tag:blogger.com,1999:blog-84253204520109090212024-03-17T14:58:46.046+05:30INVISIBLE ANALYSIS It is all about an in-depth analysis of Global Macro Economy, Global Macro Economic Trends , Global Financial Advisory Industry, Global Independent Financial Advisor, Behavioural Finance, Strategic Cost Management, Business Strategy, & Economic Foresight. INDRANEEL SENGUPTAhttp://www.blogger.com/profile/16737884422257285340noreply@blogger.comBlogger604125tag:blogger.com,1999:blog-8425320452010909021.post-67398319048382700032024-03-16T11:05:00.001+05:302024-03-16T11:15:43.653+05:30Stress Test Results of MF- Should I stay Invested in Midcap & Small Cap?<p> </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgmUBlK9lBv6Zf0dxXpcAzHtzWQRQUbAkSoDszP1usOJuMDlMMHzn0ZKBdQVUQe6aN-qrHuPdM8FVq4ZL12tBHbi7FeSLAdaDrchXtiL9-k094TFoCZB9aCjlU-fxmnfwouubIyJV0RXkEpPjIDICc6OOOqOHVUMQhF2ZypzX4G7fK7e1z0UnlKJhTUWgZy/s1536/1710527896636.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1536" data-original-width="899" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgmUBlK9lBv6Zf0dxXpcAzHtzWQRQUbAkSoDszP1usOJuMDlMMHzn0ZKBdQVUQe6aN-qrHuPdM8FVq4ZL12tBHbi7FeSLAdaDrchXtiL9-k094TFoCZB9aCjlU-fxmnfwouubIyJV0RXkEpPjIDICc6OOOqOHVUMQhF2ZypzX4G7fK7e1z0UnlKJhTUWgZy/w538-h640/1710527896636.jpeg" width="538" /></a></div><br /><p></p><p><span style="text-align: justify;">Life</span><span style="text-align: justify;"> itself has so much stress that in a recent study it has been found that approximately
5 million deaths worldwide are attributed to mood and anxiety disorders each
year.</span><span style="text-align: justify;"> </span><span style="text-align: justify;">Further more </span><span style="text-align: justify;"> </span><span style="text-align: justify;">than 700 000 people die due to suicide every
year. For every suicide, many more people attempt suicide. Now I am more under stress due to the market actions.</span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">Now over and above all so much stress we have a Stress Test by SEBI for Mutual Fund Industry to find out did any AMC
did investment in Illiquid stocks. As an
investor, I have one simple question the results are out of what my
interpretation should be doing investing. Should I redeem my assets from Midcap
and Small which I believe will play a big role when the Indian GDP grows beyond the 5
trillion mark? When the Indian GDP is rising and the growth is visible very Clearly
over the next 5 to 10 years then the capping of 100 large caps and 150 stocks
in the Midcaps space needs a significant revamp which goes without saying. It can't
be like that that out of the BSE stock exchange's
5,311 listed companies, 5061 companies
are small cap. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US"> Now if the Industry is going to become a 1Rs.00 lakh cr industry in the coming 5 or 8 years where the allocation will be and how many stress tests will be required when the bucket is small.</span> It seems
the regulator needs to move ahead the curve from the traditional practices. In 2018
this classification was introduced then Indian was struggling
with high NPA and NCLT& RERA was just being introduced and over the past 6 years, there have been complete
changes in Indian corporates.</p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">When the Regulator raised the question about
the AMCs investigating that did they investments in illiquid stocks in Midcap and small cap Space
then I must accentuate that every AMC have to file their investment reports and
audit checks and balances are very much in place by the regulator why to
create a panic for the common people who lost whopping over Rs 9 trillion
in investor wealth has been lost due to this market correction, accounting for
more than 50% of the total value destruction.</span> A country where out of 140
cr people only 5% have Equity Investments and the same country does not have
any social coverage or retirement benefits but rather just being self-reliant on
its own financial planning. Further this 5% number came up in the last 3 years
before that it was 2.2% only. <o:p></o:p></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">Now if the Indian population of investors in equities
increases to 10% 50% of the sharing comes through Mutual Funds and 50% of
the same flows in MF comes in midcap and small cap then what will be the condition
of the fund managers of the AMC where they will invest that corpus when only
150 companies are midcap and rest is all small cap. They
will have no other alternative but to invest in a small cap as per SEBI
classification. <o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhi8epcYtwHznE0TK-VLbRtTCjaPzax63qYe0Qra5zWFbMPXGWGf5k30KsbnFZtD5kp5dQZTZ3QRpyNf28alhSgUx8UfuNN8B9hvjl4EpJ5d1rKwbpzpbRBFw8_NsP2Md_RsxbooLEFPHDq_eFfrRPAHsz3gE123bQIb5tSrO8C4wKSjd_N8XimnJEJK5qj/s640/stress%202.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="397" data-original-width="640" height="398" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhi8epcYtwHznE0TK-VLbRtTCjaPzax63qYe0Qra5zWFbMPXGWGf5k30KsbnFZtD5kp5dQZTZ3QRpyNf28alhSgUx8UfuNN8B9hvjl4EpJ5d1rKwbpzpbRBFw8_NsP2Md_RsxbooLEFPHDq_eFfrRPAHsz3gE123bQIb5tSrO8C4wKSjd_N8XimnJEJK5qj/w640-h398/stress%202.jpg" width="640" /></a></div>When IILFS went for toss followed by DHFL, and PMS bank where were these stress tests from the coffers of SEBI. Why could they
not find the stress at that time? The biggest loser of this stress test is the
common investor who saves money to plan his dreams? Investor protection has
become a joke.<p></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">Coming back to the main question what an
investor should make out of this report enclosed above. It is just like a machine
but without a manual. The biggest disadvantage of this type of half-hearted work
is that financial planning which includes the most goals of life (child
education, retirement planning, buying a house) goes upside down. In a country where the number of financial advisors and MFDs is very low compared to the population number. Miss-selling and misguiding will begin due to stress test reports which will be interpreted in many ways without any benchmark of understanding. I am a simple investor I don't understand liability assets in AMC language and hence how will I evaluate this report.? If this stress test was for investors like us then what is the end result? <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">Now many financial advisors will take advantage
of the report and will misguide. Particularly
the banks since in a country of 140 billion even half the population does not
Bhagwat Gita. They are dependent on TV serials to gain knowledge of Bhagwat
Gita.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">Now post this report has come out it seems who
will liquidate first the AMC or the client from the scheme since it's a half-hearted
activity. It is just replicating the US banking stress test which also failed to enlighten
people where they should park their money even if the government can’t back it. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">In a recent presentation, the SEBI chief was recommending
to invest in REITS and INVITS well how many people understand the same and how
many sessions have been done to educate investors to invest in REITS and
INVITS. My biggest question as an investor is will REITS & INVITS will help me to plan my financial goals and objectives. Will I be able to have an early retirement? <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">Now which mutual fund should I sell and which I
should keep and increase my allocation post the stress test results. Is my
advisor correct to analyse the result and guide me since there is no
manual? <o:p></o:p></span></p>INDRANEEL SENGUPTAhttp://www.blogger.com/profile/16737884422257285340noreply@blogger.com0tag:blogger.com,1999:blog-8425320452010909021.post-46942611010100372352024-02-29T21:52:00.002+05:302024-03-01T07:09:18.410+05:30Small Cap and Midcap Re-classification yard Stick needs to be Changed...<p class="MsoNormal" style="text-align: justify;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgbzKwksx35jknBevzMZtEZAz1NK4RzzMnxo3ILz7eUsSM6J6xHjwHr2SzC_OH98dkVXtk948UXQDFp0sfTYLUZQT4MLQ5rcBf_zbd7_SD8xBzWLstK_QpA1FDgP-gfLQTlmMSrfJU__9UMFKqPI6Uicqp5ztueC5poYN58rFYYq4dmHhErlLFiEk17LlPC/s693/Untitledqqq.jpg" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: medium;"><img border="0" data-original-height="566" data-original-width="693" height="522" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgbzKwksx35jknBevzMZtEZAz1NK4RzzMnxo3ILz7eUsSM6J6xHjwHr2SzC_OH98dkVXtk948UXQDFp0sfTYLUZQT4MLQ5rcBf_zbd7_SD8xBzWLstK_QpA1FDgP-gfLQTlmMSrfJU__9UMFKqPI6Uicqp5ztueC5poYN58rFYYq4dmHhErlLFiEk17LlPC/w640-h522/Untitledqqq.jpg" width="640" /></span></a></div><span style="font-size: medium;"><br /></span><div class="separator" style="clear: both; text-align: center;"><span style="font-size: medium;"><br /></span></div><span face="Calibri, sans-serif" style="font-size: medium;">If the yardstick of measurement needs a change whom will you change the effort or the measurement
yard? Do we are all having problems revising our yardsticks for stronger growth
or we are happy with traditional measurement ways? Will you change your client’s
early retirement plan due to the wrong yardstick or you will ask the big giants to
relook to change the yardstick? </span><p></p><p class="MsoNormal" style="text-align: justify;"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: medium; mso-ansi-language: EN-US;"> A huge number of new analysts and mostly many
IFAs have suddenly due to the blessing of YouTube and some blind followers become Midcap and small-cap analysts.
