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The Reserve Bank of India has become a very aggressive buyer of gold this year buying one and a half times the gold the central bank bought in the whole of 2023 in just the first four months this calendar year and is also stocking a big chunk of its stock overseas. Now it is planning to bring back home a portion of those reserves. ET explains why RBI keeps a big chunk of its gold overseas and the risks, post the West freezing Russian assets.How much gold does the Reserve Bank hold overseas?As at end-March 2024, the Reserve Bank held 822.10 metric tonnes of gold, of which 408.31 metric tonnes were held domestically. While 387.26 metric tonnes of gold were kept in safe custody with the Bank of England and the Bank for International Settlements (BIS), 26.53 metric tonnes were held in the form of gold deposits.110595616Why does the central bank park a big chunk of the gold abroad?In 190-91, when the country had foreign exchange reserves adequate enough to fund only 15 days of imports, it had pledged a part of its gold reserves in May 1991 to the Bank of England. It had shipped 46.91 tonnes of gold to England then and raised a $405 million loan which also included some pledge with the Bank of Japan. Although the loan was repaid by November 1991, the Reserve Bank chose to keep the gold in the Bank of England vault more for logistics reasons. Besides gold held in the form of certificates could be used for trading entering into swaps and earning a small return. Moreover , RBI has also started accumulating gold from the market which it largely does from the international markets and keeping it in Bank of England vaults makes it logistically convenient. What are the risks?At times of geopolitical tensions there is uncertainty over the safety of one's international assets. In the current situation the freezing of the Russian assets by the west and the general outlook on the UK economy has likely added to the concerns of the Indian government of the safety of gold reserves overseas.110593990 What could RBI do?In consultation with the government, the RBI could use the gold in the domestic market to manage gold prices given the huge domestic demand especially in investment products like gold exchange traded funds making sure it also does not promote wasteful consumption and also develop a local market for the bullion . Also at the same time ensure that the gold stays within the domestic boundary within the country. Why does the central bank buy gold?Besides using it as a hedge against inflation and currency volatility and for diversification of foreign exchange reserves, one of the major reasons for holding gold reserves is the decline in confidence in dollar assets among central banks. The US Treasury Department data suggest that the non-US central banks' holdings of US Treasury bonds have dropped from 49.8 % in March 2023 to 47.1 % as of March 2024.110595918

Nifty formed a long-legged Doji candle on the daily charts to breach a 5-day losing streak, ending 42 points higher at 22,531.The 50-DMA is placed at around the 22,400 level, and a slip below this level could shift the test to the 22,300-22,260 zone. However, crossing 22,660 could resume the bullish trend, Om Mehra of SAMCO Securities said.On the daily chart, the Nifty has now bounced back from close to the 50-day SMA after four sessions of losses. Chartists said that the 14-day RSI at 50.33 is falling and remains below its 9-day EMA, indicating that the momentum is weakening.What should traders do? Here’s what analysts said:Jatin Gedia, SharekhanOn the daily charts, we can observe that Nifty consolidated within the range of the previous trading session and has formed an inside bar pattern which makes the extremes of the range 22,700 – 22,400 crucial levels to watch out for. A breakout on either side shall lead to a treading move in that direction. In terms of levels, 22,420- 22,313 is the crucial support zone while 22,820 – 22,900 is the crucial resistance zone from a short-term perspective.Rupak De, LKP SecuritiesThe highest call writing is visible at 23,000, while significant put writing at 22,500 indicates that the Nifty might oscillate between 22,500 and 23,000 in the next few days. However, a fall below 22,500 might trigger a correction towards 22,000.Tejas Shah, JM Financial & BlinkXNifty is trading around a make-or-break support zone of 22,400-500 levels (50-day EMA Support area) and a sharp movement of 2% to 3% can be expected on either side from this zone, preferably on the higher side. As long as Nifty is holding above 22,400-500 levels (+/- 25 points), there is no major sense of panic as of now. The short-term moving averages are just around the price action and should continue to support the indices on any decline. Supports for the Nifty are now seen at 22,400-500 and 22,200 / 22,000-050 levels. On the higher side, immediate resistance is at 22,600-650 levels and the next resistance zone is at 22,825-850 levels.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

