🤑 India’s upcoming budget

Good morning and Happy Friday. It’s felt like a particularly long week - hope you manage to get some rest when the weekend comes 💤

- Ruchirr Sharma & Shatakshi Sharmaa

TABLE OF CONTENTS

• 🤑 India’s upcoming budget

• 📱 How big is India’s smartphone market?

• 🗞️ Bite-sized summaries

  • 🧑‍🏭 Shramik Basera

  • 💸 Singapore invests big in India

  • 🇷🇺 Russia delivers a message

• 🧑‍🍳 What else is cookin’?

• 🍿 Entertainment, Entertainment, Entertainment

MARKETS

🇮🇳 India

• Indian stock market benchmarks hit new highs on Thursday, with IT stocks leading gains, and the Nifty IT index rising 2.2% past 40,000. However, MidCap and SmallCap indices declined. IT and Financial Services indices were strong, while the Media index fell.

🌍️ International

• US stock markets fell on Thursday as investors moved away from expensive growth stocks. The Dow Jones, S&P 500, and Nasdaq Composite all dropped, with increased volatility. Higher-than-expected jobless claims suggested a weakening labour market. The tech sector, especially chip stocks, declined due to potential tighter US curbs on tech exports to China.

BUDGET PLANNING

🤑India’s upcoming budget

As India gears up for its next budget announcement, all eyes are on Finance Minister Nirmala Sitharaman. Following a narrow election win for Prime Minister Narendra Modi's BJP, there's growing speculation about potential "populist" measures to appease coalition partners.

Some expect increased welfare spending and borrowing, while others, like analysts at Goldman Sachs, believe the government may stick to its infrastructure-driven growth strategy.

Interestingly, there's also a possibility of a reduced deficit, given the government's recent track record of under-promising and over-delivering.

Key areas to watch include:

• Income tax cuts: Potential benefits for individuals and consumer staples companies.

• Rural stimulus: Measures to boost consumption in rural India.

• Healthcare and manufacturing subsidies: Aimed at job creation.

• Housing incentives: Possible interest rate subventions for rural and urban housing.

Overall: The budget's impact could be significant for various sectors. For instance, consumer staples stocks like Hindustan Unilever could see gains while funds like the Columbia India Consumer ETF have already shown strong performance in anticipation.

As India balances political pressures with economic goals, this budget will provide crucial insights into the country's future direction under Modi's leadership.

Read more: CNBC

TECH TRENDS

📱How big is India’s smartphone market?

India's smartphone market is poised for explosive growth, with Deloitte predicting 1 billion users by 2026. The country also boasts the world's third-lowest cost for mobile data at $0.17/GB.

However, recent data paints a more complex picture.

Canalys reports that Q2 2024 saw just 1% year-over-year growth, with 36.4 million units shipped despite high inventory levels. Key highlights:

1. Xiaomi reclaimed the top spot with 18% market share (6.7 million units)

2. Vivo matched Xiaomi's shipments, focusing on affordable 5G and mid-range models

3. Samsung, Realme, and Oppo completed the top five

4. Brands expanded mid-high-end portfolios and used early monsoon sales to clear inventory

5. 44% of consumers plan to purchase a new device within a year

6. 5G is a major driver for upgrades

Factors contributing to slow growth include:

1. Election impact.

2. Subdued seasonal demand.

3. Extreme weather affecting production and purchases.

4. High inventory levels slowing new shipments.

5. Shrinking potential market for first-time smartphone buyers.

6. Increasing adoption of second-hand devices.

7. Fluctuating mass-market demand.

8. Consumer expectations for discounts delaying purchases.

9. Fierce competition squeezing profit margins.

Looking ahead: Given the slowing market, Indian vendors are adapting by focusing on new value propositions which include 5G technology + innovative features to attract consumers in this potentially lucrative market.

The industry must balance short-term sales strategies with long-term sustainability to capitalize on India's immense smartphone potential.

Read more: Economic Times

GENERAL OVERVIEW

🗞️ Bite-sized summaries

🧑‍🏭Shramik Basera - The Gujarat government has launched the 'Shramik Basera' scheme to provide affordable temporary accommodation for construction workers. This initiative aims to house 15,000 labourers at a nominal rate of ₹5 per day, with plans to expand to accommodate 300,000 workers over the next three years. The scheme, with a budget of ₹1,500Cr., involves constructing dwelling centres in major cities like Ahmedabad, Gandhinagar, Vadodara, and Rajkot. Chief Minister Patel inaugurated the project by performing the ground-breaking ceremony for 17 such structures and launching a dedicated portal for the scheme. This initiative is part of a broader effort to improve the living standards of workers in the unorganized sector, offering support in areas such as food, health, housing, and finances.

💸Singapore invests big in India - Singapore's state investor Temasek plans to invest up to $10B in India over the next three years, focusing on sectors like financial services and healthcare. This move reflects Temasek's bullish long-term outlook on India, contrasting with a more cautious approach to China amid geopolitical tensions. India currently accounts for 7% of Temasek's global exposure, a figure the company aims to increase. The decision comes as India's economy and stock markets show strong growth, with Temasek having already deployed $3 billion in India in the last fiscal year - its largest annual investment to date. Key investments include stakes in HDFC Bank, Ola Electric, and Manipal Hospitals. Temasek's managing director for India investments, Mohit Bhandari, emphasized the company's positive view on India's healthcare sector, seeing it as a "multi-decade" growth opportunity.

🇷🇺Russia delivers a message - Russia has signalled it may deploy nuclear missiles in response to the United States’ plan to station long-range conventional weapons in Germany from 2026. Deputy Foreign Minister Sergei Ryabkov stated that Russia is considering various options, including bolstering defences in its Kaliningrad region. This development follows the U.S. announcement to deploy SM-6, Tomahawk, and hypersonic missiles in Germany to strengthen NATO and European defence. The situation highlights escalating tensions between the two nations, with both contemplating deployments that were previously banned under a 1987 treaty. This potential arms race adds to the complex array of global security threats, particularly amid ongoing tensions surrounding the war in Ukraine. The proximity of potential Russian deployments to NATO countries, especially in Kaliningrad, could significantly impact the geopolitical landscape in Europe.

HEADLINES

🧑‍🍳 What else is cookin’?

What’s happening in India (and around the world 🌍️)

• Defence ministry to clear mega ₹70,000 Cr. order for new stealth warships.

• OpenAI unveils cheaper small AI model GPT-4o mini.

• NEET-UG paper leak: CBI arrests four MBBS students of AIIMS Patna.

• Tata Technologies Q1 profit declines 15% on-year.

• The US Dollar is at its weakest level since May.

• Citadel’s Ken Griffin buys a stegosaurus for $45M in a record auction sale.

CULTURE

🍿 Entertainment, Entertainment, Entertainment

• Richa Chadha And Ali Fazal welcome a baby girl.

• Hardik Pandya, Natasa Stankovicannounce separation.

• Manchester United have signed French defender Leny Yoro from Lille until 2029 in a deal worth £52.18M, with £6.73m in add-ons.

• Manchester City have signed Brazil winger Savinho from French side Troyes until 2029 in a deal worth 40m euros (£30.8M).

• Rebel Wilson faces a defamation lawsuit ahead of directorial debut's premiere at TIFF.