SEBI's cautious approach is bound to go ahead as we have seen previously burning
fingers. We remember that in 2018 we witnessed a similar cautious approach
where many MF schemes stopped taking inflows. Well of them kept inflows coming
and they burnt their fingers. <o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: medium; mso-ansi-language: EN-US;">We might all
have forgotten that last time some brokering company came up with Midcap and
Small cap valuation reports and they said it's time to exit but we all know what
returns we achieved. The problem of today is the classification limitations and the same is not restricted to MF but across all equity products. <o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: medium; mso-ansi-language: EN-US;">The problem
with the whole understanding of the Midcap and Small cap segment is that we are
getting carried away too much on the Index performance whereas underlying stock
valuations are low or rather cheap. What we are missing out on is that India’s
market cap is currently the 5th largest globally (US $4.5trn) but India’s
weight in global indices is still low at 1.6% (10th rank). This number will
improve as India breaches the 5 trillion GDP economy. <o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"></p><ul><li><span style="font-size: medium;"><span face="Calibri, sans-serif">We saw strong
YoY earnings growth in the 3rd quarter results </span><span face="Calibri, sans-serif">in </span><span face="Calibri, sans-serif">auto, lending financials (ex-SBI),
industrials, energy, cement, pharma, capital markets, and metal sectors. Now these
sectors are the economic sectors where India is focusing to be manufacturing a manufacturing-independent country. </span></span></li><li><span face="Calibri, sans-serif" style="font-size: medium;">The PLI is also attached to the
same segment driving growth. Now the midcap and small cap are the ones who are
going to benefit from the same. Or do you want only pharma, IT and FMCG to perform
for your client portfolio and let India struggle with GDP growth of 5 trillion?</span></li><li><span style="font-size: medium;"><b><span face=""Calibri",sans-serif" lang="EN-US"> </span></b><span face=""Calibri",sans-serif" lang="EN-US" style="mso-ansi-language: EN-US;">If the Nifty is going to be at 25000 levels in
FY-25 then where do you find Midcap and Small caps to reach and who will
support this rally of the Indian stock market. Why SEBI should rework on
classifications and if they don’t do this will have a problem for investing in the coming days as India reaches and crosses
the 5 trillion GDP mark.<o:p></o:p></span></span></li><li><span face=""Calibri",sans-serif" style="font-size: medium;">At
the aggregate level, the capacity utilisation (CU) in the manufacturing sector
increased to 74.0 per cent in Q2:2023-24 from 73.6 per cent in the previous
quarter. </span></li><li><span face=""Calibri",sans-serif" style="font-size: medium;">The
IIP-Manufacturing (Quarterly Average) is also on the rise followed by De-trended
Quarterly IIP-Manufacturing space converting from negative to positive.</span></li></ul><div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgaFq0AW9A-_cEtpRrlqX4gJeHPgnZTQL8pLnHoOGe4dpZh7UHCpcm41GojOl18_de-Jwuj27hPU2DBYrCgnLGwQ0JZ0BF2krKO8rictVgQHj_VBACMNF2j8Hzf7JfCdH1MIIL3ylxrZLTYdV-nkxC0R2VwEAw1e4ZTaYf3ECNnAbi3ZVB-rQvPWLesUNIR/s1632/2.jpg" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: medium;"><img border="0" data-original-height="528" data-original-width="1632" height="208" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgaFq0AW9A-_cEtpRrlqX4gJeHPgnZTQL8pLnHoOGe4dpZh7UHCpcm41GojOl18_de-Jwuj27hPU2DBYrCgnLGwQ0JZ0BF2krKO8rictVgQHj_VBACMNF2j8Hzf7JfCdH1MIIL3ylxrZLTYdV-nkxC0R2VwEAw1e4ZTaYf3ECNnAbi3ZVB-rQvPWLesUNIR/w640-h208/2.jpg" width="640" /></span></a></div><span style="font-size: medium;"><br /><span face="Calibri, sans-serif"><br /></span></span></div><div><span face="Calibri, sans-serif" style="font-size: medium;"><br /></span></div><div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg4Y-bjLtZ9Ub4srQeqZajJAmMzdhhCLDc2TYaE_-LzLrh2ctBRxhz7SjvfbgWU_BZTOGzx1ys2PNjipxEaEksAdxyf5W2sYkpyjgZHOyOJoiuoU-P79IZHEltVCJjelvCpewiHA-vOg4EmwNtsBLMYh2SKFgDlLFWKTb_VjhNHDCTpkj4cLewaydAVyWGc/s1570/24.jpg" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: medium;"><img border="0" data-original-height="411" data-original-width="1570" height="168" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg4Y-bjLtZ9Ub4srQeqZajJAmMzdhhCLDc2TYaE_-LzLrh2ctBRxhz7SjvfbgWU_BZTOGzx1ys2PNjipxEaEksAdxyf5W2sYkpyjgZHOyOJoiuoU-P79IZHEltVCJjelvCpewiHA-vOg4EmwNtsBLMYh2SKFgDlLFWKTb_VjhNHDCTpkj4cLewaydAVyWGc/w640-h168/24.jpg" width="640" /></span></a></div></div><ul><li><span style="font-size: medium;"><span face=""Calibri",sans-serif"> </span><span face="Calibri, sans-serif">If
you look at the order book numbers in detail you will get clarity that we have a lot to work on and a lot of earnings to be taken into books in real terms rather than based on expectations.</span></span></li><li><span style="font-size: medium;"><span face=""Calibri",sans-serif" lang="EN-US" style="mso-ansi-language: EN-US;"> </span><span face="Calibri, sans-serif">Overall
Gross Fixed Capital Formation has risen to 34% of the GDP in FY23, levels last
seen in 2013. Capital Expenditure (capex) substantially augments the economy's
productive capacity and exerts a more profound influence on long-term growth
and productivity in contrast to revenue expenditure.</span></span></li><li><span style="font-size: medium;"><span face=""Calibri",sans-serif" lang="EN-US" style="mso-ansi-language: EN-US;"> </span><span face="Calibri, sans-serif">As more capacity
utilization and economic growth drivers play their dice the MSME segment
will benefit the most which will impact the price of the Midcap and
small-cap stocks.</span></span></li><li><span style="font-size: medium;"><span face=""Calibri",sans-serif" lang="EN-US" style="mso-ansi-language: EN-US;"> </span><span face="Calibri, sans-serif" lang="EN-US">Now deep
diving into the capex of Indian corporates we find that </span><span face="Calibri, sans-serif">non-financial companies witnessed a
strong capex growth of 36.5% YoY during FY23, much higher than the 22.6% YoY
growth recorded in FY22.</span></span></li><li><span style="font-size: medium;"><span face=""Calibri",sans-serif"> </span><span face="Calibri, sans-serif"> </span><span face="Calibri, sans-serif">Further, it has been found that the aggregate
capex undertaken by Indian non-financial firms in 2023 surpassed pre-pandemic
levels for the first time, with 3.3% above the pre-pandemic baseline of 2019</span></span></li><li><span style="font-size: medium;"><span face=""Calibri",sans-serif" lang="EN-US" style="mso-ansi-language: EN-US;"> </span><span face="Calibri, sans-serif">The
government has spent Rs 5.46 lakh crore, around 54.7% of the budgeted capex
target of Rs 10 lakh crore for FY24, as of October-end, according to data from
the Controller General of Accounts.</span></span></li><li><span style="font-size: medium;"><span face=""Calibri",sans-serif"> </span><span face="Calibri, sans-serif">Now
with the interest rate outlook getting lower in FY25 and with Mr. Modi coming back
again in his 3</span><sup style="font-family: Calibri, sans-serif;">rd</sup><span face="Calibri, sans-serif"> term, is bound to increase confidence among the market investors and MSMEs.</span></span></li><li><span style="font-size: medium;"><span face=""Calibri",sans-serif"> </span><span face="Calibri, sans-serif">Looking
at the derivative numbers we find that </span><span face="Calibri, sans-serif" style="background: white;">participation in the derivatives market is on the
rise in India with the derivatives-to-cash ratio at 400x as of July 2023, the
highest in the world. Thanks to
YouTubers, full-time stock traders and 15cr new demat account holders which is
still galloping like a horse.</span></span></li><li><span style="font-size: medium;"><span face=""Calibri",sans-serif" style="background: white;"><o:p> </o:p></span><span face="Calibri, sans-serif" style="background-color: white;">Volumes in Nifty futures
have jumped by 44 per cent since July 2023, however, the volumes in the Nifty
Midcap Select index have jumped much higher, also owing to the low base.</span></span></li><li><span face="Calibri, sans-serif" style="background: white; font-size: medium;">The number of demat
accounts opened with the two depositories – the Central Depository Services
(CDSL) and the National Securities Depository (NSDL) -- rose 28.7 per cent in
the past 12 months, from 108.1 million to 139.2 million. About 4.1
million demat accounts were added in December 2023, making it the highest-ever
monthly addition.</span></li><li><span face="Calibri, sans-serif" style="background: white; font-size: medium;">This new breed of
investors has been investing for a long time, and they don’t come with any legacy of
Harshad Mehta, Ketan Parekh etc. This
new-age client wants clean government and progressive economic policies for the growth of their career and life. </span></li><li><span face="Calibri, sans-serif" style="background: white; font-size: medium;"> As salaries will grow investing appetite will
grow more and with smartphones in the world and free information on the other hand the
investing and risk-taking ability has changed. </span></li></ul><p></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: medium;"><o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: medium;"><span face="Calibri, sans-serif" style="background: white;">The biggest proof of the
pudding is that despite Ukraine Russia war and historical new highs of US
Federal rate hikes the market scaled to new highs in many countries. The historical predictions have already been
challenged hence one needs to understand the world's behavioural aspect of investments.
