The week in charts: West Asia conflict, capex push, China imports

Escalating tensions in West Asia could cause trade and stock market shocks for India. Meanwhile, manufacturing PMI grew at the slowest pace in eight months, and new project announcements by Indian companies rose year-on-year in the September quarter.

Ripple effects of Israel-Iran tensions

Geopolitical tensions escalated in West Asia this week as Israel and Iran traded attacks. The impact of the rising tensions was felt immediately in the financial sector. Brent crude oil prices jumped about $2 per barrel since the escalation of the conflict, while Indian stock markets turned volatile. Experts warned that India would need to brace for costlier crude oil and shipping charges. The ongoing tensions had already affected trade via the Suez Canal, with the average number of ships passing through it dropping significantly from last year, showed data from International Monetary Fund PortWatch.

Brent crude oil price jumped about $2 per barrel since the escalation of the conflict.

Capex announcements up 43%

New capital investments announced by Indian companies rose 43% year-on-year to ₹5.5 trillion in the September quarter, showed the latest data from the project-tracking database of the Centre for Monitoring Indian Economy (CMIE). Both private and government companies contributed to this. Announcements by private companies rose 42% from the year-ago period, while those from the public sector were up 44%. This marks a reversal of the decline in the past four quarters, which had seen a year-on-year fall of 17-77%.

Manufacturing down, but still strong

56.5: That is the manufacturing purchasing managers index (PMI) figure for September, down from 57.5 in August. This marks the slowest pace of manufacturing activity in eight months, and is due to slower expansion in factory production and receding sales. International orders rose at their slowest pace in a year-and-a-half. However, the number is still comfortably above the 50-mark that separates expansion from contraction, signalling continuation of robust activity. While cost pressures increased in September in the chemical, packaging, plastic and metal segments, the rate of increase was mild in historical terms.

Automakers raise incentives amid dull demand

The festive season got off to a dull start for the Indian automobile market after Onam and Ganesh Chaturthi failed to boost sales, Mint reported. Automakers are staring at record-high inventories despite deep discounts and higher incentives. Brands such as Honda, Toyota and Skoda have more than doubled their weighted incentives on passenger vehicles compared to last year, showed data from Jato Dynamics. With surplus vehicles and a potential sales dip during the shraadh period, hopes for a turnaround now rest on the upcoming Navratri and Diwali festivals.

Dumping probe on Chinese products

High imports from China have always been a major issue. India is now initiating a dumping probe on six products following complaints from domestic players. A Mint analysis of trade data showed that the export-import imbalance has grown, with exports being only 12.4% of imports in the first five months of 2024-25, down from 15.1% year-on-year. Among top 10 commodity groups in the micro, small and medium enterprises (MSME) import segment, five saw sharp growth in the past five years.

Celebrities splurge on real estate

₹194 crore: That's what Amitabh Bachchan and Abhishek Bachchan spent on 180,000 sq ft of residential and commercial property in Mumbai in the past four years, according to Square Yards data. This surpassed the combined area bought by the next four celebrities, and accounted for a third of all celebrity real estate transactions in that period, Mint reported. Other stars who spent more than ₹100 crore on prime properties include Janhvi Kapoor, Ajay Devgn and Kajol, and Ranveer Singh and Deepika Padukone.

Indian companies are more creditworthy

The creditworthiness of Indian companies has improved significantly in the first half of 2024-25, Mint reported. The number of rating upgrades surpassed downgrades, driven by factors such as strong domestic growth, rural consumption revival, government infrastructure initiatives, and low corporate leverage. At 14.5%, the annualised upgrade rate has exceeded the decade's average of 11%, while the downgrade rate has decreased, Crisil Ratings said. An analysis of 2,488 companies from 25 sectors by Icra showed that financial-leverage levels have also declined from their peak.

Chart of the week: ED data gap

The Enforcement Directorate (ED) appears to be relying very little on financial data provided by other government agencies. One of the data providers, the Financial Intelligence Unit, compiled 1.68 million reports of ‘suspicious transactions' between 2020-21 and 2022-23. However, the ED used this data in only 23 cases from April 2018 to October 2023, shows a Mint analysis.

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