Month: August 2023

RBI intervening in forex market to cushion Rupee fall; spends $82.8 bn from forex reserves in 9 months

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By Ritika Chhabra

The Fed raised the interest rates by another 75bps yesterday, as expected. This is the third back to back 75bps rate hike this year by the US central bank. With the latest hike, the Fed fund rate (FFR) now stands in the range of 3.0%-3.25% and is highest since January 2008. The FOMC revised the median FFR at the end of 2022 up by 100bps to 4.4% from 3.4% in June, indicating a cumulative rate hike between 125bps over the next 2 FOMC meetings this year. For 2023, the median FFR is revised up 4.6% vs. 3.8% in June, suggesting no rate cuts in 2023 and maintaining the terminal rate of 4.6% till 2024. 

These projections are much more aggressive than what investors had been pricing earlier. The dot plot projections are suggesting that the Fed will ‘keep at it’ till it can see inflation coming down under its target range. The Fed also made it clear that it is ready to sacrifice growth and is increasingly of the view that the demand and labor market need to cool off to get the runway inflation under control. The Fed chairman, Jerome Powell repeatedly used the words ‘restrictive interest rates for a longer period’ to emphasize that the central bank’s main goal is to tame inflation that is running hot at 4-decade high levels.

What does it mean for the Indian economy? 

A more aggressive tone by the Fed doesn’t spell good news for emerging market currencies including INR. Post yesterday’s FOMC meeting, the DXY index zoomed to 111.78, highest in 20 years. The INR once again crossed the psychological value of 80 against dollar, touching a new all-time low of 80.68. The RBI has been continuously intervening in the forex market to cushion the fall in rupee value. This intervention is depleting India’s foreign currency reserves at an accelerated pace. The RBI has already spent $82.8 billion from its forex reserves in 2022 so far, with the reserves currently standing at $550.8 billion as on 9th September 2022 against $642.4 billion last year. The reserves are now equivalent to covering about nine months of import compared to 16 months a year ago. 

With the reserves depleting in the past, the RBI will now be more prudent in the extent of its intervening to support the rupee. Going forward, the RBI might let the rupee weaken due to widening trade balance, elevated global commodity prices and stretched valuations of INR compared to other Asian currencies. In addition, higher interest rates in major economies globally will put a pressure on the RBI to go for a higher rate hike and stay at higher rates for a longer period, which might slow down the domestic economic growth. As Powell said in his press meet – “There is no painless way to tame inflation”. It might just be the start of the pain.

Also Read: Fed chair Powell signals recession may be price to pay for crushing inflation

(Ritika Chhabra is an Economist and Quant Analyst at Prabhudas Lilladher. The views expressed are the author’s own and do not reflect the official position or policy of FinancialExpress.com.)

TCS, HDFC Life, Vedanta, Ujjivan Small Finance Bank, NTPC, Muthoot Capital Services stocks in focus today

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Indian benchmark indices are likely to open in the green as trends in the SGX Nifty indicate a gap-up opening with a gain of 114 points. In the previous session, the BSE Sensex closed above 60,000 mark for the first time since August 18, rising 322 points to 60,115, while its broader peer NSE Nifty 50 rose 103 points to 17,936. “The recent rebound in the global markets especially the US is adding to the market strength and we reiterate our immediate target of 18,100+ in Nifty. Apart from the heavyweights, participants should also look at broader indices for trading opportunities,” said Ajit Mishra, VP – Research, Religare Broking.

Stocks in focus on 13 September, Tuesday

Tata Consultancy Services: TCS has been chosen by C&S Wholesale Grocers, Inc. (C&S), an industry leader in supply chain solutions and wholesale grocery supply in the United States, to build a new operations platform on Google Cloud to reduce the company’s carbon footprint and enhance the customer experience. C&S has partnered with TCS to reimagine its operations platforms, including customer experience and grocery distribution. TCS will lead the company-wide project and help C&S establish a new cloud-based architecture that will unify its current systems.