</span><span face=""Calibri",sans-serif" style="background: white;"><o:p></o:p></span></span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: medium;"><span face=""Calibri",sans-serif" style="background: white;"><o:p> </o:p></span><span face="Calibri, sans-serif">This time the
risk part is that fund inflows have too much concentration on the limited count
of quality stocks. What is the need of the hour is that we need a complete
re-evaluation of Midcap and Small definitions and some further bifurcation which
will benefit the Fund managers and investors. </span><span face="Calibri, sans-serif"> </span></span></p><p class="MsoNormal" style="text-align: justify;"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: medium; mso-ansi-language: EN-US;">Now many
people have suddenly jumped into large-cap investment options and simply diluted
the goal-based, risk profile-based financial planning and the Investment
document decided mutually with the client while doing asset allocation investment
in mid and small-cap. <o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span face=""Calibri",sans-serif" lang="EN-US" style="font-size: medium; mso-ansi-language: EN-US;">People have
become crazy in accentuating too much on the segment where they have forgotten
that MF is just not alone in doing investments in the segment. We have underlying
index funds, Insurance, Direct Equities, PMS and AIF products doing investments
in the same ocean. This is the place where
the voice gets strengthened and SEBI needs to ACT fast for another
reclassification to help the investors and investments.<o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgruCvfJUhobatWIu3dD9O6Ws2y6OHBjjGMvdAMnbln6AkXW1yyHXv5QNv9yXKddTLS1KBtK_7KlbkfhIce0ff0H2uaW14Fl6Vndhq75BpXP74vM7Ba0kcWqbbMhUAqhicxG9zEBqnFiAQJRkU4feGT8X4JOa7EQ7NcVirR1VDgJQm9-OTbD38xI_sf7Crd/s872/Small%20cap.png" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: medium;"><img border="0" data-original-height="872" data-original-width="786" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgruCvfJUhobatWIu3dD9O6Ws2y6OHBjjGMvdAMnbln6AkXW1yyHXv5QNv9yXKddTLS1KBtK_7KlbkfhIce0ff0H2uaW14Fl6Vndhq75BpXP74vM7Ba0kcWqbbMhUAqhicxG9zEBqnFiAQJRkU4feGT8X4JOa7EQ7NcVirR1VDgJQm9-OTbD38xI_sf7Crd/w576-h640/Small%20cap.png" width="576" /></span></a></div><div class="separator" style="clear: both; text-align: center;"><span style="font-size: medium;"><br /></span></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiA1-1ePfFXRhm6Rv0h-DuSh6GdFNiyQg0eKg3jV6WlELz9SyAJPEaTBHRH0axkmznq-jalpBk2WIk0swO0cqlL2KJ3BT_nlhqa8oYNqfHUCM2WErmW8XXJoNuF13W8sOkuf88ryGuey6H_zw5uA9HcbhICHHv-3WEePtjhNGk_r7bOS3m8aNpbqycPKSY1/s1027/yuuu.jpg" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: medium;"><img border="0" data-original-height="1027" data-original-width="819" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiA1-1ePfFXRhm6Rv0h-DuSh6GdFNiyQg0eKg3jV6WlELz9SyAJPEaTBHRH0axkmznq-jalpBk2WIk0swO0cqlL2KJ3BT_nlhqa8oYNqfHUCM2WErmW8XXJoNuF13W8sOkuf88ryGuey6H_zw5uA9HcbhICHHv-3WEePtjhNGk_r7bOS3m8aNpbqycPKSY1/w510-h640/yuuu.jpg" width="510" /></span></a></div><span style="font-size: medium;"><br /></span><div class="separator" style="clear: both; text-align: center;"><span style="font-size: medium;"><br /></span></div><span style="font-size: medium;"><span face="Calibri, sans-serif" lang="EN-US">Where we are
going wrong is that instead</span><span face="Calibri, sans-serif" style="background: white;"> of categorising stocks by their market capitalisation,
the emphasis should be on the growth potential and fundamental strengths of the
companies</span><span face="Calibri, sans-serif">. I did not hear a single IFA neither wealth manager nor any
top honchos of the financial Industry asking for changes in the mechanism of
the measurement yardstick rather than asking everyone to be careful. Rebalance
but don’t exit and since reinvestment is another challenge. Reevaluate your
goals and focus on early closures of goals. Will you ask your client to exit Midcap and small caps and become zero but
what will you do with Large and Midcap, Flexi cap and Multicap Midcap
allocations? </span></span><p></p>INDRANEEL SENGUPTAhttp://www.blogger.com/profile/16737884422257285340noreply@blogger.com0tag:blogger.com,1999:blog-8425320452010909021.post-70265800714212346812024-02-12T18:07:00.004+05:302024-02-12T18:07:34.840+05:30Dumping of China into India is Good for Indian Equities.<p> </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg4raa6g_ci5uRyGvgm5rL1ULK78aNnQnUyEHtXE5mSGw4Jsb2ttkPrCsQCJPnyQF4tSkbZ6gMD6hzdqpYv1nLWA4KKEVTmnTh6Hj6S7guS4_Bxm59ltEh1yFjAmPBwVGPciFw1FSREb1VVau_7zdOypHyaO4g6YlyqlxzpsLEajElZjmgCyeIe-0yGeynp/s639/GFZGfocbEAAmx70.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="521" data-original-width="639" height="522" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg4raa6g_ci5uRyGvgm5rL1ULK78aNnQnUyEHtXE5mSGw4Jsb2ttkPrCsQCJPnyQF4tSkbZ6gMD6hzdqpYv1nLWA4KKEVTmnTh6Hj6S7guS4_Bxm59ltEh1yFjAmPBwVGPciFw1FSREb1VVau_7zdOypHyaO4g6YlyqlxzpsLEajElZjmgCyeIe-0yGeynp/w640-h522/GFZGfocbEAAmx70.png" width="640" /></a></div><br /><p></p><p><span style="font-size: 14pt; text-align: justify;">Those who are thinking that as
Chinese markets are running at a deep discount, and this will lead to a
reversal of FPIs from India to China well it might be daydreaming with open
eyes. Why will FPI money come to India in PE, AIF CAT 1 and II, and
ETFs? Why are cheap China market investments flowing into India?</span></p>
<p class="MsoNormal" style="margin-left: 18.0pt; text-align: justify;"><b><u><span style="font-size: 14.0pt; line-height: 107%;">China DUMP @ Wealth Firms Crisis
& Investment Crisis</span></u></b><span style="font-size: 14.0pt; line-height: 107%;"><o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 18.0pt; text-align: justify;"><span style="font-size: 14.0pt; line-height: 107%;">There have been several instances
where the FPI investors of China are scared and running away from the Chinese
market.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left: 54.0pt; mso-list: l0 level1 lfo3; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 14.0pt;">The China and Hong Kong market shed around $1.5
trillion in January only. Over the past three years, about $6 trillion —
equivalent to roughly twice Britain’s annual economic output has been
wiped off the value of Chinese and Hong Kong stocks. In these 3 years when
the Chinese markets were running on deep discounts Indian market attracted
FPIs.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left: 54.0pt; mso-list: l0 level1 lfo3; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="background: #FDFDFD; color: #333333; font-size: 14.0pt;">PE investments have
declined significantly in China due to the economic and sectoral turmoil. Now
this has led to a significant drop in financial product opportunities.</span><span style="font-size: 14.0pt;"><o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left: 54.0pt; mso-list: l0 level1 lfo3; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 14.0pt;">It's not the dip which is the opportunity but the lack
of opportunity for growth within China.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left: 54.0pt; mso-list: l0 level1 lfo3; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="background: #FDFDFD; color: #333333; font-size: 14.0pt;">Wealth firm closures
are all due to the lack of an ageing population, and the growth of a savings
mindset. 30% of residential property purchased in China is parked in real
