📈 Monetary policy

Good morning. 2 names today - Vinesh Phogat and Neeraj Chopra.

That’s all 🥇🇮🇳 

- Ruchirr Sharma & Shatakshi Sharmaa

TABLE OF CONTENTS

• 🇯🇵 RBI monetary policy committee commences deliberations

• 🧑‍🚀 Space tech is booming, fuelled by funding and policy support

• 🗞️ Bite-sized summaries

  • 🛫 Bathinda International Airport

  • 🛣️ Building Indian infrastructure

  • 🤷 Trouble in OpenAI paradise

  • 🇯🇵 Back to regularly scheduled programming

• 🧑‍🍳 What else is cookin’?

• 🍿 Entertainment, Entertainment, Entertainment

MARKETS

🇮🇳 India

• Indian stock markets reversed early gains on Tuesday, with both BSE Sensex and NSE Nifty50 closing in the red. Sensex fell 0.21% to 78,593, while Nifty dropped 0.26% to 23,992. Most Nifty50 and Sensex constituents declined, led by insurance companies. Broader indices also fell, with Nifty Next 50 down 0.92%. Sectoral performance was mixed, with Financial Services facing the biggest losses while IT and Metal saw slight gains. The volatility index, India VIX, decreased by 7.97%, ending at 18.74 points.

🌍️ International

• U.S. stock markets rebounded on Tuesday. Investors were reassured by Federal Reserve officials' comments easing recession fears. All major sectors gained, led by real estate and financials. Nvidia boosted tech stocks. The market recovery follows Monday's sell-off amid weak economic data and concerns about the Fed's interest rate policy.

MONETARY POLICY

📈 RBI monetary policy committee commences deliberations

The Reserve Bank of India's Monetary Policy Committee (MPC) has begun its three-day deliberations, with financial experts widely anticipating that the benchmark interest rate will remain unchanged. The decision, set to be announced on Thursday, comes amidst concerns over inflation and steady economic growth.

Led by RBI Governor Shaktikanta Das, the six-member MPC is expected to maintain the repo rate at 6.5%. This decision would mark the seventh consecutive review where rates have remained stable, following the last hike in February 2023.

Key factors that might influence the decision include:

1. Inflation concerns: Retail inflation, based on the Consumer Price Index (CPI), rose to a four-month high of 5.08% in June, primarily due to increasing food prices.

2. Economic growth: Despite elevated interest rates, India's economy continues to show resilience and growth.

3. Global economic conditions: The MPC is likely to consider developments in US Federal Reserve policy and international commodity prices.

4. Monsoon progress: The impact of rainfall on food prices remains a crucial factor in the inflation outlook.

Most analysts predict the MPC will vote 4:2 in favour of maintaining the current rate. They also expect the committee to retain its monetary stance of 'withdrawal of accommodation'.

Several economists, including those from Goldman Sachs and DBS Bank, anticipate no change in the policy rate. They suggest that the RBI will continue to emphasise its commitment to the 4% headline inflation target.

Speaking according to sectors: 

• Housing: The real estate sector hopes for a stable or marginally reduced repurchase rate to sustain the current market momentum.

• Consumer Durables: Lower interest rates could boost consumer confidence and spending power, driving demand in this sector.

Overall: Some analysts suggest that the RBI might consider pivoting to a neutral stance, given signs of easing core inflation and expectations of declining food prices. However, this remains a minority view.

The MPC's decision and accompanying commentary will be closely watched by markets, businesses, and consumers alike. The central bank's outlook on domestic inflation trajectory and global economic conditions will provide valuable insights for various stakeholders.

While maintaining price stability remains the RBI's primary focus, balancing this with economic growth objectives continues to be a key challenge. The decision to hold rates steady would reflect the central bank's cautious approach to navigating current economic uncertainties.

Read more: Economic Times

SPACE TECH

🧑‍🚀 Space tech is booming, fuelled by funding and policy support

India's space tech sector is experiencing a significant surge in hiring as startups expand their operations, driven by record funding and supportive government policies. 

Key Highlights:

1. Indian space tech startups received a record $126M in funding in 2023, surpassing previous years' figures. The government has also allocated ₹1,000 Cr. to support these startups in the recent budget.

2. Companies like Skyroot Aerospace, Pixxel, Agnikul Cosmos, Digantara, Dhruva Space, SatSure, and Manastu Space are leading the charge in expanding their workforce.

