutional investors (NIIs).
Financial Highlights:
The firm was able to sustain a high level of performance. For the fiscal year ending March 31, 2020, the film earned Rs 271.38 crore in total revenue. This was increased from Rs 214.31 crore the previous year. The company's net losses increased to Rs 111.95 crore in FY20, up from Rs 58.05 crore the previous year. Krsnaa Diagnostics, on the other hand, had a significant decrease in spending and an increase in income.For the nine-month period ending December 31, 2020, the net profit and sales were Rs 195.93 crore and Rs 562.7 crore, respectively. This trend was caused by increased income from operations as a result of the pandemic's outbreak.
Recommendation: The business model is scalable, and in the present climate, where post-COVID health consciousness is at an all-time high, this industry is only going to grow in the next years. This represents a big market for the firm as well as significant potential.The firm intends to use the proceeds of the offering to pay down debt, which is usually valued accretive for service-oriented enterprises. ) The IPO price for Krsnaa Diagnostics discounts the most recent year's profits at roughly 21X, which is lower than the comparable group. We recommend you to subscribe(Aggressive Investors).
Rolex Rings, Incorporated in 2003, based in Rajkot, Gujarat, is one of the country's largest makers of forged and machined components. The business has established a long-term relationship with its clients.
Rolex Rings made a profit of Rs 86.95 crore for the fiscal year ended March 31, 2021, up from Rs 52.94 crore the previous year, its net profit at a compounded annual growth rate stands at 21.3%.
More than half of the company's revenue comes from outside the country, with 60 customers in 17 countries, including India.
Domestic and worldwide markets are spread across two-wheelers, passenger vehicles, commercial vehicles, off-highway vehicles, electric vehicles), industrial machinery, wind turbines, and railways, among other areas.
It produces a diverse range of bearing rings, that are appropriate for a wide range of end-users.
Some of the main worldwide and local names that Rolex Rings serves are SKF India, Timken India, and NRB etc.
The SME IPO is worth Rs.731 crore. The new issue is worth 56 crore rupees. This will be utilized to meet long-term working capital needs as well as other corporate needs. The promoters are given a sale offer for the remaining 675 crores. The issue opens on July 28, 2021, and will close on July 30, 2021. The issue is priced at 880 to 900 per equity share.
About 50 per cent is kept for Qualified Institutional Buyers,15 per cent for non-institutional buyers, and 35 per cent for retail investors.
The funds obtained through the IPO will be used in the following manner:
Rolex Rings IPO details
Subscription Dates: 28 – 30 July 2021
Price Band
INR880 – 900 per share
Fresh issue
INR56 crore
Offer For Sale
7,500,000 shares (INR660 – 675 crore)
Total IPO size
INR716 – 731 crore
Minimum bid (lot size)
16 shares
Face Value
INR10 per share
Retail Allocation
35%
Listing On
NSE, BSE
Rolex Rings, a global vehicle parts producer, is ready to launch its public offering as the comeback gathers steam.
By investing in renewable energy, the corporation hopes to lessen its reliance on changing electricity costs and lower its carbon footprint.
The company now operates wind turbines with an installed capacity of 8.75 MW. The company is in the midst of extending its solar project capacity by 12 MW and has already placed purchase orders for the necessary equipment.
The automobile industry is slowly rebounding in 2021 after a tough ride in 2020. Auto sales are being driven by a number of factors, including the relaxation of lockout restrictions and pent-up demand.
Soybean is one of the primary commodities which is traded on NCDEX. These days vast blow has been viewed in its prices as trading around its all period high. It is because of the lack of supply in the physical market and the increase in demand.
Another reason is monsoon stipulations as excess rainfall has been seen within more than a few soybean producing states like Maharashtra where the sowing has been affected badly because of delay in monsoon the sowing in Madhya Pradesh also got affected.
But looking at the contemporary situation, it is anticipated to have good sowing in Madhya Pradesh in the near term because of ongoing monsoon conditions namely as each of these states makes a contribution in accordance with around 89% in the quantity produced.
YearUSBrazilArgentinaChinaIndia2021-2022 119.884144521911.22020-2021112.5491374719.610.452019-202096.667128.548.818.19.32018-2019120.515119.755.315.96710.932017-2018120.065123.437.815.2838.35
As per SOPA, the worldwide soybean production has been increased over the years and the 2021-2022 forecast has also been increased compared to the last few years.