estate which is in the form of investments rather than living.</span><span style="font-size: 14.0pt;"><o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left: 54.0pt; mso-list: l0 level1 lfo3; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="background: #FDFDFD; color: #333333; font-size: 14.0pt;">Further around 80% of
the savings of China is parked in real estate investments compared to 30% of
the U.S</span><span style="font-size: 14.0pt;"><o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 18.0pt; text-align: justify;"><span style="font-size: 14.0pt; line-height: 107%;"> </span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiuZJtNUCx832kCcHCuiBlUVHqHUkuSzlYQJfSYXrqb1yugPZ7_TWVZAV7BC7-hFCwPtiFGEUz1yVGrl5sA9NFlFp6u4qJJomzUAxeWdDvaWgElKr9NUW9JsQ5s8J_64BPIAQ2qBGBvDzeQb_9zhioh4il38HYN841LthquL17EaBguoKahbMyJgbeLBSWr/s1121/GBF6KAIXkAAwZBK.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="802" data-original-width="1121" height="458" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiuZJtNUCx832kCcHCuiBlUVHqHUkuSzlYQJfSYXrqb1yugPZ7_TWVZAV7BC7-hFCwPtiFGEUz1yVGrl5sA9NFlFp6u4qJJomzUAxeWdDvaWgElKr9NUW9JsQ5s8J_64BPIAQ2qBGBvDzeQb_9zhioh4il38HYN841LthquL17EaBguoKahbMyJgbeLBSWr/w640-h458/GBF6KAIXkAAwZBK.jpg" width="640" /></a></div><br /><p></p>
<p class="MsoListParagraph" style="margin-left: 54.0pt; mso-list: l0 level1 lfo3; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 14.0pt;">32.4% is the rate of household savings which comes to
3.2% of the GDP. Further, the current carnage of the real estate investment
products leads to more savings and hence wealth products are drying down faster
followed by wealth firms shutting down offices.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left: 54.0pt; mso-list: l0 level1 lfo3; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 14.0pt;">Export has come down and so has the earnings of the
Chinese corporates.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left: 54.0pt; mso-list: l0 level1 lfo3; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 14.0pt;">Chinese consumption accounts for 53% of GDP compared
to 73% of the global standard.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left: 54.0pt; mso-list: l0 level1 lfo3; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 14.0pt;">Hence deep discount opportunities in any market do not
lead to an inflow of funds. The Chinese market carnage is so strong that its
securities regulator was sacked and moved from his position.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left: 54.0pt; mso-list: l0 level1 lfo3; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 14.0pt;">U.S. emerging market funds’ allocation to China as a
share of total EM exposure declined to 20.6% from 28.6% on an asset-weighted
basis, and to 20% from 26% on an equal-weighted basis. They want stability
in the economy and an economy to grow based on demographic statistics of the
young population. China has a bulging ageing population.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left: 54.0pt; mso-list: l0 level1 lfo3; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 14.0pt;">The market value of China and Hongkong equities is
down by nearly $7 trillion since its peak in 2021 whereas Indian markets rose
by 60% and American stocks rose by 14%. Out of its 40 years of export, the
Chinese economy faced only 6 times when its trade was negative.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left: 54.0pt; mso-list: l0 level1 lfo3; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 14.0pt;">A 7% or 8% GDP has now come down to 4% which makes it
difficult for its economy to grow.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left: 54.0pt; mso-list: l0 level1 lfo3; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 14.0pt;">The real estate bubble burst is the new member in
the carnage context but what we find is that the Chinese economy struggled from
2017 -18 onwards once Mr. Donald Trump squeezed the neck of Chinese bureaucrats
and its economic policy framework. <o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left: 54.0pt; mso-list: l0 level1 lfo3; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 14.0pt;">In China safer money market instruments are attracting
the flows instead of equities. Wealth Firms have become bankrupt and legally
bound with lost faith due to the real estate wealth products disaster.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left: 54.0pt; mso-list: l0 level1 lfo3; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 14.0pt;">The fall of the China and Hong Kong markets has led to
a significant loss of faith among Chinese investors and further foreign wealth
firms are moving out from China.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left: 54.0pt; mso-list: l0 level1 lfo3; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 14.0pt;">The biggest losers are the blue-coloured job people
whose savings went tossed due to the real estate sector collapse.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left: 54.0pt; mso-list: l0 level1 lfo3; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 14.0pt;">Investment wealth firms like Zhongzhi International a
wealth firm owes to 150000 clients around $2.9tn which will never come
back. Chinese demography does not support companies for opportunities in PE and
similar opportunities.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left: 54.0pt; mso-list: l0 level1 lfo3; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 14.0pt;">The outflow is very strong from China and the same is
proven when it is found that emerging market ex-China debt funds, have
attracted inflows for the past seven months and in January drew in $47.3
billion, the most since October 2022 and one of the highest on record.<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 2.5pt; text-align: justify;"><span style="font-size: 14.0pt; line-height: 107%;"> </span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjmsxXiv2jdZaiKRP33Izrf7W9KoIkAlGjibwoqgatcw4XZECxtkZmNoP-WfsYawiTINGasbIVD_DVKq2b4IZ0i8gmkDJMyUUeEMmGNlA8eZD1RDort9Rbni5ofpUtkG58X-QskPUmTXLZzZQhyphenhyphennXajg5m2D4BRw9uLS3CLttrsvq4YxQdPiTtv06pN6bbb/s1601/F-cKNRdboAAn4Zs.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="975" data-original-width="1601" height="390" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjmsxXiv2jdZaiKRP33Izrf7W9KoIkAlGjibwoqgatcw4XZECxtkZmNoP-WfsYawiTINGasbIVD_DVKq2b4IZ0i8gmkDJMyUUeEMmGNlA8eZD1RDort9Rbni5ofpUtkG58X-QskPUmTXLZzZQhyphenhyphennXajg5m2D4BRw9uLS3CLttrsvq4YxQdPiTtv06pN6bbb/w640-h390/F-cKNRdboAAn4Zs.jpg" width="640" /></a></div><br /><p></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-size: 14.0pt; line-height: 107%;"> </span><b><u><span style="font-size: 14.0pt; line-height: 107%;">India Inflow -FPIs</span></u></b></p>
<p class="MsoListParagraph" style="margin-left: 90.0pt; mso-list: l2 level1 lfo2; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 14.0pt;">The biggest reversal of inflows happening from China
to India is through the ETF route. BlackRock is set to fully replicate the
underlying index of its $2bn China A-Shares ETF.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left: 90.0pt; mso-list: l2 level1 lfo2; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 14.0pt;">It has been found that according to data from LSEG
Lipper, China-focused funds domiciled outside of that country saw outflows of
$1.54 billion in 2023 alone, and an 18.8% drop in assets under management.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left: 90.0pt; mso-list: l2 level1 lfo2; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 14.0pt;">Meanwhile, the expanding roster of ex-China funds
pulled in $6.13 billion in 2023, with assets jumping 168% to $12.27
