The Fed decides to hold interest rates

16th March 2024 – 23rd March 2024 | Another week in the markets

S&P 500	Nasdaq	VIX	DJIA	Russell 1000	NYSE
5,234.18	16,428.82	13.06	39,475.90	2,868.36	18,112.04
2.29%	2.85%	-9.37%	1.97%	2.29%	1.48%
Nifty 50	Gold	Silver	Brent crude	USD-INR	EUR-INR
22,096.75	$2,166.50	$24.83	$84.94	83.60	90.36
0.33%	0.33%	-2.24%	0.48%	0.85%	0.11%

Source: MarketWatch 

Hello Saturday,

This week, the Federal Reserve decides to hold interest rates steady, Samsonite mulls over listing itself on the US bourses, and Flipkart opens up its coffers and doles out 100% bonuses.

• The Federal Reserve held interest rates steady, which the markets read as a positive sign and roared to new heights. The projections released by Federal Reserve officials once again reaffirmed that the Fed is eyeing three rate cuts this year.
• Hyundai and its sibling company, Kia are recalling over 147,000 EVs this week over possible defects in the charging unit. Last week as well, the companies recalled over 170,000 EVs in South Korea that were suffering from the same issue.
• Luggage manufacturer Samsonite is looking to list itself in the US markets considering the massive investor appetite that seems to be powering the markets to record highs. Samsonite, as per the Wall Street Journal, is looking to raise less than $500 million.
• Indigo is considering the purchase of a widebody aircraft to give it more muscle in its rivalry with Air India.
• Flipkart delivers largesse to its employees; doles out 100% bonuses to employees. 

Taking stock | Fed sidelines inflationary bumps | Re-calls ramp up | Samsonite spreads out | Indigo ambitions | Flipkart’s free hand | Invest wisely

Taking stock

All three major indices closed the week with gains, bolstering a strong market trend that has been rocketing the indices higher for several weeks now. The Nasdaq rose by about 0.2% to register a fifth record close of the year, while the Dow tumbled by 305 points on Friday but still ended with weekly gains. The S&P 500 scaled up 2.29% this week. 

Fed sidelines inflationary bumps

The Federal Reserve, this week, opted to keep interest rates steady and projected an optimistic outlook that fuelled markets to new heights. Further, projections from Fed officials went on to reaffirm the three rate cuts that had earlier been pencilled in for 2024.

The Fed held the interest rates steady in the range of 5.25% to 5.5%, a high of a little over two decades.

The larger picture of inflation’s trajectory muddied after the hotter-than-anticipated rise of inflation figures for January and February. For January, the consumer-price inflation eased to 3.1% over 3.4% in December. However, when seen on a year-on-year basis, core inflation – inflation figures sans food and energy prices — remained unchanged at 3.9%. For the month of February, CPI rose by 3.2% on a year-on-year basis, higher than the economists’ expectations of 3.1%.

In his address and in his interaction with the media, Chair Powell conceded that the data of the last two months was stickier than what the Fed had anticipated, and cautioned that policymakers cannot dismiss data that they don’t like. However, he went on to add that the adverse data of the first two months had not marred the larger story of inflation, which is,  “moving down gradually on a sometimes-bumpy road toward 2%”

Markets rejoiced as the Fed had largely retained its rate projections, while making modest changes to inflation and growth forecasts for the year. 

Re-calls ramp up

 Hyundai Motors and Kia have been on a re-call spree.

This week, they recalled over 147,000 EVs from the US over a possible defect in the charging system, which could possibly lead to power loss while the car is running. This isn’t the only instance when the two companies have issued a recall. Last week, as well, the two auto manufacturers issued a car recall in South Korea, recalling over 170,000 units over the same defect.

Hyundai is slated to recall 98,878 units of the Ioniq and Genesis brands, while Kia will be recalling 48,232 units of its EV6 cars, a release by the National Highway Traffic Safety Administration indicated. Car safety regulators said that car owners can have their units inspected and the software replaced at no extra cost.