Last year the prices surged because of the buying done from China’s end as because of fear of coronavirus cases China was continuously buying it to meet its domestic demand in future but as it got sufficient supply, the correction was seen in the prices of soybean.
In addition to this, soybean was used as feed for the cattle in the cattle industry and poultry farms but now it has been substituted with wheat and rice which also led to the low import of it. Since China is the biggest importer of Soybean and Soy complex so any action from their end has direct on the prices of soybean worldwide.
As in the past few days or last week, multiple times circuit has been seen in the prices of soybean, SOPA said that it is completely taken over by the speculators, the end-users of soybean or soybean meal like poultry industry/aquaculture are extremely suffering because of such speculation activities.
To support its claim, SOPA said, "In the last seven trading sessions, the soybean futures contract on NCDEX has gone up by 21.77% and the upper circuit had to be applied 4 times." In addition to this SOPA also said that there is no physical stock in NCDEX warehouses and the demand and supply for oil in the year 2020-2021 were slightly tight.
"To curtail speculation, we request to increase margin money from current 25% to 50% for lean season contracts and that the circuit limit in lean season should be reduced to 2% a day, "said SOPA in a release.
But recently it came into the news that the exchange denied the SOPA request, as per the NCDEX there is no speculation and prices are trading fairly as there is non-availability of the soybean in the physical market and demand is increasing rapidly. So we can say that in the near term some more upside view can be seen in the prices of soybean.
Investment is something that gives you outstanding returns if done properly. If you have excessive funds lying in your bank account, save them wisely. You might have heard the above statement from every stock analyst who manages your wealth profile. This is because money is always measured in terms of time.
The time value of money states that the amount of money you have in present is worth more than that the same amount of money you will have in the future. Instead of letting your money sit idle, it would be much better if you park your surplus fund with liquid ETFs.
Liquid ETFs or Liquid Exchange Traded Funds are the mutual funds whose units are traded on the stock exchange. Unlike normal ETFs, the investment in liquid ETFs generally happens in overnight securities such as Repo or Reverse Repo securities, landing obligations and collateralized borrowings.
The primary motive of liquid ETF is to provide an income filled with low risk, at the same time gives a high liquidity level.
Investors who park their funds in liquid ETFs can earn significant returns on idle funds while at the same time remaining liquid to benefit from lucrative investment opportunities.
Liquid ETFs are only suited for large retail investors, portfolio management service (PMS) providers. Futures and Options (F&O) brokers and institutions invest directly in equities, HNI (High Net-worth Individuals).
These are several liquid ETF funds that are readily available to trade. These liquid funds can be traded immediately.
Equity market investors and traders have a habit of making continuous profits from transactions. However, sometimes they even face a loss but these are part of daily work.
The investors who have a tremendous amount of money, always find a better alternative so that they can increase their profit to a greater extent. One such alternative is liquid ETFs. Investing in ETFs enables investors to earn extra profit from excessive funds.
NSE and BSE are the funds that are available for trading where buyers and sellers quickly perform the transactions during the stock market hours on any stock trading days.
ETFs are gaining a lot of popularity these days as many investors consider liquid ETFs as the best instrument that can do wonders with their money.
However, if you are deprived of several benefits of investing in liquid ETFs or exchange-traded funds, this blog will help you out.
ETFs are not for long term investment. They are for short term investments and provide high liquidity, these are always preferred by high profile investors. Like other stocks, these funds are also listed in stock exchanges which are traded during the day. These funds are inter-linked with intraday trading and therefore the prices of the ETF heavily depend on the intraday trades.
For instance, if the intraday rates of the underlying assets change, the ETF prices also change. ETF investors are the experienced ones, and therefore they know what they have paid and what they will receive at the selling.
With liquid ETFs, investors move money from one place to another, construct strategies around their investment and manage intraday portfolios. Investing in ETFs allows investors to successfully invest in a diversified portfolio such as stocks, bonds, commodities, derivatives.
ETFs are passively managed funds that are specially designed to offer low-risk returns and high liquidity. Investors invest in an ETF when they sell equities from their portfolio. Many stockbrokers enable investors to reinvest 100 per cent of the proceeds into an ETF that too on the same day.