billion. It has been found that ETF funds excluding China have soared
significantly in 2002 and 2023.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left: 90.0pt; mso-list: l2 level1 lfo2; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 14.0pt;">The MSCI Emerging Markets index returned 9.8% in 2023
versus 20% for the MSCI Emerging Market ex-China index, as the world’s
second-largest economy struggled.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left: 90.0pt; mso-list: l2 level1 lfo2; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 14.0pt;">This is getting reflected in all ETFs and most
importantly change of Benchmarks of pension and insurance funds of developed
and emerging markets.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left: 90.0pt; mso-list: l2 level1 lfo2; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 14.0pt;">Zurich-based Vontobel Holding AG is looking ahead
towards India to invest and set up an office.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left: 90.0pt; mso-list: l2 level1 lfo2; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 14.0pt;">India-focused ETFs saw net inflows of $8.6 billion
last year compared to the $7.4 billion peak in net flows in 2021.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left: 90.0pt; mso-list: l2 level1 lfo2; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="background: #FDFDFD; color: #333333; font-size: 14.0pt;">Last year, investors
redeemed €2.9 billion (£2.5 billion) from actively managed China equity
open-end funds domiciled in Europe, marking an annual organic growth rate of
-6.6%.</span><span style="font-size: 14.0pt;"><o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 18.0pt; text-align: justify;"><b><u><span style="background: #FDFDFD; color: #333333; font-size: 14.0pt; line-height: 107%;">It's
not cheap but the long-term Cheap of China.</span></u></b><span style="font-size: 14.0pt; line-height: 107%;"><o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 18.0pt; text-align: justify;"><b><u><span style="background: #FDFDFD; color: #333333; font-size: 14.0pt; line-height: 107%;">Conclusion:</span></u></b><span style="font-size: 14.0pt; line-height: 107%;"><o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 18.0pt; text-align: justify;"><span style="background: #FDFDFD; color: #333333; font-size: 14.0pt; line-height: 107%;">India
will attract more inflows in coming years as various benchmarks and ETF inflows
Ex China are now getting diverted to India. Indian economic structure is the
prime thing which guides the NIFTY and the growth of India.</span><span style="font-size: 14.0pt; line-height: 107%;"><o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left: 90.0pt; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 14.0pt;">In Dec. 2019, household financial assets were 86.2 %
of GDP; liabilities were 33.4 % of GDP. In March 2023, these numbers were 103.1
% and 37.6 %, respectively.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left: 90.0pt; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 14.0pt;">Hence Net Financial Assets of households
were 52.8 % of GDP in Dec. 2019, and by March 2023, it had improved to 65.5 %
of GDP.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left: 90.0pt; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 14.0pt;">The number of GST taxpayers increased from 66 lakhs at
its introduction in 2017 to 1.4 crore in 2022, with a larger number
of smaller businesses entering the regime.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left: 90.0pt; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 14.0pt;">. The number of recognised start-ups has increased
from 452 in 2016 to more than 98,000 in 2023.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left: 90.0pt; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 14.0pt;">Internet penetration in India, as per the ‘Internet in
India’ report 2022, crossed the 50 per cent mark in 2022, growing more than
three-fold since 2014. This leads to a significant change in preference for
goods and services followed by extensive maturity of investors.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left: 90.0pt; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 14.0pt;">Effectively, the capital expenditure of the Public
sector (including Union government capex, grants to the states for capital
asset creation, and investment resources of the Central PSEs) has increased
from ₹5.6 lakh crore in FY15 to ₹18.6 lakh crore in FY24<o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left: 90.0pt; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 14.0pt;">The PLI Scheme, involving an outlay of ₹1.97 lakh
crore, 746 applications were approved till the end of December 2023, with 176
MSMEs being direct beneficiaries. The scheme witnessed over ₹1.07 lakh crore of
investment, leading to production/sales of ₹8.7 lakh crore and employment
generation of over 7 lakh. The scheme has witnessed exports exceeding ₹3.4 lakh
crore.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left: 90.0pt; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 14.0pt;">The Insolvency and Bankruptcy Board of India (IBBI)
shows that the IBC has rescued 808 corporate debtors through resolution plans,
with realisations of 168.5% against the liquidation value and 32%
against the admitted claims of the creditors.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left: 90.0pt; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 14.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-size: 14.0pt;">. Companies are now raising funds from issuances of
bonds instead of relying mainly on bank loans. Corporate bond issues in FY23
were 2.9 times those in FY 2014, while outstanding corporate bonds grew a CAGR
of 12.8 per cent between FY 2014 and FY23. A report by CRISIL states that the
corporate bond market is set to more than double from ₹43 lakh crore in FY24 to
₹100-120 lakh crore in FY30. Hence less burden due to the rising interest rate
scenario.<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 18.0pt; text-align: justify;"><span style="font-size: 14.0pt; line-height: 107%;">Hence it’s the economic policy
framework which protects its own citizens and also FPIs which is the actual
reason why India will attract more inflows in coming years compared to the
Chinese deep discount market.</span></p>INDRANEEL SENGUPTAhttp://www.blogger.com/profile/16737884422257285340noreply@blogger.com0tag:blogger.com,1999:blog-8425320452010909021.post-2488893314231303972024-02-11T12:10:00.009+05:302024-02-11T15:54:58.106+05:30Who is adding India in Every Global Investors Portfolio & Products ?<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhM72BmHeFPBudvseW_yfkAdw2rbW2HCbl7Sbu7ZSSKGN2kQo1Rl6j76DZCZrJEcUGCGpUv7p4O3pen3flWRPLB8BYYlAM9FgDtlMhzE7w7hTU9UUaBKhdQ_LM9FBlzOmfAUtH7SslMuQVrxaUt8qNLKB-TaFiaa0mFDGCAVhTC-PqxhVo31Ip6e6dk-M7y/s1072/GEnVr6kXQAACNF2.jpg" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: medium;"><img border="0" data-original-height="187" data-original-width="1072" height="112" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhM72BmHeFPBudvseW_yfkAdw2rbW2HCbl7Sbu7ZSSKGN2kQo1Rl6j76DZCZrJEcUGCGpUv7p4O3pen3flWRPLB8BYYlAM9FgDtlMhzE7w7hTU9UUaBKhdQ_LM9FBlzOmfAUtH7SslMuQVrxaUt8qNLKB-TaFiaa0mFDGCAVhTC-PqxhVo31Ip6e6dk-M7y/w640-h112/GEnVr6kXQAACNF2.jpg" width="640" /></span></a></div><p><span style="font-size: medium;"><span style="background-color: white; color: #0f1419; text-align: justify;">I am
not able to believe that my country India is the fastest growing economy among G20, G7 and even among the global market.
