In this week's wrapup, we'll talk about the tussle between the central and state government, how investors made billions betting against shopping malls, the contraction of India's GDP, a rebound in automobile sales, the AGR saga, and whether the world is running out of copper.
What went wrong at Tata Motors?
Last week, Tata Motors announced that it was planning to become debt free in just 3 years. This ambitious target to pay back thousands of crores of loans obviously caught investor interest. But it also begets another more important question — How did Tata Motors get here? I mean, how did a legacy brand like Tata find itself in such a precarious spot.
Well, if you want to understand the source of this problem you should definitely check out this week's Market's edition.
An act of God or is it?
On Monday, we talked about the central government's refusal to pay GST compensation to states across India. Back when GST was introduced, there was one big problem- it was a consumption-based tax. Meaning states with higher consumption figures would benefit more than producer states.
And this was deeply problematic, because states like Tamil Nadu made massive investments on roads, highways and ports to incentivize manufacturing. And until GST was introduced, they could extract a return on their investment by claiming taxes at the point of origin. So to incentivise them to adopt the new system, the centre promised to compensate them until they could work out alternatives. But a few days ago, the reneged on this promise. Find out why here.
The Mall Short
On Tuesday, we talked about the mall short. It’s no secret that coronavirus has hit retailers hard. Multiplex theatres are empty. Window shopping is a thing of the past. And sweeping changes in multiple industries might just spell the doom for malls and shopping complexes. However, for a certain class of investors, this is actually good news.
These people have been betting against malls for a while now. In fact, they’ve been banking on it even before the pandemic reared its ugly head. But how exactly do you do that? Find out here.
The Fault in our GDP
On Wednesday, we talked about the GDP. India's GDP contracted by 23.9% in the first quarter of 2020 (compared to the quarter last year) and it’s worse than most people expected. Now, the reasons here are obvious- income levels are on the decline, investments are sputtering, borrowing levels are exploding each day and then there's the pandemic.
But let us go beyond that. What are the sub-segments where the contraction is more pronounced? Which sectors were deeply affected these past few months and why were they affected so much? Find out here.
On Automobiles and AGR
On Thursday, we talked about a rebound in automobile sales and the AGR saga. There was some good news from the auto industry recently. India’s largest car manufacturer Maruti Suzuki registered 17% growth in sales compared to August last year. So does this mean automobile sales (at least passenger vehicles) are finally making a spectacular turnaround?
Along with answering this question, we also talked about the AGR saga. And guess what? It's finally coming to a close. You can check out both stories here.
Is the world running out of copper?
On Friday, we talked about about copper, innovation and pink newspapers. A recent headline proclaimed that copper inventories were at their lowest levels in almost 15 years on the London Metal Exchange. And although this does sound rather dire, there is more to this than what meets the eye. So we break it down for you.
Apart from that, we also discuss the myth of innovation and why financial newspapers are pink. Lots of interesting stuff, and you can read whole draft here.
And that's a wrap from us! have a great weekend.