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Every Monday, the Mint’s Plain Facts section features key dates and events to look out for in the coming week. India is set to hold its first-ever 5G auction, with Gautam Adani’s foray into telecoms closely watched. Two of the biggest auto giants, Bajaj Auto and Maruti Suzuki, will announce their Q1 results. 22. The Commonwealth Games begin in Birmingham on Thursday. The US, grappling with high inflation, rising imports and supply chain disruptions, is set to release gross domestic product (GDP) data on Thursday.
1. 5G Auction
India is set to launch its first ever 5G broadcast auction on Tuesday. The government will auction 73GHz spectrum in 10 bands with a validity of 20 years. Along with incumbents Reliance Jio, Bharti Airtel and Vodafone Idea, the auction will also see Gautam Adani’s foray into the telecom space with Adani Data Networks throwing its hat into the ring.
The Adani Group has received a Letter of Intent from the Department of Telecom to grant a Unified License (UL) in the Gujarat circle. Analysts expect Jio to be the biggest spender, followed by Airtel. The Mukesh Ambani-owned telecom company has already put in a whopping ₹14,000 crore as earnest money.
The government is likely to raise $13 billion to $20 billion from the auctions, according to the Jefferies report. The introduction of 5G-based services could provide 10 times the speed of what is possible through 4G services.
2. Auto earnings
India’s two largest auto giants, Bajaj Auto and Maruti Suzuki, will release their earnings reports for the quarter ending June this week. Maruti Suzuki is likely to have seen an easing of supply chain constraints with low inventory in channels, which is likely to help wholesalers, according to analysts at Motilal Oswal Financial Services. However, higher auto discounts and increased raw material costs may subsequently hurt operating margins. The company could report strong year-over-year earnings, largely due to a low base. But the continued shortage of semiconductor chips is likely to lead to a 4% decline in revenue on a sequential basis, Nirmal Bang said in a report.
Bajaj Auto is likely to see sales decline by 1% YoY and 6% sequentially due to higher raw material costs and operational deleveraging, Nirmal Bang reports. The shortage of semiconductor chips will continue to hurt the company’s performance, analysts said.
3. Axis Bank earnings
Axis Bank, which had reported handsome profit growth of 54% y-o-y and 17% growth in net interest income to ₹8,819 crore in the March quarter, will release its June-quarter earnings report on Monday. The bank is expected to post robust growth, largely driven by its decision to enter into an agreement to acquire Citibank’s consumer business earlier this year. According to JM Financials, June quarter is expected to be strong for the banking industry as a whole and for larger private banks in particular. It picked Axis Bank, among others, as a top performer in this quarter. Analysts at Emkay said Axis is expected to report strong credit growth in retail because of mortgages and unsecured loans. As banks, including Axis, invest in upgrading technology and on branch expansion, higher operating expenditure is likely to hurt profitability.
4. The US economy
The US economy probably contracted for the second quarter in a row in the April-June period. This raised fears of an impending recession. In the March quarter, the country’s GDP gradually decreased by 1.6%. This was the first decline since the recession that resulted from the covid-19 pandemic in 2020. The National Bureau of Economic Research defines a recession as a situation that “involves a significant decline in economic activity that spreads across the economy and lasts for more than a few months.”
GDP data for the June quarter is available on Thursday. The US economy has been struggling with high inflation, rising imports and disruptions to supply chains since the start of Russia’s war with Ukraine. Inflation jumped to a 40-year high of 9.1% in June, hurting consumer confidence. That could prompt the US Federal Open Market Committee to raise interest rates aggressively again at its two-day meeting starting on Tuesday.
5. CWG 2022
A total of 72 countries are gearing up to take part in the 22nd Commonwealth Games (CWG), which begin on Thursday in Birmingham, England. India has historically done well at the Games, finishing third in the previous edition in 2018 with 66 medals, including 26 gold. Australia, consistently the top performer, finished first with 198 medals.
In 2019, the Commonwealth Games Federation decided that this year’s event would not include archery and shooting. Several Indian athletes expressed their disappointment over the decision, claiming that India’s medals would suffer. The 2022 event will feature four new sports: a women’s cricket tournament, 3×3 basketball, 3×3 wheelchair basketball and para table tennis. India’s hopes rest on more than 200 athletes representing the country in 15 sports at this year’s event, after an outstanding show at last year’s Tokyo Olympics.