I firmly believe that the Indian market- NIFTY 22000 is a bubble and is about to
burst at a point in time. I am searching for rationales for the correction of NIFTY to
the level of 15000. I am in searching expecting the scam to burst before the 18</span><sup style="color: #0f1419; text-align: justify;">th</sup><span style="background-color: white; color: #0f1419; text-align: justify;">
Loksabha Election and the Indian economy to get fort tailspin. I am searching
for the banking crisis, a high level of NPA and falling confidence in the global
market.</span></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="background: white; color: #0f1419; font-size: medium; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">These are
the wishes of the PUT option holders, the bear favouring market players and most
importantly those who have lived life in a market filled with all sorts of slow
and corruption. But before delving
further I would accentuate the global crisis which is brewing like a filter
coffee taking a long time to get launched in the market.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="background: white; color: #0f1419; font-size: medium; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">If we
want to know where India, U.S. and China stand we need to know the respective
key aspect of fund inflow and outflow which decides the Nifty fate of 30000 or
40000. I am not repeating the same demographic change and opportunities for the Indian capital market. I am discussing the slowdown opportunities of the US and China where India is placed and its investments. <o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span style="background: white; color: #0f1419; font-size: medium; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><b><u>The US Slow Poison Fall </u></b></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-size: medium;"><span style="background: white; color: #0f1419; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">The
S&P 500 is already up 5.4% on the year, well above the 1.9% average gain
Wall Street strategists were predicting for all of 2024</span>. 2024 has been
the best start of the year for momentum factor since 2008, IShares MSCI World Momentum has gained 14% ytd vs 6% for iShares Core MSCI
World. Momentum factor has also outperformed on Wall St. iShares MSCI USA
Momentum has gained 14% vs iShares Core S&P 500's 5.5%.<o:p></o:p></span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjoxKrT7xzaNe0BxRfOxhFA2laBrrrRdZFTGy6_TFSpWwYMyvLR70pI2IN0wfd_0McdRPbHWSYGWz8wAI8DsOYQcdYuDFyf6PzvT1EbUH9TdRCpCzNLfI1ascnfFyIl062TMLDvXirhkllkV9FuULMLmKudzxTyPDS-oH_tihyphenhyphen42fzSK6WBwoImSvSrHwkE/s2360/GGAu2aBXEAAZ99U.png" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: medium;"><img border="0" data-original-height="1478" data-original-width="2360" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjoxKrT7xzaNe0BxRfOxhFA2laBrrrRdZFTGy6_TFSpWwYMyvLR70pI2IN0wfd_0McdRPbHWSYGWz8wAI8DsOYQcdYuDFyf6PzvT1EbUH9TdRCpCzNLfI1ascnfFyIl062TMLDvXirhkllkV9FuULMLmKudzxTyPDS-oH_tihyphenhyphen42fzSK6WBwoImSvSrHwkE/w640-h400/GGAu2aBXEAAZ99U.png" width="640" /></span></a></div><span style="font-size: medium;"><br /></span><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhPJ4M4tY2dvGaFq_2j-mdBLglnN7gsx0MUJIeoyBxaL4MjLwWUiGuP753OjiygaoPtyvEalK7a32sEQyiKquGLL7IwlGwrwPDW8MKBHH6M1_RptjOlwruwJKtnkXbNcHsscL4YOXsP14J0FKjE4cko4PGkmoOYv3obhB5gdKRLeFI06OlyuGjexhkgu5fP/s2366/GGAu6EfWQAA03S1.png" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: medium;"><img border="0" data-original-height="1472" data-original-width="2366" height="398" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhPJ4M4tY2dvGaFq_2j-mdBLglnN7gsx0MUJIeoyBxaL4MjLwWUiGuP753OjiygaoPtyvEalK7a32sEQyiKquGLL7IwlGwrwPDW8MKBHH6M1_RptjOlwruwJKtnkXbNcHsscL4YOXsP14J0FKjE4cko4PGkmoOYv3obhB5gdKRLeFI06OlyuGjexhkgu5fP/w640-h398/GGAu6EfWQAA03S1.png" width="640" /></span></a></div><span style="font-size: medium;"><br /></span><p class="MsoNormal" style="text-align: justify;"><span style="background-color: white; color: #0f1419; font-size: medium;">On the
other hand, the wall Street have narrowed down. Those who are thinking soft
landing for the U.S economy as the stock market index is at a time high well it is a gimmick to be believed in. More than 70% of the S&P 500 stocks have underperformed
in 2023. It is not a soft landing but a crash landing in the form of slow poisoning.</span></p><p class="MsoNormal" style="text-align: justify;"><span style="background-color: white; color: #0f1419; font-size: medium;"><b><u>Magnificient Bubble.</u></b></span></p><p class="MsoNormal" style="text-align: justify;"><span style="background-color: white; color: #0f1419; font-size: medium;">Those who are in search of the bubble in the Indian market and investing with huge trust in the International market well the bubble dream is true but the country's name is changed.</span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; mso-layout-grid-align: none; text-align: justify; text-autospace: none;"><span style="font-size: medium;"><span style="background: white; color: #0f1419;">The FANG name now has changed into magnificent
7. Magnificent 7 market cap nears $13
trillion. These seven tech giants of the other big name Magnificent 7
alone represent 30% of th</span>e S&P 500. Currently, the
Magnificent Seven's market value is almost half as large as the remaining 493
S&P 500 companies combined.</span></p><p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; mso-layout-grid-align: none; text-align: justify; text-autospace: none;"><span style="font-size: medium;"><br /></span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiMLy2ChWDfmfWMHgpcEAIEMSUSbjUArQTzwHAZymeRGr1S3iTd1idcBqE2NJXizfbYdwLju0MnfDolj_MtfqgLh2l-rRv3RaNnuSDTT1r9W-uf4-nKlkJbqZ11WT7YOO5V6f27-AKdVcJAUuoZH9k7iZHlXW4p7NEOqO9tzpENR53R6-B35u0DVcUXXcxD/s1342/GFpK_BVWgAAX2e6.png" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: medium;"><img border="0" data-original-height="864" data-original-width="1342" height="412" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiMLy2ChWDfmfWMHgpcEAIEMSUSbjUArQTzwHAZymeRGr1S3iTd1idcBqE2NJXizfbYdwLju0MnfDolj_MtfqgLh2l-rRv3RaNnuSDTT1r9W-uf4-nKlkJbqZ11WT7YOO5V6f27-AKdVcJAUuoZH9k7iZHlXW4p7NEOqO9tzpENR53R6-B35u0DVcUXXcxD/w640-h412/GFpK_BVWgAAX2e6.png" width="640" /></span></a></div><span style="font-size: medium;"><br /></span><p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; mso-layout-grid-align: none; text-align: justify; text-autospace: none;"><span style="font-size: medium;"> If we take a quick look towards the returns
made by these 7 we find</span></p><p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; mso-layout-grid-align: none; text-align: justify; text-autospace: none;"><span style="font-size: medium;"><o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; mso-layout-grid-align: none; text-align: justify; text-autospace: none;"><span style="background: white; color: #0f1419; font-size: medium; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">Magnificent
7 Total Returns, 2022-24...<o:p></o:p></span></p>
<p class="MsoListParagraphCxSpFirst" style="line-height: normal; margin-bottom: 0cm; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l0 level1 lfo1; text-align: justify; text-autospace: none; text-indent: -18pt;"></p><ul><li><span style="font-size: medium;"><span style="color: #0f1419; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span style="background: white; color: #0f1419; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">Nvidia $NVDA:
+125%<o:p></o:p></span></span></li><li><span style="font-size: medium;"><span style="color: #0f1419; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span style="background: white; color: #0f1419; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">Meta $META:
+41%<o:p></o:p></span></span></li><li><span style="font-size: medium;"><span style="color: #0f1419; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span style="background: white; color: #0f1419; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">Microsoft
$MSFT: +25%<o:p></o:p></span></span></li><li><span style="font-size: medium;"><span style="color: #0f1419; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span style="background: white; color: #0f1419; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">S&P 500
$SPY: +7%<o:p></o:p></span></span></li><li><span style="font-size: medium;"><span style="color: #0f1419; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span style="background: white; color: #0f1419; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">Apple $AAPL:
+6%<o:p></o:p></span></span></li><li><span style="font-size: medium;"><span style="color: #0f1419; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span style="background: white; color: #0f1419; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">Amazon $AMZN:
+3%<o:p></o:p></span></span></li><li><span style="font-size: medium;"><span style="color: #0f1419; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span style="background: white; color: #0f1419; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">Google $GOOGL:
-2%<o:p></o:p></span></span></li><li><span style="font-size: medium;"><span style="color: #0f1419; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span style="background: white; color: #0f1419; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">Tesla $TSLA:
-47%<o:p></o:p></span></span></li></ul><span style="font-size: medium;"><!--[if !supportLists]--></span><p></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; mso-layout-grid-align: none; text-align: justify; text-autospace: none;"><span style="background: white; color: #0f1419; font-size: medium; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><o:p> </o:p></span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjA2YRvHVS8XbmHUpTRJKB3oTyfXJvBPEgLejmH8Ay7z07fjj4618-2skKKGNfHkuwUX5hPIM755wUd62DuebRJ0QlDY85cWRNItbTGDDsi8E7BEVDyfEFVqfOHAZYUiAu3G8zB9MHpvsQLUEzH47oSuAp05btfq5iaybdqtaHR9Kbn7sex9607_rcsm9TD/s1494/GFiOekMXEAA9fr2.png" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: medium;"><img border="0" data-original-height="719" data-original-width="1494" height="308" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjA2YRvHVS8XbmHUpTRJKB3oTyfXJvBPEgLejmH8Ay7z07fjj4618-2skKKGNfHkuwUX5hPIM755wUd62DuebRJ0QlDY85cWRNItbTGDDsi8E7BEVDyfEFVqfOHAZYUiAu3G8zB9MHpvsQLUEzH47oSuAp05btfq5iaybdqtaHR9Kbn7sex9607_rcsm9TD/w640-h308/GFiOekMXEAA9fr2.png" width="640" /></span></a></div><span style="font-size: medium;"><br /></span><p></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; mso-layout-grid-align: none; text-align: justify; text-autospace: none;"><span style="background: white; color: #0f1419; font-size: medium; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><b>The remaining
70% of the S&P 500 companies are underperformed.</b><o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; mso-layout-grid-align: none; text-align: justify; text-autospace: none;"><span style="font-size: medium;"><span style="background: white; color: #0f1419; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><o:p> </o:p></span><span style="background: white; color: #0f1419;">The employment
numbers of the US are also fake since they report underemployment figures.</span><span style="background: white;"> it is not clear that the new jobs in question are
well-paying sustainable jobs that meet the cost of living across the US</span>.