Source: Google Finance

Samsonite spreads out

Luggage manufacturer Samsonite is eyeing a new listing in the US given the higher investor appetite that is powering the three major indices to new record highs, frequently. Sources told media platforms that the company is looking to raise less than $500 million.

Earlier, on Friday, Samsonite had said that it was looking to list itself on bourses other than those in Hong Kong. A listing on another stock exchange will increase the liquidity of the company’s shares, finance new operations, boost business expansion, and assist the company in amplifying its imprint across the world.

The luggage manufacturer, whose market capitalization towers at a little over $5.5 billion as of this week, was first listed on the Hong Kong stock exchange in 2011. The company had raised $1.25 billion at that time.

Hong Kong investors were far from enthused about the possible listing in the US. News of the dual listing was greeted by a falling share price, which plummeted by 7.17% to 28.50 Hong Kong dollars by Friday-end. 

Indigo ambitions

Indigo is looking to branch out into long-haul services with a keen eye on affluent Indians who can afford to fly frequently into places like the UK and Europe. India’s leading low-cost carrier aims to break into a new segment with the purchase of a widebody aircraft. Currently, Indigo runs a fleet consisting mostly of Airbus planes. It also operates two Boeing 777s leased from Turkish Airlines.

Bringing a widebody aircraft into its fleet will not only add to the company’s muscle when it comes to competing with Air India but will also increase its international flying radius. As per a report by Business Standard, the airline is reportedly considering several aircrafts, and is likely to place an order for 30 Airbus SE A350s. 

The business newspaper reported that their decision will, most likely, be announced in the coming weeks while simultaneously cautioning that the airlines could still revisit its decision about the number of planes and the timing of the purchase.

As things stand, Indigo is one of the largest customers of Airbus after it placed a mind-blowing order for a record 500 A320neo family aircrafts in 2023. 

 The company, which was set up in 2005, now operates over 2,000 flights a day and covers over 118 destinations. The airline achieved a rare feat last year by becoming one of the few airlines across the world to ferry more than 100 million passengers a year.

Flipkart’s free hand

At a time when the technology sector is grappling with a downturn and a flurry of pink slips, Flipkart is turning out to be an outlier. 

The e-commerce giant is doling out 100% bonuses to all employees and unveiling merit-linked payouts to eligible workers. The company is reportedly implementing this initiative for most of its 22,000-strong workforce.

While the total amount of bonuses and increments handed out is not known, media platforms reported that the number of employees receiving increments is higher than the previous year. Market experts believe that the 100% bonuses are reflective of the strong growth in the e-commerce segment and the increasing hold of the company in the segment.

Flipkart Group Chief Executive Officer, Kalyan Krishnamurthy, in a letter addressed to the employees, said that 2023 was a strong year for the company, where it has scaled and debuted categories across product lines and empowered the Indian customer. The company also marked out that its stock option allocation initiative will be applicable to those who are eligible.

Flipkart Internet, the marketplace wing of the e-commerce company, reported a 42% growth in operating revenue, which stood at Rs 14,845 crore. Its total loss slumped by 9% to Rs 4,026 crore, while its total expenses surged by 26% to Rs 19,043 crore in FY23.

In 2022, the Bengaluru-based company posted operating revenues of Rs 10,477 crore and a loss of Rs 4,419 crore. 

Invest wisely 

For one’s investments to bear fruit, it is necessary to channel funds into companies that enjoy a clear market advantage. Outlier returns become a reality, when investors deeply examine and research the business dynamics of the companies that they have zeroed in on. Heeding tips, social media gossip and advice from well-meaning but financially illiterate friends can only lead to losses and heartache. With the Appreciate app as your partner, you can prevent yourself from falling victim to such a fate. Our deep research skills, experience and expertise can help you steer your way to long-term wealth and prosperity.

Warm regards,
Another week
in the markets