India’s 5G subscriber base is expected to rise to 20-25% of overall users from around 17% now. But 5G adoption won’t be as fast as 4G because the average selling price of 5G smartphones is still 2-4x higher than normal smartphones, said India Rating and Research (Ind-Ra).The ratings firm added that the Indian telecom industry was at an inflection point in fiscal 2024 with their investments in 5G networks and spectrum renewal having peaked to almost $20 billion. Thereafter, telcos would keep their investments subdued while possibility of tariff increase remains uncertain."The cash outflow towards spectrum renewal/acquisition could be a marginal drag on cash flows from FY25. Visibility on meaningful tariff hikes remains uncertain, since globally also 5G has not yielded any major tariff premium over 4G tariffs,” said Priyanka Bansal, associate director, Ind-Ra.Bharti Airtel and Reliance Jio - the only two telcos to have rolled out 5G services - have guided that capex intensity would moderate from FY25 onwards as accelerated pan-India rollout of 5G was achieved by CY2023 offering 95% coverage.Therefore, the telcos would now focus on improving return on capital investment by increasing headlines.“Currently telcos are in a much better position to execute tariff hikes, given the improvement in service offerings (higher data quantum, higher speed, other auxiliary offerings, 5G speed etc) since the last tariff hikes”, she added.“..return ratios (ROCE) and free cash flow will see a sharp improvement only in FY26, when capex subsides and potential tariff hikes help improve revenues.”Ind-Ra said that significant investments in the network have improved service metrics such as higher data quantum, higher speed, other auxiliary offerings, 5G speed etc. which have far surpassed the historical tariff hikes.It also showed that subscribers have been resilient in absorbing tariff increases while showing consistent growth in data usage.Top two telcos Jio and Airtel shall continue to acquire market share from Vodafone Idea, especially in the high-ARPU (average revenue per user) customer base.

Fear of the coming anti-dumping duty in US has sent ripples across the ceramic tiles landscape in Morbi, the world’s second largest ceramics hub, ToI reported on May 31. The US govt has yet to official start levying the duty, but the tiles companies in Morbi are already worried, the report (by Niyati Parikh) said.They allege that a minimum of 25% of US orders have been suspended, with potential for further halts following the petition for anti-dumping duty submission to the US government.This setback comes already reduced demand, attributed to increased duties in Gulf Cooperation Council (GCC) countries and economic deceleration in Europe.KG Kundariya, former president, Morbi Ceramic Association, told ToI: “The US ceramic tiles business is heavily import dependent and India is one of the exporters. Lately, tile makers in the US have moved a petition seeking to impose anti-dumping duty on ceramic tiles imported from India. There are fears among US companies that they may have to end up paying heftier import levies if the duty is imposed in retrospective effect. As a result, many have currently halted orders to India."110585058According to the website of the US Department of Commerce, on May 10, they declared the commencement of investigations into antidumping duty (AD) and countervailing duty (CVD) regarding ceramic tiles from India.ToI's report said quoting Nilesh Jetparia, ex-president, Morbi Ceramic Association: “Dispatches to the US have been completely halted from Morbi. Unless there is greater clarity on the duties that are likely to be imposed, an importer will not risk paying additional duties on their purchases. As a result, the majority of orders are on hold.” Industry estimates suggest that the US constitutes approximately 8-9% of the total exports of ceramic tiles and related products from Morbi. On average, Morbi ships roughly 800 containers of ceramic tiles to the US each month.Amidst the disruptions in global trade caused by the Red Sea Crisis, which has led to delayed shipments and increased shipping costs, manufacturers of ceramic tiles in Morbi are grappling with uncertainty as orders from US-based manufacturers are temporarily halted.Morbi is home to approximately 800 ceramic tile manufacturing units, exporting goods valued at Rs 19,000 crore to 180 countries, including the US, Saudi Arabia, UAE, Iraq, Israel, Taiwan, and various European nations.