Child poverty is up %, in the U.S. and average rent prices have
surged nationally. According to a report by the Federal Reserve Bank of
New York, the number of those underemployed is much higher – 33 per cent among
college graduates. </span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; mso-layout-grid-align: none; text-align: justify; text-autospace: none;"><span style="font-size: medium;"><span style="color: #333333; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-font-kerning: 0pt;"> </span><span style="color: #333333;">The National
Federation of Independent Business (NFIB) small business hiring plans index
declined from 16% in December to 14% in January.</span><span style="color: #333333;"> </span><span style="color: #333333;">The fall of the economy and market began
for the U.S. but under a sugar-coated number of S&P 500 and employment data.</span></span></p><p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; mso-layout-grid-align: none; text-align: justify; text-autospace: none;"><span style="color: #333333; font-size: medium;"><b><u>The CHINA Outflow </u></b></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-size: medium;"><o:p> </o:p>Now China have been in a lot of messy
phases since the pandemic and the journey seems to be never-ending. There is a massive
shift being witnessed towards shifting investment allocation from China to
India. For example, the US equity funds reduced stock exposure to 1.38% from
2.17% over 3 years. The outflow of
funds continues despite China's inclusion in the $1.2T JP Morgan EMBI bond index, its
global FX reserve share dips to a 4-year low at 2.37%. Investors retreat, with Chinese
debt seeing 7 months of outflows, while EM ex-China debt attracts significant
inflows. They are aggressively waiting for India to be included in the JP Morgan
Bond Index.</span></p><p class="MsoNormal" style="text-align: justify;"><b><u><span style="font-size: medium;">India In Every Global Investor Portfolio & Products </span></u></b></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: medium;"><o:p> </o:p>The shift to India is already being reflected
and this will be a long-term shift compared to what we have witnessed historically.
Evidence
of this monumental shift can be seen in the actions of major hedge funds, like Marshall
Wace ($62 billion) positioning India as its largest net long bet outside
the US. On the other hand, Zurich-based
Vontobel Holding AG made India its top emerging market holding. This is a clear
vote of confidence in India's growth trajectory compared to China.</span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: medium;"><o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-size: medium;">Global giants like Goldman Sachs &
Morgan Stanley are leading the charge, signalling a strong endorsement of India's
economy, and asking their investors to add India to their portfolios. This pivot reflects a strategic reassessment
of growth potential in emerging markets. If we look at the global ETF market,
we find that the evaluation of investment strategies towards India has become more aggressive.
US ETFs focused on India experiencing
record inflows, while funds dedicated to China see outflows. This speaks loudly that investors have started
accepting Indian growth in their portfolios. <o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: medium;">ETF flows are changing the direction. As China AMC suspends purchases of Nasdaq 100 ETF and S&P 500 ETF the doors for Indian markets open up. Very soon Indian investors will be able to invest in these funds ( regulatory changes will take place) and simultaneously flows from these countries will come to Indian markets. Long-term investments are getting out of China which is a major economic event. Between September 2023 & January 2024, a net outflow of more than $140 billion of long-term investment had left. Emerging markets excluding China are getting huge inflows through ETFs. emerging market securities attracted $35.7 bn in January -- the third consecutive month of overall inflows to EM, explained mainly by strong debt issuance.</span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: medium;"><br /></span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgMcddz2lM2-gJt9ocFkuPDo1dEj54pvBTDxk7ohWbep5fr-zwca3Cr0ALK5JUA6UQVryl-lcFIxzQmPAL6kOrjcfpJA8sCup0Lr42qEorSr85WS_wUBd3hhz1qICfjC02J7h5czDFVT30hpDZQu4z4iBPVZuyHVSyDN5jWuyGFKfELsclZKBtWc19_e94x/s1296/GF-j0gzboAAwuMy.jpg" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: medium;"><img border="0" data-original-height="768" data-original-width="1296" height="380" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgMcddz2lM2-gJt9ocFkuPDo1dEj54pvBTDxk7ohWbep5fr-zwca3Cr0ALK5JUA6UQVryl-lcFIxzQmPAL6kOrjcfpJA8sCup0Lr42qEorSr85WS_wUBd3hhz1qICfjC02J7h5czDFVT30hpDZQu4z4iBPVZuyHVSyDN5jWuyGFKfELsclZKBtWc19_e94x/w640-h380/GF-j0gzboAAwuMy.jpg" width="640" /></span></a></div><span style="font-size: medium;"><br /></span><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhi0n5fOQY_6XWo16wsyyX2nlsv8UjeQpniZ9I89oCcCboikH7L-fv_C0gYBO6MO9_cG6b37uKxvRNWsl6fvK9LuMkmOOpPUhF027zUF3TFb6vvnyE7NO_yTJYb8mzTLSuLvMFI_g1r3nMqaNKGq9s1BpsiE8yXWBpJnYFhlP1UH8yq6fti4-0NY9yKprED/s1296/GF-j5ENawAAoB8M.jpg" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: medium;"><img border="0" data-original-height="796" data-original-width="1296" height="394" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhi0n5fOQY_6XWo16wsyyX2nlsv8UjeQpniZ9I89oCcCboikH7L-fv_C0gYBO6MO9_cG6b37uKxvRNWsl6fvK9LuMkmOOpPUhF027zUF3TFb6vvnyE7NO_yTJYb8mzTLSuLvMFI_g1r3nMqaNKGq9s1BpsiE8yXWBpJnYFhlP1UH8yq6fti4-0NY9yKprED/w640-h394/GF-j5ENawAAoB8M.jpg" width="640" /></span></a></div><span style="font-size: medium;"><br /></span><p class="MsoNormal" style="text-align: justify;"><span style="font-size: medium;">Japanese investors are also
diversifying aggressively towards India. Thanks to the strategic tie-ups of
India with Russia and Japan followed by other countries who are now adding
India to their investment portfolio.</span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: medium;"><o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-size: medium;">So Indian markets are well placed to
get huge inflows in 2024 and onwards. Those who were thinking that the Indian
market would fall Indian investors would cry and there would be a recession in
India and expecting NIFTY to be around 15000 levels well very sorry to disappoint
the PUT option holders. <o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><b><u><span style="font-size: medium;">Pull Up Socks - Indian Financial Advisors</span></u></b></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-size: medium;">U.S. boutique bank Lazard or
European peer Rothschild or UBS all are shutting down their offices in
China and moving out investments. These big giants are looking towards India and
hence you will find significant pay raises and job growth. Indian financial
market is just poised for a huge turnaround where new products investment
options and strategies will come. If the
NIFTY become 50000 or 70000 by 2030 then don’t expect that Indian investment options
will remain the same. New doors new opportunities and global product options
will come up which will create a new world of Investment products. The IFA community and financial advisory
platforms the so-called RIA models are yet to explore and grow. The Indian
financial market needs quality RIA’s and IFAs who will guide and navigate these
new products as NIFTY grows to 50000 levels or 70000 or 100000 mark.</span><o:p></o:p></p>INDRANEEL SENGUPTAhttp://www.blogger.com/profile/16737884422257285340noreply@blogger.com2tag:blogger.com,1999:blog-8425320452010909021.post-87182026994412987152024-01-16T11:03:00.008+05:302024-01-17T08:40:18.061+05:30NIFTY 22000! be Greedy Just Like FII's<p> <a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhB4tv_aBE-jcR9VbsrtEMAwGQsRtx8amKfgisxUedh1DHW8YQ82UtspjE3Cb4JPo2mge_fQWv7GHinbw3hEZZQnbQFQxIoW6wUF1VINbzXPmyfMI1FNSkeKV1guT1E76JKFqVAVqUpxYRD50N7ugDCvEyMtzok2x4p5oRbADODL_GU8B6-WBJ9yCP6EUq7/s1302/rte.jpg" style="margin-left: 1em; margin-right: 1em; text-align: center;"><img border="0" data-original-height="1235" data-original-width="1302" height="608" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhB4tv_aBE-jcR9VbsrtEMAwGQsRtx8amKfgisxUedh1DHW8YQ82UtspjE3Cb4JPo2mge_fQWv7GHinbw3hEZZQnbQFQxIoW6wUF1VINbzXPmyfMI1FNSkeKV1guT1E76JKFqVAVqUpxYRD50N7ugDCvEyMtzok2x4p5oRbADODL_GU8B6-WBJ9yCP6EUq7/w640-h608/rte.jpg" width="640" /></a></p><br /><div class="separator" style="clear: both; text-align: center;"><br /></div><br /><p></p><p><span style="text-align: justify;">NIFTY at 22000 levels and the
biggest question in mind is that is time to invest in equities.</span><span style="text-align: justify;"> </span><span style="text-align: justify;">It has become difficult to choose between large-cap, mid-cap and small-cap investments. </span><span style="text-align: justify;"> </span><span style="text-align: justify;">Yesterday
we had a couple of sessions with different segments comprising HNI and
retail and both of them had the same question about where to invest. Even many of
them are now planning to be sitting on cash and stay sidelines for doing any
investments. Do you all know that when you lose conviction in the market for
investing it’s mainly due to lack of analysis of the market dynamics and its
micros? Do you know when you follow herd mentality? Lack of visibility of the
growth propensity of the market leads to an unclear vision for investing!</span></p>
<p class="MsoNormal" style="text-align: justify;">We need a new lens to look
towards India from the FII’s point of view and not from being an Indian looking
towards the Indian market. The time has
come when we need to change our style of looking towards India and see through
the glasses of being a foreign investor) Do you ever think how your investments will
look from 23 years now when India celebrates 100 years of Independence?
