IOCL Q4 results, RBI’s banking data

1. Loan book growth

On Friday, the Reserve Bank of India (RBI) will release data on loans and deposits of commercial banks for the fortnight till 7 May. These numbers could provide an early glimpse of the economic fallout of the second covid-19 wave, as it covers the period when most states imposed lockdowns.

In the first wave, growth in loans had slowed down as most sectors in the economy turned risk-averse after a stringent nationwide lockdown brought most economic activities to a standstill.

Deposit growth, meanwhile, picked up to 11.5% during April-June last year, against 9.5% a quarter ago, with reduced consumption and greater caution driving up savings.

By 2020-end, deposits were plateauing and the loans curve was rising again, but the second wave has dealt another blow to credit growth. As of 23 April, credit growth had already slipped to 5.7%, despite a low base.

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2. Tata Motors results

One of India’s largest home-grown auto firms, Tata Motors, will on Tuesday announce its financial results for the quarter ending in 31 March. The company makes almost half of all commercial vehicles (CVs) sold in India, and its performance can be an important barometer of business sentiment.

Sales were hit hard last year, plummeting to nearly half of the 2019-20 levels. However, the CV segment showed resilience after the first covid wave and Tata Motors sold more than 107,000 units in the March quarter, the highest during the pandemic. This could boost the firm’s revenues, which had already jumped to a seven-quarter high in October-December.

The second wave could upend all gains and put exports under the spotlight, which is why investors will eye the company’s guidance on the months ahead. The clouded outlook has kept the company’s stock nearly flat since March. If lockdowns continue, vehicle sales this year may not match pre-pandemic levels, said a CARE Ratings report last month.

3. Indian Oil results

IOCL, which runs about a third of India’s oil refining capacity, will also declare its March quarter earnings on Tuesday. It is largely expected to expand its profits on the back of higher crude oil prices, a stronger rupee, and recovering refining margins. Gross refining margins, a measure of profitability for refiners, had slumped in the June quarter, but is now on an upward trajectory. The marketing side could also gain from increased fuel consumption in India. But a larger chunk of profits could come from inventory gains due to higher crude oil prices in the past quarter. ICICI Securities expects inventory gains to double since the December quarter. This puts the focus on revenue from operations, which does not take into account these external factors. Revenues from operations grew for the first time in six quarters in the December quarter. Investors will also track the firm’s projections on the lockdown impact on auto fuel sales and refining operations.

4. Europe’s recovery

Unlike the US, which has seen a sharp rebound in economic activity on the back of fast vaccinations, a sluggish vaccine roll-out has meant a slower recovery for the Eurozone. Two progress updates are due this week: inflation data for April (Wednesday) and the flash purchasing managers’ index for May (Friday). The manufacturing sector has recovered fast, expanding at its quickest in three years in April. But, lockdowns have dealt a severe blow to services, which saw only their first expansion in eight months. The upcoming…