The stock market follows a settlement cycle of T+2 days, i.e. ETF units will get credited to investors’ accounts on the settlement day.
ETFs offer many benefits as in this type of scheme, individual investors hold their investment until they find a better alternative to move their funds. Another advantage of ETFs is that investors can forward the funds as a pledge against cash margins if investing in derivative segments.
Many brokerage houses accept ETFs as a cash margin if they want to trade in the derivatives segment.
Liquid exchange-traded funds offer investors better portfolio management by allowing them to invest in various sectors, industries, and country categories. They provide investors easy exposure to desired stock market segments.
ETFs are now available in the major asset classes, thus making them a good investment option. Also, investors can select to trade ETFs during stock market volatility or continue to invest based on their financial plans to earn profits.
The cost of investing in ETFs is quite less than mutual funds as the lower the costs, the higher the returns. Operational costs are an integral part of the structured investment as these costs include portfolio management fees, marketing costs, administrative expenses, distribution costs and more.
Here, lowering the costs means non-involvement of fund managers which means lower expenses of the funds. ETFs have lower expenses in transfers, monthly statements. Unlike open-ended funds, brokerages do require to send regular updates to the investors.
Mutual funds have more taxes than ETFs. This is because ETFs have a lower capital gain. The rate of capital gain tax applied to ETFs is also less as compared to mutual fund investments.
Liquid ETFs have only one dividend option. The daily earned dividends get reinvested into ETFs. Some ETF funds will credit bonus to its investors account weekly or monthly. Since the stock trading returns are low, brokerages waive off brokerage fees and depository participant changes on these funds.
Mutual funds and ETFs are similar investment types. However, the difference lies in the services they provide. ETFs provide higher liquidity than mutual funds and are also convenient to tap when cash flow is needed.
सोना दो सप्ताह के उच्च स्तर के पास पहुंच गया है और 21 मई के बाद से अपने सबसे बड़े साप्ताहिक बढ़त के साथ कॉमेक्स में 1830 डॉलर प्रति औंस के स्तरों पर है। कॉमेक्स वायदा चांदी के भाव भी 26 डॉलर के करीब पहुंच गए है। अमेरिकी फेडरल रिजर्व द्वारा पिछले सप्ताह की बैठक में संकेत मिले है कि छोटी अवधि में संपत्ति की कमी शुरू करने और ब्याज दरों में वृद्धि की संभावना नहीं है।डॉलर जो सोने के विपरीत दिशा में चलता है, एक माह के निचले स्तरों पर पहुंच चुका है। पिछले सप्ताह अमेरिका से जारी होने वाले बेरोज़गारी के आंकड़े भी फेड के अनुरूप रहे जिसमे बेरोज़गारी दावों में बढ़त दर्ज की गई है। एसपीडीआर गोल्ड ट्रस्ट में पिछले एक महीने के बाद 0.6 प्रतिशत की बढ़त दर्ज की गई है। घरेलु वायदा बाजार में सोना सप्ताह मे निचले स्तरों से 1000 रुपये तेज़ हो कर 48200 प्रति दस ग्राम रुपये के स्तरों पर है। चांदी पिछले सप्ताह निचले स्तरों से 2300 रुपये तेज़ हुई है और इसके भाव 68200 रुपये प्रति किलो के करीब रहे। 10 साल की अमेरिकी बांड उपज निचले स्तरों 1.25 प्रतिशत पर ही बनी हुई है। जिससे सोने और चांदी के भाव को सपोर्ट है।
इस सप्ताह के महत्वपूर्ण आर्थिक आंकड़े जिनमे सोमवार को अमेरिकी आइएसएम मैन्युफैक्चरिंग पीएमआई, बुधवार को एडीपी नॉन फार्म एम्प्लॉयमेंट चेंज, आइएसएम सर्विस पीएमआई, गुरुवार को ब्रिटैन की मौद्रिक नीति और शुक्रवार को अमेरिकी पैरोल के आंकड़े प्रमुख है।
इस सप्ताह सोने और चांदी में तेज़ी रहने सम्भावना है। सोने में 47800 रुपये पर सपोर्ट और 48500 रुपये पर प्रतिरोध है। चांदी में 66000 रुपये पर सपोर्ट और 69000 रुपये पर प्रतिरोध है।
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