Watch for this week: IMF report, ICICI Bank earnings
Premium- Financial results for the March-ended quarter are due from ICICI Bank and Nestlé India. The things to look for are
Every Monday, Mint’s Plain Facts section features key data releases and events to look for in the coming week. This week, the International Monetary Fund (IMF) will bring out its biannual World Economic Outlook, which will lay out growth forecasts for the global economy. Financial results for the March-ended quarter are due from ICICI Bank and Nestlé India. The things to look for are:
1.World Economic Outlook
The IMF will release its latest growth forecasts on Tuesday. In its last update in January, it had already lowered the 2022-23 growth forecasts for global output because of the Omicron wave, disrupted recovery, and higher inflation. IMF had said that the global economy was entering 2022 in a weaker position than had previously been expected. The situation has only degraded since then with the Russia-Ukraine war. India is likely to be more badly affected than China, the IMF said in March. The sharp rise in oil prices presents a significant trade shock. The demand for India’s exports could decline with a slowdown in the US, the EU, and China, while imports could also be adversely affected because of supply-chain disruptions. The tightening of financial conditions may hurt domestic demand and the fiscal position with the rising borrowing costs. A downgrade of growth forecasts is, hence, on cards, for both the world and India.
2.ICICI Bank updates
India's third largest lender will present its earnings for the March quarter and the full fiscal 2021-22 on Saturday. In October-December, ICICI Bank had posted robust growth in its net profits and loan growth and a decline in net non-performing assets, beating the expectations of analysts. A further improvement is likely in the just-ended quarter. Analysts noted that the third wave did not have much impact on recollection and loan demand. Hence, with the March quarter being seasonally strong in disbursements, full-fledged business activity was seen after two years. The strong performance was likely driven by healthy credit growth across retail and corporate segments, with low expenses keeping profits high. Analysts at Kotak Institutional Equities expect ICICI Bank to deliver 64% year-on-year (y-o-y) growth in its profit after tax. The y-o-y loan growth is likely to be 16%. In general, the banking and financial sector is set to bring cheer to investors and ICICI Bank is no different.
3. Nestlé earnings
Nestlé Indiawill announce its earnings for the first quarter of 2022 on Thursday. It follows the January-December financial year. After recording a growth in its profits for four successive quarters, the fast-moving consumer goods (FMCG) giant was in the red in the last quarter of 2021. However, net profit for the entire year was 3% higher than what it registered in 2020. Sales in the FMCG sector have been under stress as inflation has hurt demand. FMCG volumes declined in January-February on a y-o-y basis, showed data from market researcher Nielsen. Despite this, Nestlé India’s profit is projected to grow in the January-March quarter compared with the same period last year. ICICI Direct expects the company, which recently declared an interim dividend of ₹25 per share for 2022, to post a 4.5% y-o-y growth in net profit.
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4.Crew-4 launch
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 lift off on a SpaceX Crew Dragon named Freedom, atop the company’s Falcon 9 rocket. The astronauts are scheduled to return in the fall later in the year. They will conduct experiments and maintenance activities. The research will be in material science, health technologies, and plant science in preparation for human exploration beyond low-earth orbit. Studies include those around ageing immune systems and artificial retina manufacturing. The crew is also scheduled to conduct a pair of spacewalks to continue the development of ISS for new solar arrays to increase its total power supply availability. If the launch is delayed on Saturday, the expedition has two back-up launches on Sunday and on 25 April.
5.EU inflation
The Russia-Ukrainewar has led to extreme price pressures globally through higher commodity and food prices, with the euro area also facing the heat in March. The data for the month, due to be released on Thursday, will likely show inflation rising to an all-time high of 7.5%, sharply up from 5.9% in February, according to flash estimates. Should inflation come in at 7.5% in March, it would be nearly four times higher than the 2% midpoint target of the European Central Bank. While the ECB delivered a status quo policy last week, it confirmed it would end the bond purchase programme in the third quarter of the year. There may be some moderation in inflation in April, but high inflationary risks are far from over for the euro bloc. However, the ECB has said it would maintain a level of flexibility as the war also has a significant impact on the region’s economic activity, signalling the pace of normalisation will depend on how the situation evolves.