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Where is the Sensex headed? will the economy turn around? what about sectors like auto, pharma, consumer goods and infra? Business Standard tells you what to expect in the new year
 "20 key industrial, political and economic developments to expect in 2020")
Battered by an unprecedented slowdown, the Indian auto industry is desperately pinning hopes on the next financial year for a turnaround, banking on a host of new and upgraded models slated to make their way to the market. The industry's hopes are also in line with expectations that the economy would finally come out of the slump, drawing people back to the showrooms. They are cautiously optimistic about the year that will mark the transition to stricter emission norm BS-VI and compliance to new safety norms thereby making vehicles costlier are lurking around the sector. With India's flagship motor show the biennial Auto Expo round the corner, the auto sector is treating the show as the launching pad of revival, having been through an unprecedented slump, which began from the last festival season and continuing unabated till date.
The year 2019 was a mix of ups and downs for the electric vehicle sales in the country. The coming year is expected to be better, with the entry of more electric cars and Chinese entities’ entry, bringing down the average cost. The second phase of the Rs 10,000-crore scheme of the central government, termed Faster Adoption and Manufacturing for Hybrid and Electric vehicles (FAME II), offers higher incentives to higher powered products. Recently, Union minister Prakash Javadekar told Parliament about 285,000 buyers of electric/hybrid vehicles had been supported by a subsidy of Rs 360 crore under FAME. Indian luxury car market, comprising top five players -- Mercedes, BMW, Audi, JLR and Volvo, witnessed a total sales of 40,340 units in 2018 and is expected to see a decline in 2019. German automobile company Audi expects Indian luxury car market to remain flat next year and growth to come in only in 2021, having gone through a challenging 2019.
Year 2019 was a roller coaster for the Bharatiya Janata Party. It lost a few electoral battles, but triumphed in the key one — the Lok Sabha polls. Legislatively, it delivered on its core agenda of scrapping Article 370. Year 2020 would test not only the BJP’s ability to win the ballot box in the couple of Assembly polls, but whether it has the intellectual wherewithal to win the streets. It will test if the BJP has the faculty to persuade the country’s youth and minorities that it has their interests at heart, and the perspicacity to reach out to its increasingly upset allies. Year 2020 will tell the country if the BJP’s current leadership, and its governments at the Centre and in states, have the ability to accomplish this democratically and with minimal violence.
On December 17, when Uttar Pradesh Chief Minister \Adityanath was canvassing for BJP candidates in Jharkhand, more than of his own 100 party legislators were protesting in the Vidhan Sabha precincts against the alleged high-handedness of police and district officials. Adityanath went into damage-control mode quickly by meeting the disgruntled BJP MLAs. But, the widespread violence and arson during the anti-Citizenship Amendment Act (CAA) protest in the state capital two days later (on December 19) put a big question mark on the efficiency of law enforcement and intelligence under his stewardship. Several people were killed in violent protests across the state and scores of others, including policemen, were injured. The violence made big headlines in the national media, putting the party leadership on the back foot. These developments not only prompted critics to raise pertinent questions about the leadership style of Adityanath but augured the ushering in of 2020 with a platter of challenges for him as the BJP prepares for the 2022 Assembly election.
India's economy is expected to rebound in 2020 on the back of measures taken by the government and the RBI coupled with easing of global trade tensions, industry body CII said on Dec 29. The chamber also suggested a flexible fiscal policy that will set a central government's target for the deficit in the range of around 0.5 to 0.75 per cent, and said it is likely to have a significant multiplier effect on the economy. "Nascent signs of recovery are noted in the form of improved PMIs (Purchasing Managers' Index) of manufacturing and services, jump in passenger air traffic, sharp moderation in the decline in sales of passenger cars, among others," said CII President Vikram Kirloskar. But Struggling Air India might be forced to shut down by June next year unless it finds a buyer as "piecemeal" arrangements cannot be sustained for long, according to a senior airline official. Amid continuing uncertainty over the fate of the national carrier, the official said there is also need for funds to restart operations of 12 grounded narrow-body planes. The airline has a debt burden of around Rs 60,000 crore and the government is still working on the modalities for the disinvestment.
As it prepares the 2020-21 (FY21) Union Budget, the government may assume a growth rate of 6-6.5 per cent in real gross domestic product (GDP) for the next fiscal year. It is also likely to assume a deflator of around 4 per cent. That could take the nominal GDP outlook for FY21 to around 10 per cent. The upcoming Budget is crucial for Prime Minister Narendra Modi and Union Finance Minister Nirmala Sitharaman as the government looks for ways to reverse a deep slowdown across sectors and hope.