3. Aggressive Hiring Plans:

   • Agnikul plans to increase its 250-strong team by 25% in FY25.

   • Pixxel aims to add 70-100 new employees to its current 200.

   • Skyroot has grown by 60% to over 300 employees in the last year.

   • Digantara plans to expand from 70 to 100 employees by FY25.

   • Dhruva Space intends to double or triple its headcount.

   • Manastu Space and SatSure also have significant hiring plans.

Overall: Despite the growth, recruiting quality talent remains a significant challenge. Many startups report difficulty finding specialised skills, often turning to allied industries like automobile, electronics, and IoT for recruitment.

But regardless, as these startups scale up and push technological boundaries, they are creating job opportunities and positioning India as a major player in the global space industry.

Read more: Economic Times

GENERAL OVERVIEW

🗞️ Bite-sized summaries

🛫 Bathinda International Airport - Shiromani Akali Dal MP Harsimrat Kaur Badal has urged the Union Civil Aviation Minister to upgrade Bathinda Airport to international status. She emphasised Bathinda's strategic location connecting eight districts across three states and requested international flights to Canada, benefiting students and families. Badal also called for a daily Delhi-Bathinda flight and connections to key Sikh holy sites. The MP highlighted Bathinda's importance, citing its central university, oil refinery, thermal plants, and the Takht Sri Damdama Sahib. With no international airport within 300 km, Bathinda presents a strong case for upgrade.

🛣️ Building Indian infrastructure - The National Highways Authority of India (NHAI) plans to monetise up to $2.4B worth of road projects in the current fiscal year through infrastructure investment trusts. This initiative aims to reduce NHAI's outstanding debt of ₹3.2T ($38B) to around ₹3T by fiscal 2025. The authority has already raised ₹160B by monetising 889 kilometres of toll roads. NHAI intends to save about ₹10B by retiring high-cost debt early. Additionally, it targets building 10,421 kilometres of new national highways this fiscal year. The authority's ₹1.68T budget for road projects will be funded through federal allocations, toll collections, and asset monetisation.

🤷 Trouble in OpenAI paradise - OpenAI, the influential AI startup, is experiencing a significant leadership shakeup. Co-founder John Schulman has left to join rival Anthropic, citing a desire to focus on AI alignment. President Greg Brockman announced a year-end sabbatical, while chief scientist Ilya Sutskever departed in May to start a new AI company. Jan Leike, who led the superalignment team, also left, expressing concerns about safety taking a backseat to product development. Other departures include product manager Peter Deng and several members of the superalignment team. These exits highlight the competitive landscape in AI research and development, as well as evolving priorities within the industry regarding safety and innovation.

🇯🇵 Back to regularly scheduled programming - Japan's stock market experienced a dramatic rebound on Tuesday, with the Nikkei 225 surging 10.23% to 34,675.46, marking its largest daily gain since October 2008 and the highest-ever spike in index points. The Topix also rose 9.3% to 2,434.21. This recovery followed a 12% drop in the previous session, triggered by the Bank of Japan's interest rate hike and global recession fears. Major sectors, including trading houses, automakers, and semiconductor suppliers saw significant gains. Other Asian markets also rallied, with South Korea's Kospi jumping 3.3%. The yen weakened against the dollar, while oil prices rose.

HEADLINES

🧑‍🍳 What else is cookin’?

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

• Amazon India head Manish Tiwary resigns.

• India exports $122.7M in non-basmati white rice during Apr-May.

• Axios lays off 50 staffers amid media landscape shift.

• Warren Buffett’s Berkshire Hathaway slashes Apple stake by 50% on selling spree, cash holding nears $280B.

• Sheikh Hasina to stay in India until the UK grants asylum.

• How the Google antitrust ruling may influence tech competition.

• Nobel winner Muhammad Yunus says ready to head Bangladesh 'interim government.'

CULTURE

🍿 Entertainment, Entertainment, Entertainment

• Olympics updates:

  • View the complete medal tally here.

  • Neeraj Chopra throws himself into the Javelin final with a season-best throw of 89.34M.

  • India Men’s lost the team Table Tennis R16 matchup against China 0-3.

  • Silver assured as Vinesh Phogat becomes the first Indian woman wrestler to enter the Olympic final.

  • Germany defeats India 3-2 in men's hockey semifinal match.