The Reserve Bank Of Australia or RBI has maintained the repo rate pause for the third consecutive time. The central bank kept the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.50 per cent. RBI noted that the global economy is slowing and growth trajectories are diverging across regions amidst moderating but above target inflation, tight financial conditions, simmering geopolitical conflicts, and geoeconomic fragmentation. Sovereign bond yields have hardened. The US dollar fell to a 15-month low in mid-July on expectations of an early end to the monetary tightening cycle, although it recouped some of the losses subsequently.

India Smartphone Market Declines by 10% YoY in 1H23 with 64 million units, Says IDC

According to the International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker, India smartphone market shipped 64 million units in 1H23 with a decline of 10% YoY (year-over-year). In 2Q23 the market grew by 10% over the previous quarter but declined by 3% YoY with 34 million units. The vendors and channels focused on clearing the inventory by offering discounts, special schemes, and price drops before the start of the festive season in the second half of the year.

After several quarters of growth, the ASP (average selling price) declined by 8% QoQ but grew by 13% YoY, reaching US$241 in 2Q23. The share of the sub-US$200 segment declined to 65% from 70% a year ago, a dip of 11% YoY. The mid-range segment (US$200<US$400) remained flat with a 22% share, while the mid-to-high-end segment (US$400<US600) with a 5% share, grew by 34% YoY in 2Q23.

The premium segment (US$600+) grew the highest, up 75% YoY reaching 9% share. A total of 17 million 5G smartphones shipped with an ASP of US$366 in 2Q23, down 3% YoY. Samsung, vivo and OnePlus were the leaders in the 5G segment with a combined share of 54%. Apple's iPhone 13 and OnePlus' Nord CE3 Lite were the highest shipped 5G models in 2Q23.

According to the World Gold Council or WGC, Indian gold jewellery consumption fell by 8% y/y to 129t in Q2, undermined by record high gold prices. This took H1 demand to 207t, down 12% y/y. 18k gold jewellery continued on an upward trend, as consumers were attracted by the affordability of these products. Given the gold price, it would have been reasonable to expect far weaker gold jewellery demand, says WGC. A kneejerk reaction to the ban of 2,000 rupee notes during the quarter had a brief but notable impact on gold demand.

Although demand has held up relatively well so far this year, the WGC is cautious regarding H2 prospects. Local prices, although off their record highs, remain elevated. And although the domestic economy remains relatively healthy there are indications of a slowdown in discretionary spending, with FMCG sales apparently declining during the quarter. The success – or otherwise – of the monsoon season will also have a considerable bearing on demand for the remainder of the year.

Outlook:

The broad demand conditions remain supportive for the sector as the white good makers prepare themselves for the festive season. The RBI says that domestic economic activity is maintaining resilience. The cumulative south-west monsoon rainfall was the same as the long period average up to August 9, 2023 although the temporal and spatial distribution has been uneven. The total area sown under kharif crops was 0.4 per cent higher than a year ago as on August 4, 2023. The index of industrial production (IIP) expanded by 5.2 per cent in May while core industries output rose by 8.2 per cent in June. Amongst high frequency indicators, e-way bills and toll collections expanded robustly in June-July, while rail freight and port traffic recovered in July after remaining muted in June. The composite purchasing managers' index (PMI) rose to a 13-year high in July.