HDFC Life: UK-based investment company Abrdn is planning to sell up to 4.3 crore sales representing 2 per cent of HDFC Life Insurance Company’s outstanding shares through a block deal to raise over Rs 2,425 crore. The Edinburgh-based company, which was formerly known as Standard Life Aberdeen, has offered the shares in the price band of Rs 564.1 to Rs 578.55, which is a discount of up to 2.5% on the scrip’s close on Monday in the block deal, reported Reuters.

Ujjivan Small Finance Bank: Ujjivan Small Finance Bank (SFB) on Monday launched its QIP (Qualified Institutional Placement) with a floor price of Rs 21.93 per share to meet the regulatory requirement ahead of merger with its parent company. Shares of Ujjivan Small Finance Bank on Monday closed 5.42% higher at Rs 25.30 apiece on BSE. It has gained over 20% in the last one month. In February this year, the lender had informed raising of up to Rs 600 crore by issuing shares to qualified institutional buyers in order to meet the regulatory requirements for amalgamation with its parent firm Ujjivan Financial Services.

Vedanta: Taking the first major step in its $20 billion joint venture with Taiwan’s Foxconn, Vedanta has selected Gujarat for its semiconductor project. The project will include display and semiconductor facilities near Ahmedabad. The Mumbai-headquartered oil-to-metals conglomerate has obtained financial and non-financial subsidies including capital expenditure and cheap electricity from Gujarat to build the semiconductor plants, news agency Reuters reported.

NTPC: National Thermal Power Corporation (NTPC) has paid a final dividend of Rs 2,908.99 crore for 2021-22 to its shareholders. The final dividend is 30% of the paid-up equity share capital of the company, an NTPC statement said.

Also Read: Sensex ends at nearly 1-month high, Nifty near-term support at 17807; Will Nifty hit 18100 soon?

Muthoot Capital: BNP Paribas Arbitrage bought 2.45 lakh equity shares in Muthoot Capital Services at an average price of Rs 196 per share, however, Elevation Capital VI FII Holdings offloaded 3,58,484 shares at an average price of Rs 196.47 per share.

Sensex ends at 2-month low, Nifty support shifts to 200-day SMA at 16850; use volatility to buy quality stocks

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BSE Sensex and NSE Nifty 50 tanked on Monday amid global growth concerns, and weak cues. BSE Sensex crashed 954 points or 1.6 per cent to settle at 57145, while NSE Nifty 50 index plunged 311 points or 1.8 per cent to finish trade at 17016. Stocks of index heavyweights such as Reliance Industries Ltd (RIL), ICICI Bank, ITC, HDFC Bank, Axis Bank, and Maruti Suzuki India, among others contributed the most to the indices’ fall. Broader markets underperformed the equity market frontliners. S&P BSE Midcap index tumbled 2.8 per cent or 719 points to settle at 24,553, while S&P BSE Smallcap plunged 3.3 per cent or 959 points to finish at 27854. Bank Nifty index plunged 2.35 per cent or 930 points to settle at 39,027. India VIX, the volatility index, jumped 6.3 per cent to finish at 21.89 levels.

Also read: RBI MPC likely to raise repo rate 50 bps to tame inflation; may pause rate hike after Dec monetary policy

Global risk assets including equities extended their selloff on Monday as fears of faster inflation and global recession continued to rise. The Chinese government raised the foreign exchange risk reserve requirements for financial institutions to stem a drop in the yuan, making it more expensive for traders to short the currency. S&P Global ratings has retained India growth outlook at 7.3 per cent for the fiscal year 2022-2023 and 6.5 per cent for the next fiscal year, although it sees the risks tilted to the downside. Nifty has broken the important support of 17166 and now is on the verge of breaking 17000. 16947 and 16794 are the next supports for Nifty while 17166 could be the resistance in the near term.

Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities

The speed with which central banks across the globe are hiking interest rates, investors are worried that slackening growth would push key economies into recession. With the monetary policy decisions on the anvil, rate-sensitive stocks like banking, realty & auto crumbled badly as rate hikes could dent demand going ahead. However, due to markets being in oversold territory, we could witness a quick pullback rally. For traders, the 200-day SMA and 16850 would act as a key support level. On the flip side 17150 and 17200 could be the immediate hurdle for the bulls.

