Good morning! Young buyers are making the mighty Indian automobile industry bend to their will. As per The Economic Times, one out of every four cars sold in India is equipped with a sunroof. This number was just about 7% five years ago. Such is the craze that sales for models with sunroofs are 55% more than non-sunroof counterparts. Automobile executives are puzzled though, given its limited use in a humid country. They see it as an example of elite imitation in an upwardly mobile, aspirational generation. But we know it’s all about vibes. ✨

🎧Is TikTok’s juggernaut slowing down? Tune in to The Signal Daily on Spotify, Apple Podcasts, Amazon Music, or wherever you listen to podcasts. 

Roshni Nair and Adarsh Singh also contributed to today’s edition.

The Market Signal* 

Stocks & Economy: Shaking off their early January lethargy, US indices set new records on Monday. Stocks across sectors gained ground to help the Dow and S&P 500 to their all-time highs. 

The US stock market has opened up a $38 trillion valuation gap with China’s market, including Hong Kong. China MSCI index is now 60% cheaper than its US equivalent. Shares in Hong Kong have lost so much value that India has now overtaken it to become the fourth largest stock market in the world. Asia Genesis hedge fund is shutting down after its bet on China went awry and investors wanted their money back.    

Asian shares, except in Shanghai, have begun the day on a positive note. The GIFT Nifty indicates a buoyant Tuesday for Indian equities as well. The market was shut on Monday after the Maharashtra government announced a public holiday for the Ram Temple consecration ceremony.

ENTERTAINMENT

The Goose Is Cooked

Sony has officially terminated its $10 billion merger with Zee Entertainment, asking for $90 million in termination fees for alleged breach of merger preconditions. In a note to the exchanges (pdf), Zee refuted the allegations; it said promoter and CEO Punit Goenka had proposed letting go of the top job in the Sony-Zee combine and offered alternatives that Sony did not respond to.

What now?: The markets were closed on Monday, but Zee Entertainment’s stock will probably take a beating today. The Goenka family owns only 4% but the merger was scuttled largely over the question of Punit Goenka’s post-merger role. Zee said it will sue Sony if needed. 

But Zee’s major shareholders may also take legal action against the Goenkas. It won’t be the first time: Zee staved off a legal challenge from its largest shareholder Invesco in 2021. 

POLITICS

Temple Nation

Prime Minister Narendra Modi, thronged by celebs and business tycoons, inaugurated the (under-construction) Sree Ram Janmabhoomi Mandir at Ayodhya on Monday. 

Religion 🤝🏽 state: In speeches post the inauguration ceremony, UP chief minister Yogi Adityanath, RSS chief Mohan Bhagwat, and Modi linked the temple’s construction with nation-building. Soon after, Modi announced a scheme to install solar power systems on one crore rooftops. Named the Pradhanmantri Suryoday Yojana or PM’s sunrise plan, he said it was inspired by Lord Ram who was “Suryawanshi” (descendant of the sun).

In god’s name: The event was a massive business opportunity for consumer brands and travel firms. There is hope that Ayodhya may eventually attract more tourists (and business) than global hotspots like Mecca and Vatican City. But some criticised the last-minute decision to close the stock markets on Monday for the event as a risk to the country’s business-friendly global image.

UNION BUDGET

A Tricky Numbers Game In The Offing

The Union Budget—technically, a vote-on-account aka interim budget—which finance minister Nirmala Sitharaman will present on February 1, is unlikely to contain any major policy adjustments. Yet, this being an election year with global headwinds blowing, it will not be plain vanilla either. 

The Indian Express reports that the government might raise the amount of income exempt from tax to ease the burden on payers in the bottom rung and encourage them to switch to the new tax regime, which has a lower rate but fewer exemptions. It plans to make up for the loss in revenue by raising the efficiency of collection with 360-degree profiling of payers. The report also expects more money to be spent on welfare. 

Modest output growth: The Mint newspaper reports that the government will likely assume a nominal GDP growth of around 11.5% and a fiscal deficit of 5.3% in FY25 to anchor the Union Budget. Advance estimates released in early January put the nominal GDP growth for 2023-24 at 8.9%, lower than the 10.5% estimated in the Union Budget for 2023-24. High nominal GDP raises tax collections too.  

The Signal

Improved collection efficiency has helped the government collect more taxes than budgeted. Yet, it will need much more revenues to keep the tempo of capital expenditure high while also spending on welfare. As private capital expenditure has not picked up as much as expected, the government may need to play the big spender’s role longer while keeping fiscal deficit in check.

