What to watch this week: IMF report, results of Icici Bank
Every Monday, Mint’s Plain Facts section features key data releases and events to look out for over the coming week. This week, the International Monetary Fund (IMF) will release its half-yearly outlook for the world economy, which will outline growth forecasts for the global economy. The financial results for the quarter ended March are due to ICICI Bank and Nestlé India. Things to look for are:
1. World Economic Outlook
The IMF will publish its latest growth forecasts on Tuesday. In its last update in January, it had already lowered the global output growth forecast for 2022-23 due to the Omicron Wave, a disrupted recovery and higher inflation. The IMF had said that the global economy was entering 2022 in a weaker position than expected. The situation has only deteriorated since then with the Russian-Ukrainian war. India will likely be hit harder than China, the IMF said in March. The sharp rise in oil prices presents a significant trade shock. Demand for Indian exports could decline with a slowdown in the US, EU and China, while imports could also be negatively affected due to supply chain disruptions. Tighter financial conditions could hurt domestic demand and the fiscal position as borrowing costs rise. A downward revision of growth forecasts is therefore in order, both for the world and for India.
2.ICICI Bank Updates
India’s third-biggest lender will present its results for the March quarter and the full 2021-22 fiscal year on Saturday. In October-December, ICICI Bank had posted robust growth in net profit and loan growth and a decline in net non-performing assets, beating analysts’ expectations. Further improvement is likely during the quarter just ended. Analysts noted that the third wave did not have much impact on the memory and demand for loans. Therefore, as the March quarter is seasonal in terms of disbursements, full-fledged business activity was observed after two years. The strong performance was likely driven by healthy credit growth in the retail and corporate segments, with low spending maintaining strong earnings. Kotak Institutional Equities analysts expect ICICI Bank to post 64% year-on-year (YOY) growth in after-tax profit. Year-over-year loan growth is expected to be 16%. In general, banking and finance should bring joy to investors and ICICI Bank is no different.
3. Nestlé revenue
Nestlé India will announce its results for the first quarter of 2022 on Thursday. It follows the fiscal year from January to December. After recording profit growth for four successive quarters, the fast-moving consumer goods giant (FMCG) was in the red in the last quarter of 2021. However, net profit for the full year was 3% higher. than it had in 2020. Sales in the FMCG sector came under pressure as inflation hurt demand. FMCG volumes fell in January-February on a year-over-year basis, data from market researcher Nielsen showed. Despite this, Nestle India’s profits are expected to rise in the January-March quarter compared to the same period last year. ICICI Direct expects the company, which recently declared an interim dividend of ₹25 per share for 2022, to post 4.5% year-on-year growth in net income.
NASA’s SpaceX Crew-4 mission is set to launch for the International Space Station (ISS) on Saturday. The expedition is the fourth crew rotation mission and will carry four astronauts. Crew-4 will take off on a SpaceX Crew Dragon named Freedom, atop the company’s Falcon 9 rocket. The astronauts are expected to return in the fall later in the year. They will conduct experiments and maintenance activities. Research will focus on materials science, health technologies and plant science for human exploration beyond low Earth orbit. The studies focus on the aging of immune systems and the manufacture of artificial retinas. The crew must also perform a pair of spacewalks to continue the ISS’s development for new solar panels to increase its total availability of electrical power. If the launch is delayed on Saturday, the expedition has two backup launches on Sunday and April 25.
5. EU inflation
The Russian-Ukrainian war has led to extreme price pressures globally due to rising commodity and food prices, with the Eurozone also facing heat in March. Data for the month, due out on Thursday, will likely show inflation hitting an all-time high of 7.5%, up sharply from 5.9% in February, according to flash estimates. If inflation stood at 7.5% in March, it would be nearly four times higher than the European Central Bank’s median target of 2%. While the ECB proposed a status quo policy last week, it confirmed that it would end the bond buying program in the third quarter of the year. There could be some moderation in inflation in April, but elevated inflationary risks are far from over for the euro bloc. However, the ECB said it would maintain a level of flexibility as the war is also having a significant impact on economic activity in the region, signaling that the pace of normalization will depend on how the situation develops.