Also read: S&P Global projects India’s FY23 GDP growth at 7.3%; estimates inflation to fall to 5% in next fiscal

Vinod Nair, Head of Research, Geojit Financial Services

The soaring dollar as a result of aggressive monetary tightening, slowing economic growth and rising demand from cautious investors are causing turbulence in the global equity market. This is creating mayhem in the domestic market led by weakening INR, elevated bond yields and pessimistic trends of Asian peers. Only the IT sector, which exhibited the weakest performance in the last 1yr, defied the trend in anticipation that the global recession is mostly factored in the price and are trading at reasonable valuations.

Mohit Nigam, Head – PMS, Hem Securities

We believe investors should avoid taking riskier positions in the near term as the volatility is likely to continue for some time. Investors should rather use this volatility to accumulate good quality stocks with strong growth visibility and solid fundamentals. On the technical Front immediate support and resistance in Nifty 50 are 16800 and 17400 respectively. Immediate support and resistance in Bank Nifty are 38000 and 39500 respectively.

Rupee sinks further to 81.95

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The rupee on Wednesday sank to a record low of 81.95 against the dollar amidst a relentless surge in the greenback and a sharp rise in the US treasury yields. The domestic currency closed the session at 81.90, down 37 paise over Tuesday’s close.

With the greenback continuing to strengthen, most Asian currencies were under pressure, especially the offshore Chinese yuan, which lost more value than the rupee. Given India’s large trade deficit with China, the relatively faster depreciation of the yuan is a cause for concern. The Korean won, the offshore Chinese yuan, the Thai baht and the Indonesian rupiah were all down anywhere between 0.5- 1.2%.

The dollar index, which measures the value of the greenback against a basket of six currencies, strengthened to near 115 levels and, according to current watchers, could gain further. The dollar index was trading at 114.78, a new twenty-year high. Last week, the US Federal Reserve hiked interest rates by 75 bps for the third consecutive time with chairman Jerome Powell saying that the central bank officials are “strongly resolved” to bringing down inflation. The more-than-expected hawkish commentary and the prospect of bigger rate hikes spooked the markets.

Amid the rising dollar, the yield on the 10-year US Treasury was ruling above 4.01%, levels not seen since October 2008. The yields are up 80 basis points in September so far. News agencies reported that the 30-year yield in the UK had risen to highest since 1998 amid debt sale.

The local currency markets remain anxious about India’s widening current account deficit (CAD) and foreign funds outflows from the equities market. The weak sentiment saw the Indian currency slip to 81.95 in intra-day trades. The Reserve Bank of India (RBI) is understood to have intervened in the markets, dealers said, adding the dollar sales helped the rupee close above the 82-mark.

Typically, at the end of the month, oil companies are in the market to buy dollars.

Meanwhile, ahead of the RBI’s announcement on the monetary policy review on Friday, the yield on the ten-year bond closed at 7.334%, up 4 bps from previous close of 7.293%. While the bond markets have priced in a hike in the repo rate of 50 basis points, the rise in yields suggests the markets believe the terminal rate could be higher than earlier anticipated. The OIS (Overnight Index Swap) markets are pricing in a terminal rate of 6.8%.

Most economists expect a terminal repo rate of over 6% with some penciling in a level of 6.5%. The repo is currently at 5.4%. Rising yields are a worry for banks, which hold large bond portfolios, as they would incur mark-to-market losses.

Sebi penalises 10 entities for diverting IPO proceeds in Birla Pacific Medspa case

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Capital markets regulator Sebi has imposed penalties totalling Rs 3.42 crore on 10 entities, including Birla Pacific Medspa and Yashovardhan Birla, for violating listing agreements as well as diverting proceeds from the initial public offer of Birla Pacific Medspa Ltd.The regulator imposed a fine of Rs 1.07 crore on Birla Pacific Medspa Ltd, Rs 32 lakh on Abhijit Desai, Rs 26 lakh on PVR Murthy and Rs 25 lakh each on Yashovardhan Birla, Venkateshwaralu Nelabhotla, Mohandas Adige, Anoj Menon, Rajesh Shah, Upkar Singh Kohli and Tushar Dey.