The consumer durables industry returned to a steady growth path in 2019 after almost two flat years but might not be able to repeat the feat in the coming year as broader market indicates economic slowdown. The sector estimated to be around Rs 76,400 crore in FY'19, logged a growth rate of about 10 per cent, largely helped by long and harsh summer, which lifted sales of compressor-based cooling products such as AC and refrigerators. The industry, however, continued to face challenges in segments like TV panels and microwave, which failed to deliver a notable performance during 2019. The Consumer Electronics and Appliances Manufacturers Association (CEAMA), however, is hopeful that the demand of cooling products next year will be high as well.
The Indian retail industry expects to bounce back in the second half of 2020 on the back of consumer demand revival and increased spending. While major players struggled to keep themselves on the growth chart in 2019, they expect a decent double-digit growth coming back in 2020. But sectoral experts are cautions, saying it would depend on various factors like recovery of manufacturing and other sectors, incentives in the Union Budget and availability of money in the hands of consumers to make purchasing decisions.
The year 2019 has been tough for the domestic steel industry as both stocks and commodity prices dropped significantly during the year. With steel consumption slipping to unexpected levels on the back of an extended monsoon, the US-China trade war, and a liquidity crunch in the domestic market, among several other factors, prices of the alloy plunged almost 34 per cent in 2019. The industry had estimated market consumption growth at 7 per cent at the beginning of FY20. In the last two years, domestic steel demand has grown 7-8 per cent.
India is set to cross the 100-Gw renewable energy capacity mark in 2020 and can make rapid strides towards the ambitious 175 Gw clean energy target by 2022 provided the government keeps a close eye on key issues and deals with those well in time. The government, however, needs to promote storage to ensure 24x7 clean energy supply as coal fired thermal power still remains the base load in the country. Presently, the issues hampering growth of renewables in India are lack of interest of financial institution to fund renewable energy projects, safeguard duty on imported solar panels, ambiguity over goods and services tax (GST) on solar equipment and low investor sentiment due to delayed or non-payment by discoms to clean energy developers. India’s installed renewable energy generation capacity touched around 86 Gw by November-end. This includes solar, wind, small hydro, biomass, waste to energy and others.
The gross non-performing asset ratio of banks may increase to 9.9 per cent by September 2020 from 9.3 per cent in September 2019, according to an RBI report. The report said state-run banks' GNPA ratios may increase to 13.2 per cent by September 2020 from 12.7 per cent in September 2019, whereas for private banks it may climb to 4.2 per cent from 3.9 per cent, under the stress scenario. The foreign banks' gross bad loans may increase to 3.1 per cent from 2.9 per cent in September 2019.
The Centre is considering rationalising trade margins for drugs first at 45 per cent and gradually lowering them and capping them at 30 per cent, possibly starting with one drug category at a time, such as antibiotics and pain and analgesics. Business Standard has learnt that some of the drug majors such as Cipla and Alkem, among others, have opposed the proposal because they have a sizeable business in unbranded generic medicines. While the trade margins for branded generics are standardised by trade, the margins vary in the case of unbranded generics.
Investors are preparing to usher in the New Year with cautious optimism amid hope of a recovery in economic growth aided by cut in interest rates by the RBI. On the technical charts: S&P BSE Sensex: The index formed a strong bottom around 36,000 levels, which should act as a turning point in calendar year 2020 in case the markets correct. Also, the index has managed to hold ground above the 40,000 mark, which will remain an immediate support from a short-term viewpoint. If the index breaks 40,000 levels, then 39400 – 39,000 is a medium-term support for the index. That said, the chart pattern move suggests a rally towards 49,000 levels going ahead. Nifty 50: The index has made fresh high twice in CY19 and the positive momentum is likely to remain intact in CY20 as well. For the Nifty, 12,500 seems to be the immediate level the index is trying to scale. The formation is “Higher High, Higher low” remains intact till the lower support of 11,800 is not broken. The MACD is successfully trading above the signal line.
The year 2019 saw benchmark indices scale fresh lifetime highs amid volatility. Trade war concerns, tax proposals for India Inc and foreign portfolio investors (FPIs), the overall slowdown in the economy, rate cuts by the Reserve Bank of India were some of the key factors that guided markets through 2019. The rally was however polarised and while the Sensex and the Nifty50 gained at least over 11 per cent, the broader market continued to bleed. Going ahead, analysts say the market will be driven by macro-economic tailwinds. Receding global trade war fears, continuity of enabling government policies, benefits of low-tax structures for corporates, good monsoon, low-interest rate regime, the low base of CY19 will turn sentiment around, leading to higher consumption. Improving economic outlook along with favourable policies should see FPIs returning. In an interview with Business Standard, the deputy CEO of Edelweiss Global Investment Advisors Shiv Sehgal said that the improving liquidity scenario is a positive for markets in the year 2020. According to Sehgal, the US Fed reversing its hawkishness to cut rates thrice in 2019 and resume its balance-sheet expansion makes him optimistic about an improving liquidity scenario in 2020.