ELECTRIC VEHICLES

The Big Chill

The German auto industry has been on its knees for months. Couple that with an EV supplier crisis, and the sector could see layoffs affecting thousands of workers. Bosch, Continental, ZF Friedrichshafen, and Schaeffler have either announced, or will announce such cost-cutting measures.

In other news: Chinese major BYD, which dethroned Tesla as the bestselling EV brand last year, is entering Elon Musk’s turf. It will now release premium EVs under the Yangwang brand; models include a Lamborghini lookalike that rotates 360 degrees and a $150,000 supercar.

In the US, where the Biden administration is making it harder for BYD to sell passenger vehicles, consumers are grappling with reduced mileage and slow charge times because of the biting winter. EV growth was already softening; this development is the last thing Ford, Stellantis, and suppliers such as Panasonic, which had already slashed targets, would want to contend with.

TECH

An Uncharacteristic Setback

Pre-orders for Apple’s $3,500 mixed reality headset, the Vision Pro, are sold out ahead of the February 2 release in the US but don’t let that fool you. Things aren’t looking stellar.

How so?: As tech analyst Ming-Chi Kuo notes, shipping times have remained unchanged despite sold out pre-orders. This probably means the intensity of demand (outside Apple die-hards/core fans) is already petering out. According to The Information, some orders could take as long as six weeks due to accessory bottlenecks.

That’s not all: Developers’ longstanding beef with Apple could also affect Vision Pro adoption. Barring work/productivity suites Slack and Office 365, which will have visionOS versions of their apps, not many have shown an inclination to build for a new operating system. That includes Netflix, Spotify, YouTube, and major gaming studios. Early reviewers have also criticised device design, primarily the bulky battery pack.

FYI

Challenge accepted: The Supreme Court will begin hearing arguments on April 30 in Google India’s appeal against an order by the Competition Commission of India imposing a fine for alleged antitrust violations. 

It’s cold outside: Delhi set a new record for power demand in the winter season, peaking at 5,816 megawatts on January 19, as a cold wave gripped north India. 

✈️: Air India flagged off its first wide-body Airbus A350 aircraft from Mumbai to Chennai; it will later be used for international trips. 

Phew! India’s antitrust regulator Competition Commission of India will look at multinationals’ turnover differently when assessing penalties. It’ll consider their global turnover only in specific cases. 

No way: Exxon Mobil is dragging sustainable investment firms Arjuna Capital and Follow This, who want the energy giant to cut back its core oil and gas business, to court. 

Game over: Tencent’s Riot Games is planning to lay off 11% of its global staff, or 530 employees, to focus on live games as audiences hold off spending on big titles.

THE DAILY DIGIT

₹12,226 crore 

Or ~$1.5 billion. India’s box office collections in 2023, up 15% from 2022, according to Ormax Box Office Report, 2023. (The Economic Times) 

FWIW

Bank run: That scary term has taken on a whole new meaning. Why? Because people are running to get their morning joe from a bank. Yes, you read that right. Banks like Capital One are establishing coffee chains across the US. The idea is to make people aware of the brand. For now, there’s no angle of selling their products, which is a relief. Its detractors, though, are sceptical. They hark to similar failed experiments by brands like General Motors, BMW, and Bumble, among others. However, a loneliness crisis in the US provides a perfect opportunity for Capital Bank to try again, and we all know how much banks love to make money out of people’s misery, right?

Djok-ing: At this point in time, Novak Djokovic breaking a record is perhaps the blandest news. That’s why we’re bringing you a record that he failed to set. In his match against Adrian Mannarino, Djokovic was on the verge of a rare triple bagel. The triple bagel is a feat when a player wins all the games of the three sets. No one has achieved that feat at any Grand Slam since 1993, with the Australian Open never witnessing it. The Serbian won the match 6-0, 6-0, 6-3, and in a post-match interview revealed that it was intentional because he wanted to ease the pressure. Show off! 

Colour me green: Sage green, to be specific. The colour is all the rage when it comes to home painting jobs. Sage green is part of a growing stable of nature-inspired hues that are becoming increasingly popular for home exteriors. The trend, known as “biophilia” in the design world, uses such hues to give an organic and earthy feel to houses. Designers believe that a need to portray authenticity and breaking the Instagram-fuelled homogeneity is a big motivator for clients. Some clients are also opting for bright colours like red… which honestly reminds us of the Red Queen from Alice In Wonderland.