The order came after Sebi conducted an investigation into the initial public offer of Birla Pacific Medspa Ltd (BPML) for the period July 7-15, 2011.The scrip of BPML was listed on BSE on July 7, 2011, after the IPO was open for subscription from June 20-23, 2011.The price of the scrip had seen sharp volatility on the listing day, closing at Rs 25.35, 154 per cent more than the issue price of Rs 10 per share, Sebi said in an order on September 28.BPML received IPO proceeds of Rs 65.17 crore, however, funds received in the IPO were not utilised for setting up of the 55 ‘Evolve’ healthcare clinics across India as stated in the prospectus by the firm and funds to the extent of Rs 34.91 crores were actually siphoned off by the company.

It was also observed that BPML had extended funds to certain entities which were used to support the scrip price on the day of the listing, thereby violating PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms. In addition, BPML has not filed any disclosure of deviation in the use of IPO proceeds along with its financial results to the stock exchanges and the fillings of the financial results were signed by Murthy on behalf of the company, thereby violating the listing agreements under SCRA. Accordingly, the market watchdog imposed a fine of Rs 2 lakh on BPML.

However, this penalty would be subject to the outcome of Sebi’s appeal pending before the Supreme Court. Section 23E in the SCRA pertains to listing conditions.Meanwhile, in a separate order, Sebi slapped fines totalling Rs 71 lakh on 35 entities for violating market norms in the matter of First Financial Services Ltd.

The order came after Sebi conducted an investigation into trading and dealings in the scrip of First Financial Services Ltd and observed abnormal movement in the price and trading volume of the scrip on BSE during the period May 2012 to March 2014. 

Sensex, Nifty end lower amid volatility post hawkish US Fed commentary; Nifty support at 17500

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BSE Sensex and NSE Nifty 50 ended in red on Thursday, as investors reacted to the 75bps interest rate hike by the US Federal Reserve. Moreover, the weekly F&O derivatives expiry added to the volatility in the stock market. BSE Sensex fell 337 points or 0.6 per cent to 59,120, while NSE Nifty 50 was down 89 points or 0.5 per cent to settle at 17630. Stocks of HDFC Bank, ICICI Bank, Reliance Industries Ltd (RIL), Housing Development Finance Corporation (HDFC), Axis Bank among others contributed the most to the indices’ loss. The broader market indices outperformed the equity frontliners. S&P BSE Midcap gained 0.3 per cent or 82 points to settle at 25,860, while S&P BSE SmallCap index added 0.5 per cent or 138 points to finish at 29,377. Bank Nifty index tumbled 1.4 per cent to settle at 40,631.

Also read: US Federal Reserve may hike interest rate by 75bps yet again in November; FOMC unlikely to cut rates in 2023

Indian markets reacted mainly to the US Federal Reserve’s hawkish undertone on interest rate that fuelled pessimism amongst the investors. As expected, banking stocks bore the brunt that led to extended correction in local benchmarks. Technically, Nifty has formed lower top formation on daily and intraday charts and closed below the 20-day SMA (Simple Moving Average), indicating continuation of weakness in the near future. The index has been consistently facing resistance at higher levels and at the same time regularly taking support near the 17500 level. For the traders 17500 and 17700 would be the important level to watch out for and below 17500, the index could slip till 17400-17350 levels. On the flip side, a range breakout over 17700 could push the index up to 17800-17850.

Kunal Shah, Senior Technical Analyst, LKP Securities

The Bank Nifty index witnessed selling pressure at higher levels and remains in a sell-on-rise mode as long as it stays below the level of 42,000. The index immediate downside support stands at 40,500 and a breach below this will open gates for further downside toward the 39,000 level. The index is trading in a tight range between 40,000-42,000 and a break on either side will give a directional move to the index.