Even as the Indian real estate sector continues to witness a slowdown, cities like Bengaluru and Mumbai are expected to attract healthy office rentals in 2020, mainly backed by rapid expansion of IT industry, a report has said. According to a study titled 'Asia-Pacific Prime Office Rental Index Q3 2019' by property consultant Knight Frank, the National Capital Region (NCR) would see stable growth in rentals. The IT industry accounted for 35 per cent of total transaction volume in first half of 2019 across the top eight cities, which was most apparent within Bengaluru, which recorded an 14 per cent rental rise in January-June (H1) 2019.
1. The East-West Corridor of Kolkata Metro was originally slated to be operational by 2012, but was later pushed back to 2015. The project will now be implemented in four phases. The first phase and second phase is currently expected to be operational by March 2020. 2. Mumbai Metro Rail Corporation, which is implementing the Colaba-Bandra-Seepz corridor, on Friday said 100 per cent tunnelling work of the project will be completed by September next year. Apart from this, the Corporation hopes to complete 70 per cent of civil work and get the first rolling stock by December 2020, MMRC said in a statement. Currently, more than 70 per cent of the tunnelling work across the 33 km corridor has been completed. 3. Jaipur Metro is a rapid transit system in the city of Jaipur and the first phase of the project is expected to be completed in 2020. The construction works for metro rail project in Srinagar will start by 2020. The Detailed Project Report (DPR) for the Metro rail project has been prepared. The metro rail project, covering 25km in length, in Srinagar will be completed in two phases. 4. Work on Phase III of Delhi Metro started in 2011 with 2016 being the planned deadline. Later, certain small extensions to the Delhi Metro were added as part of the Phase - III project which are still under-construction and expected to get completed by 2020. And the construction works for metro rail project in Srinagar will start by 2020. The Detailed Project Report (DPR) for the Metro rail project has been prepared. The metro rail project, covering 25km in length, in Srinagar will be completed in two phases.
The Department of Telecom will soon seek sector regulator Trai's recommendations on pricing and other modalities for coveted 5G bands of 24.75-27.25 GHz, and wants to put this new spectrum up for auction sometime next year, sources said. This new 5G chunk is separate from the Rs 5.22 trillion spectrum sale plan approved by the Digital Communications Commission on December 20, under which 8,300 MHz of airwaves across 22 circles are set to be put on block in March-April 2020.
WiFi services being provided through BharatNet in villages across India will be free of charge till March 2020, Telecom and Information Technology Minister Ravi Shankar Prasad said on Dec 25th. Currently, 48,000 villages connected under the BharatNet project have WiFi access. The minister said all common service centres (CSCs) will offer banking services. As such, CSCs act as access points for delivery of digital services and the number of these centres has increased from about 60,000 in 2014 to 3.60 lakh currently. Haryana itself has 11,000 CSCs offering an array of 650 services. CSC e-Governance Services India Ltd is implementing the Digital Village initiative in rural and remote areas of the country. Overall, one lakh villages are set to be transformed into digital villages.
1. Chinese smartphone maker OnePlus has confirmed that it will participate in the 2020 edition of Consumer Electronics Show, to take place in Las Vegas, US, from January 7. The company will showcase its ‘Concept One’ smartphone, which it says will “demonstrate a vision of both new technology and alternative design approach for the future of smartphones”. 2. Motorola, will in 2020 launch in India the Motorola Razr, a bendable-screen smartphone based on the company’s iconic Moto Razr flip-phone (original). 3. Oppo’s under-screen-camera technology is expected to find its way into smartphones in 2020. The technology will allow the company to design smartphones with obstruction-free front profile and enhanced screen-to-body ratio. 4. In 2020, iRobot will launch a floor-mopping robot under its Braava series of machines.It will be equipped with the company’s imprint technology, which will allow it to work in sync with iRobot Roomba robotic vacuum cleaners. 5. Part of LG’s 2020 Ultra series monitors, the UltraFine Ergo Display is designed for working professionals who spend a lot of time at their desk. The monitor has an ergonomically advanced arm-type adjustable stand that can extend outwards, be positioned close to the wall, be moved up to the eye level, or lowered to the desk. 6. Microsoft’s gaming console, the Xbox, is set to get a complete makeover next year, both in terms of design and performance. The next-generation gaming console, called the Xbox Series X, is expected to come out in the last quarter of 2020, along with an exclusive set of gaming titles.
The Mars 2020 rover, which sets off for the Red Planet next year, will not only search for traces of ancient life, but pave the way for future human missions, NASA scientists said on Dec 27 as they unveiled the vehicle. The rover has been constructed in a large, sterile room at the Jet Propulsion Laboratory in Pasadena, near Los Angeles, where its driving equipment was given its first successful test last week. It is scheduled to leave Earth in July 2020 from Florida's Cape Canaveral, becoming the fifth US rover to land on Mars seven months later in February.
First Published: Dec 31 2019 | 1:24 PM IST
