Winning Bizness Economic Desk

A creditable first was achieved in the Indian mutual funds industry in December 2023. For the first time, the total assets under management (AUM) of the Indian mutual funds industry breached the Rs 50-lakh-crore mark.

The Association of Mutual Funds in India (AMFI) said that the total AUM of the industry was pegged at Rs 50.78-lakh-crore as on December 31, 2023, which was higher than the previous month’s AUM of Rs 49.05-lakh-crore.

The total AUM of the industry vaulted over Rs 10-lakh-crore in the last one-year.

The figure was pegged at Rs 39.9-lakh-crore in December 2022. A significant highlight here is that assets clocked an expansion of around six times in the last ten-years.

Systematic Investment Plans (SIPs) continued to set new records with December witnessing Rs 17,610-crore flowing in through SIPs—it was pegged at Rs 17,073-crore in November.

In a significant development, December also witnessed over four-million new SIP accounts being opened.

In terms of net inflows in equity schemes, December of last year also saw a net inflow of Rs 16,997.09-crore with sectoral/thematic funds accounting for the biggest chunk at Rs 6,005.49-crore.

Here, a point of interest is that net inflows registered by Arbitrage Fund breached the Rs 10,000-crore mark at Rs 10,645.16-crore while hybrid funds as a category witnessed net inflows of Rs 15,009.30-crore during December of last year.

Debt funds as a category, on the other hand, saw net outflows totalling Rs 75,559.93-crore in December. Here, it must be pointed out that the end of quarter months typically witnesses outflows in debt funds.

Liquid funds, as a category, saw the highest quantum of outflows at Rs 39,675.27-crore. A point to be highlighted here is that in December of last year, the total number of unique investors climbed to 42.1-million, a robust increase in the last five-years from 19.1-crore in December 2018.

Adani Group Announces Rs 50,000-cr Investment in Maharashtra

Leading Indian blue-chip conglomerate, the Adani Group, has announced a massive Rs 50,000-crore investment in the western coastal state of Maharashtra.

A Memorandum of Understanding (MoU) was inked between Adani Enterprises Limited and the Maharashtra government to set up a one GW hyperscale data infrastructure in the state.

The MoU was signed in the presence of Maharashtra Chief Minister Mr Eknath Shinde and Adani Group Chairman, Mr Gautam Adani, at the World Economic Forum (WEF) 2024 held earlier in the month at Davos.

The data centre infrastructure, which will be set up in key locations such as Mumbai or Navi Mumbai and Pune, will be powered by renewable energy, which will enhance the green energy infrastructure in the state and provide direct and indirect employment to 20,000 people.

According to a press statement, the Adani Group intends to make deemed distribution investments to power the proposed 1 GW hyperscale data centre infrastructure.

The Maharashtra state government has evinced a keen interest in promoting information technology-related infrastructure and services and considers the proposed hyperscale project to be economically and socially beneficial to the state.

Retail Inflation Rises to 5.69 Per Cent in Dec

An unfavourable base effect was instrumental in pushing up India’s retail inflation to a four-month high of 5.69 per cent in December of last year (2023).

The Consumer Price Index (CPI)-based inflation stood at 5.55 per cent in the previous month of November last year.

Headline retail inflation climbed up again in December 2023 and here it must be highlighted that it has now spent 51 consecutive months north of the Reserve Bank of India (RBI)’s medium-term target of four per cent.

Significantly, however, it has undershot forecasts for the second consecutive month; it has been lower than the Indian central bank’s forecast of 5.6 per cent for the October-December period.

An unfavourable base effect was the key driver of inflation in December 2023 although the price momentum as indicated by the Month-on-Month (MoM) change in prices weakened.

The Consumer Food Price Index was down 0.9 per cent MoM, aided by a 5.3 per cent sequential fall in the price index for vegetables as prices continued to correct.

The slowdown in price momentum was visible in categories apart from food too, with the price index for housing reducing by 0.6 per cent MoM in December of last year. Housing makes up ten per cent of the consumption basket.

Other categories such as clothing and footwear, fuel and light and miscellaneous items all witnessed their price indices increase by a miniscule 0.2 per cent from November.

Consequently, core inflation declined further to 3.9 per cent from 4.1 per cent in November. Core inflation is inflation excluding food and fuel.

The less-than-expected rise in retail prices in December of last year is very welcome indeed. This inflation data is the last one before the presentation of the interim budget for 2024-25 on February 1 followed by the Monetary Policy Committee’s interest rate decision on February 8.

Forex reserves climb USD 1.63-billion to USD 618.9-billion

India's forex reserves jumped USD 1.634-billion to USD 618.937-billion for the week ended January 12, the Reserve Bank of India (RBI) data showed.

In the previous reporting week, the overall reserves had declined by USD 5.89-billion to USD 617.3-billion.

The country's forex reserves had reached an all-time high of USD 645-billion in October 2021.

The reserves took a hit as the Reserve Bank deployed them to defend the Rupee amid pressures caused majorly by global developments since last year.

For the week ended January 12, the foreign currency assets—a major component of the reserves–increased USD 1.859-billion to USD 548.508-billion, the data showed.

Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound, and yen held in the foreign exchange reserves.

Gold reserves were down USD 242-million to USD 47.247-billion during the week, the RBI said. The Special Drawing Rights (SDRs) were up USD 12-million to USD 18.31-billion, the apex bank said.

India's reserve position with the IMF increased USD 6-million to USD 4.872-billion in the reporting week, the RBI data added.

India’s Industrial Growth Falls to 2.4 pc in Nov

The country’s industrial output growth slid to 2.4 per cent in November of last year from the previous month’s high of 11.6 per cent, according to data released by the Ministry of Statistics and Programme Implementation (MoSPI).

A point to be noted here is that since this was the Diwali period, there were fewer working days and this pushed down production.

At 2.4 per cent, the latest industrial growth figure as per the Index of Industrial Production (IIP) is an eight-month low. Here, it must be pointed out that in November 2022, the country’s industrial output had expanded by an encouraging 7.6 per cent.

For the April-to-November period last year, the IIP growth was at 6.4 per cent as against 5.6 per cent in the first eight months of 2022-23.

In November of last year, growth was pushed down by the manufacturing sector—its production increased by a meagre 1.2 per cent on a Year-on-Year (YoY) basis. This low growth follows a robust 10.2 per cent increase in October.

The sharp southward movement in manufacturing output growth can be attributed to the many holidays in November on account of festivals which led to a reduction in working hours and consequently, lesser production.

Other sectors too registered a fall in growth with electricity generation increasing by just 5.8 per cent as against a very heartening 20.4 per cent growth in October.

Another sector, mining, was just 6.8 per cent higher as opposed to a growth of 13.1 per cent in October.

In terms of use-based classification of goods, production growth in November was lower for all six categories as compared to October.

It may be recalled that economists have been pointing out for some time now that the IIP data would be affected by seasonal factors with Diwali occurring in November in 2023 and in October in the previous year.

This impacts the base effects and hence the economists put forth their view that instead of monthly growth numbers, the average for the October-November period might be a better indicator of ground realities.

If the average for two months is taken, the Indian economy is faring far better now with industrial output up seven per cent YoY in October-November 2023 as compared to a growth of a measly 1.8 per cent in the October-November period of 2022.