Also read: India’s GDP to grow at 7.5% in FY23 despite developed-economy recession; inflation to stay above 6% till Nov

Vinod Nair, Head of Research, Geojit Financial Services

The Fed turned more hawkish than anticipated, increasing its rate forecast to 4.4% by the end of 2022. The indication is that 125bps more rate hikes can be expected in the next 2 policy meetings scheduled this year. Following this, the US dollar index rose above 111, depreciating INR to beyond 80. The Indian stock market was able to sustain its resilience with limited cuts but if the rupee continues its weakness the domestic market would turn less attractive for foreign investors in the short-term, affecting performance.

Palak Kothari, Senior Technical Analyst, Choice Broking

On the technical front, the Nifty has been trading with Lower Highs & Lower Low formation for the last 3 trading sessions on a daily basis which has weakness in the counter for an upcoming session. Furthermore, Nifty formed a Doji candle on a daily chart which points out the confusion between buyer & seller. Nifty has been facing resistance from 21 DMA as well as the middle band of Bollinger which adds bearishness to the prices. On the OI Data, On the call side, the highest was witnessed at 17800 while on the put side was at 17500 level. The daily momentum indicator MACD was trading with a negative crossover which points out the weakness in the counter. The support for nifty has shifted around 17500 levels while on the upside 17800 may act as an immediate hurdle. On the other hand, Bank nifty has support at 40000 levels while resistance at 41500 levels. Overall, the Nifty is looking volatile for an upcoming session. Nifty may find support around 17500 levels while breaching below will open the gate for 17380-17200 levels

Hindustan Unilever vs Nestle India; Nestle to outperform HUL in long term

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We believe Nestle may potentially outperform HUL in long term driven by multiple favourable factors (both extrinsic and intrinsic). In Nestle, we like penetration-led volume growth on the back of rural expansion among peers. There is lower threat from D2C (direct-to-consumer) brands given the inherent challenges in scaling up in Foods category. There is opportunity to bring more from global portfolio in true long term.

Nestle India has relatively lower salience from rural areas (20%; one of the lowest in our coverage) compared to HUL which has been a pioneer in driving penetration-led growth in rural areas through smaller packs and brand architecture. We note that rural regions are one of the large drivers of volumes for most of the FMCG companies.

We believe Nestle through its strategy will likely drive rural penetration for its products leading to volume growth.

HUL on the other hand has been a pioneer over the last few years in driving penetration-led volume growth through its LUP ( low unit packs) strategy and multi-brand architecture. We believe HUL will likely have premiumisation led growth as it has already achieved high penetration for some of its products, and (material) growth going forward will be through upgrading consumer to a premium brand. However, HUL will also likely continue to gain penetration-led growth as consumer shift away from unorganised segment, we believe that benefit will be lower for HUL compared to Nestle India.

Nestle India is present in food categories while HUL is present in home care, beauty and personal care (BPC) and foods. We believe, D2C brands have higher presence in BPC categories compared to food categories.

Nestle India currently operates in 4 categories out of 7 categories where Nestle SA (parent company) is present. Therefore, Nestle India does not need to look for inorganic opportunities as it can always get some of the brands from the parent to India as and when Nestle feels that there is opportunity in that particular category.

On the other hand, HUL is largely present in the (relevant) categories where Unilever (parent company) is present. Also, HUL has been active in acquiring companies in India in categories like health food drinks (GSK Consumer – Horlicks, Boost etc.), Ice Creams (Aditya Milk), Ayurvedic Hair Oil (Indulekha), Female Hygiene (VWash) etc.

Nestle India has one of the lowest salience of rural revenues amongst its peers. It is continuously expanding reach into smaller cities and rural areas. It has a target to expand into ~120,000 villages by CY24. We value stocks on DCF except Adani Wilmar, Godrej Cons. and Tata Cons. which we value on SoTP basis. Key upside risk is better-than-expected gross margins due to correction in input prices. Key downside risk is unexpected irrational competition due to deceleration in general consumption demand.

Gold Price Today, 16 Sep 2022: MCX gold at multi-year low, may trade sideways to down; US Fed policy eyed

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Gold Price Today, Gold Price Outlook, Gold Price Forecast: Gold prices were trading weak in India on Friday, on the back of muted global cues. On Multi Commodity Exchange, gold October futures were trading Rs 76 or 0.2 per cent down at 49,236 per 10 gram as against the previous close of Rs 49,312. Silver December futures were ruling Rs 198 or 0.4 per cent down at Rs 56,219 per kg.  Globally, yellow metal prices hovered near a two-year low on Friday and were set for a weekly fall as an elevated dollar and prospects of aggressive U.S. rate hikes dented bullion’s appeal, according to Reuters. Spot gold was unchanged at $1,664.48 per ounce, and was down 3% for the week so far. Prices hit its lowest since April 2020 at $1,659.47 on Thursday. U.S. gold futures were down 0.3% at $1,673.10.

Also read: Rupee likely to remain steady amid strong dollar, risk aversion in markets; USDINR pair to trade sideways

MCX gold drops to multi year low amid panic over rate hikes. Focus has shifted to the Fed policy which is scheduled next week. The dollar has reached 109.5 levels and looks strong. MCX October future has a room for further downside until 49,100 per 10 gram. Hence we recommend short on rise.

Tapan Patel, Senior Analyst — Commodities, HDFC Securities

Gold prices traded weak on Friday with spot gold prices at COMEX were trading near $1663 per ounce in the morning trade. MCX Gold October futures opened lower near Rs. 49224 per 10 gram in line with fall in COMEX gold prices. The yellow metal extended losses on hawkish FED on larger rate hike expectations. The stronger dollar index also weighed on investment sentiments in gold. We expect gold prices to trade sideways to down for the day with COMEX Spot gold support at $1650 and resistance at $1690 per ounce. MCX Gold October support lies at Rs. 48900 and resistance at Rs. 49800 per 10 gram.

Also read: Petrol, Diesel Price Today, 16 Sep 2022: Fuel cost static; check rates in Delhi, Noida, Mumbai, other cities

Prathamesh Mallya, AVP- Research, Non-Agri Commodities, and Currencies, Angel One

Interest rate hikes increase the opportunity cost of owning non-yielding metal, despite the fact that gold is seen as a safe investment during economic turmoil. The recent increase in the US dollar index, rising US Treasury yields, and the hike in U.S. inflation figures have all worked together to keep gold buyers largely inactive. Following the Fed’s policy meeting next week, the markets have fully priced in an interest rate increase of at least 75 basis points, and maybe even up to 100 basis points. We expect gold to trade lower towards 48870 levels, a break of which could prompt the price to move lower to 48450 levels.

(The views in this story are expressed by the respective experts of the research and brokerage firm. Financial Express Online does not bear any responsibility for their advice. Please consult your investment advisor before investing.)

Rupee likely to consolidate in near-term, may fall to 83 level, if 82 breached amid global uncertainty

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By Dilip Parmar

King dollar flattening everything right now, causing issues for everywhere and everyone except America. Printing dollars over the years has given the US “exorbitant privilege” and it is “our currency and your problem” (to quote President Richard Nixon’s treasury secretary, John Connally). That means that for now at least, it’s not America’s problem and the surge in the greenback is unlikely to end soon. The US dollar is stronger than ever and pierced to two decades high. With the risk of economic damage spreading from Tokyo to London, they have been drawn into the fight to prop up their currencies. Globally central banks adopted the idea of a coordinated monetary tightening path to control inflation. Federal Reserve Chair Powell’s only focus is to fight against inflation at home and to achieve a pivot at the earliest to supercharge the king dollar. 

High-interest rates and the comfort of feeling safer money in dollar assets are helping the greenback. At first sight, the country welcomes a weaker currency against exporting currency which tends to stimulate growth by making export more competitive while nations likely India whose trades are imbalanced feel the heat of higher inflation and lower exports. The weaker currency makes the import costlier while fear of recession reduces the exports. While from the US Fed’s perspective, a stronger dollar actually helps fight inflation as it allows cheap imports but curbs growth.

Curtailing inflation, the Federal Reserve has raised its benchmark interest rate from near zero to above 3% in record time. And at its most recent meeting, on Sept.21, the central bank projected it would add an additional one and a half percentage points in the coming months-promptly sending risk markets into a nosedive, short-term bond yields and the haven dollar to a multi-year high.

A weaker currency is forcing RBI to be with the curve and increasing interest rates and intervening by selling the dollar, which risks driving economies into slower growth. India’s central bank raised the repurchase rate by 50 basis points to 5.90%. The RBI trimmed the economic growth outlook for the financial year ending March to 7% while retaining its 6.7% forecast for inflation. Retaining the “withdrawal of accommodation” stance clearly indicates that policy rates have not yet peaked and a 35 bps hike in December and a quarter point move in February. 

Also Read: Petrol, Diesel Price Today, 3 Oct 2022: Fuel cost static; check rates in Delhi, Mumbai, Noida, other cities

Looking at the global uncertainty and tighter liquidity, the rupee is expected to trade left in the medium term while in the shorter term it could consolidate in the range. Spot USDINR is having a line on sand at 82 and crossing of it will pave way for 83 and more while on the lower side

80.70 acts as a support line.

(Dilip Parmar, Research Analyst, HDFC Securities. Views expressed are the author’s own.)

Govt sets 2022-23 grain production target at 328 mt, up 4% on year

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The government on Wednesday set a food grain production target of 328 million tonne (mt) for the 2022-23 crop year (July-June) which is 4% more than a record foodgrain output of 315.7 mt in the previous year.

Out of the total grain production, rabi crops such as wheat, mustard and chana (gram) would contribute 164.8 mt in 2022-23 crop year. Rabi crops are sown in the winter months of December-January and harvested from April onwards.

“The strategies would be to enhance area through inter-cropping, crop diversification, and productivity enhancement by introducing high yield varieties, adoption of suitable agronomic practices in low yielding regions, utilizing residual moisture, early sowing and lifesaving irrigation for rabi crops,” an agriculture ministry statement stated after the inauguration of the national conference on agriculture for rabi campaign-2022.

Also Read: Fresh review of gas pricing formula starts

It noted that the priority of the government is on agro-ecological based crop planning for diversion of land from excess commodities like rice and wheat to deficit commodities like oilseeds and pulses and high value export earning crops.

Last month, the government had estimated overall foodgrain output in the 2021-22 crop year (July-June) had hit a record 315.7 mt, buoyed by a record rice harvest of 130.2 mt. Wheat production has dropped almost 3% to 106.84 mt.

The drop in wheat output is attributed to heat-wave between March and June that hit the crop in the northern states of Punjab and Haryana. This eventually forced the government to impose a ban on wheat exports in May to keep local supplies steady. Trade sources believe the actual wheat output could have been below 100 mt.

According to trade estimate rice production in the next crop year (2022-23) could decline by around 6 – 10 mt because of fall in paddy acreage in the current kharif sowing so far because of deficiency in monsoon rainfall in key growing states of West Bengal, Bihar, Jharkhand and Uttar Pradesh.

Record production is estimated for crops such as rice, maize, gram (chana), pulses, rapeseed and mustard, oilseeds and sugarcane for 2021-22 crop year, agriculture and farmers welfare minister Narendra Singh Tomar said.

In a major boost to reducing import dependence, pulse output rose by close to 27.69 mt in the 2021-22 crop year compared to 25.46 mt estimated in the previous crop year.

The output of coarse cereals such as barley, bajra, maize and ragi is estimated to decline to 50.90 mt from 51.32 mt reported in previous crop year.

According to the agriculture ministry, in the non-food grain category, oilseeds output rose more than 4% to 37.7 mt in the 2021-22 crop year compared to previous year. Rapeseed/mustard seed production is estimated at a record 11.74 mt, which was 15% more than the 2020-21 crop year.

Soybean output rose by 3% to 12.99 mt compared to previous year. India imports about 56% of its edible oil requirement.

Sugarcane production in 2021-22 crop is estimated at record 431.8 mt compared to 405.39 mt in the previous year while cotton output is expected to drop to 31.2 million bales (170 kg each) from 35.24 million bales.