Where and what do we need to understand for investing for the next 23 years? </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgLcCFQscFdRMOa1tR2ULxTpHKagNz1yR-b-9W8lVP7ZiKdALu4CCkvA8jAwb-mIuii0SyccJsRMC8GIGe40c50DnfyLtiZJ6bsIl_RYYt5Mb0jfIwA7lGLN_8G_ZxyTFtHL1IRFzCnVJ_U7HQsk86AyF40Ams0LN9kQLQAHvXA-5NkybJVIzTkPMrhUUZu/s1350/db7eae56-5a78-4949-94b2-c5701eaf42d2-transformed.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1350" data-original-width="1080" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgLcCFQscFdRMOa1tR2ULxTpHKagNz1yR-b-9W8lVP7ZiKdALu4CCkvA8jAwb-mIuii0SyccJsRMC8GIGe40c50DnfyLtiZJ6bsIl_RYYt5Mb0jfIwA7lGLN_8G_ZxyTFtHL1IRFzCnVJ_U7HQsk86AyF40Ams0LN9kQLQAHvXA-5NkybJVIzTkPMrhUUZu/w512-h640/db7eae56-5a78-4949-94b2-c5701eaf42d2-transformed.jpeg" width="512" /></a></div><br /><p class="MsoNormal" style="text-align: justify;">Those who are worried about election
results and NIFTY 22000 and focused on predicting for fall well India –Average MSCI
index Return of over 30% during the previous election years -2019, 2014, 2004
and 1999. Moreover, in 2024, we will witness global growth since 6 major markets are having the Presidential election and hence government spending
at the last moment will drive growth for the global economy. Public spending
will increase consumption in these 6 major election markets where India is also
a part of it. 73% of the Global equity universe will head for election in 2024
(MSCI ACWI weighting ) and 54% of the MSCI emerging market.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi-M3nlcHSR8WOOoq8KYtg9xAvFXP5SLvRmj-F3JG6SSExc9-E90HXE_K0vJKJ1DP0uePIUBm3n4U0SkqRODVFaLbklBrKhtqJTExE9TWxciEQBZc5yKEX-LpMKeJWUM9zIfN-Cm3ITEknFrVkTFIsJNsieEBgxpLxMq8YWBWj1IIPaMeZqoHP7IKMbUqLG/s1080/photo_2024-01-16_11-58-53%20(2).jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="878" data-original-width="1080" height="520" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi-M3nlcHSR8WOOoq8KYtg9xAvFXP5SLvRmj-F3JG6SSExc9-E90HXE_K0vJKJ1DP0uePIUBm3n4U0SkqRODVFaLbklBrKhtqJTExE9TWxciEQBZc5yKEX-LpMKeJWUM9zIfN-Cm3ITEknFrVkTFIsJNsieEBgxpLxMq8YWBWj1IIPaMeZqoHP7IKMbUqLG/w640-h520/photo_2024-01-16_11-58-53%20(2).jpg" width="640" /></a></div><br /><p class="MsoNormal" style="text-align: justify;"><b><u>Indian Micros and Not Macros</u></b></p>
<p class="MsoNormal" style="text-align: justify;">Strong credit outlook, capacity utilization
at 80% , improving external balances, positive outlook for EPS growth, and significant
oil import of around 45% from Russia
leading to the low cost of energy are all the factors adding momentum to the equity
valuations. Market Cap of India increased by over 80% in the last 3 years only. Gold
prices rose by 65% over 2020-23. If we combine the Indian household equities,
real estate and gold together increase from U.S $1.8 trillion to $ 2.7 trillion.
This also includes real estate where property prices increased by 30%. </p>
<p class="MsoNormal" style="text-align: justify;">Indian economy which is the backbone of the Indian capital market has many key rationales to be observed to
find the expected growth of the market in 2024 and onwards.</p>
<p class="MsoListParagraphCxSpFirst" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -18pt;"></p><ul><li><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]-->Market cap to GDP at present at 120% compared to
10 years average of 87%.It might look expensive but if we compare India with the U.S. and China we find 155% and 103% respectively. </li><li><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]-->India is much more appealing compared to emerging
market peers 12 months forward PE-wise. India’s 12 months forward PE is 21.2x against
the October 2021 peak of 26.6x. </li><li><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]-->If I have to calculate the premium of the
current market we find it is at 86% to EM compared to 120% premium in October
2022.</li><li><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]-->Indian equities are getting more attractive for investments
among NRI’s too. If we look at the NRI asset accumulation levels we find that
currently, it stands at 17.5% which is much below the peak of 20% in 2021. </li><li><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]-->In the last 10 years gross fixed asset capital
formation to GDP fell from 34% to 27% in FY 2021. The current climate is
conducive for the economy to make a reversal.</li><li><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]-->Low Banking NPA ratio</li><li><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]-->Healthy Forex reserves to the tune of 600 billion
</li><li><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]-->Low external debt of India </li><li><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]-->CAD at 1.6% of GDP </li><li><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]-->40 million consumers travel by Air in India every
year </li><li><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]-->30 million monthly online transactions for
online aggregators.</li><li><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]-->26 million international Travelers from India </li><li><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]-->Infrastructure segment like highways are
reducing the cost of transportation to the GDP from 16% to 9% and will further
bring it down to 5%. </li><li><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]-->If we look at the bank deposits we find Rs1.5
million growth ( CAGR of 45% over FY 19-23)</li><li><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]-->Total ownership of BSE 200 by direct retail investors
has increased from 8.5% in Dec-2019 to 9.8% in Sept 2023.</li><li><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]-->Domestic Mutual Fund ownership increased from
8.1% in Dec 19 to 9.2% in Sept 2023.</li></ul><div><br /></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg6y7De8GGK2y1txubUIfolnejHRpdk5u-LW7kZus6zcunb1s9vFNkvWJY1mK7S-nfaHPoxKnDAkRdWTuVpxFdVL5uNP3eU40se2sX02dWvyXHX2qVnnkEEW0JzShJhC6JjROxpHMXG6vDrJwQq12xQoqbNrL8qPMNimybGIlLnKzi59XZDIOn2K15m072N/s1083/GD75kfzbcAAvVab.jpg" style="margin-left: 1em; margin-right: 1em; text-indent: -18pt;"><img border="0" data-original-height="632" data-original-width="1083" height="374" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg6y7De8GGK2y1txubUIfolnejHRpdk5u-LW7kZus6zcunb1s9vFNkvWJY1mK7S-nfaHPoxKnDAkRdWTuVpxFdVL5uNP3eU40se2sX02dWvyXHX2qVnnkEEW0JzShJhC6JjROxpHMXG6vDrJwQq12xQoqbNrL8qPMNimybGIlLnKzi59XZDIOn2K15m072N/w640-h374/GD75kfzbcAAvVab.jpg" width="640" /></a></div><br /><div><br /></div><!--[if !supportLists]--><p></p>
<p class="MsoNormal" style="text-align: justify;">NIFTY 50 promoter shareholding is
high. The promoter shareholding increased to 52.4% in FY24 (till date) v/s 41.6%
in FY-19. This reflects the commitment of the management towards the business. As
the per capita income of Indian consumers grows the growth will be reflected in
white goods, FMCG, auto, healthcare services, travel, real estate etc. Emerging
markets like India will not be impacted by the recession since the foreign ownership
of assets for India among the EM market is just 28%. India is among the other Asian
countries where the central bank RBI along with government reform measures is strong
compared to China (Struggling with Real Estate Debt) and Japan (Increasing the
Rate of Interest). </p>
<p class="MsoNormal" style="text-align: justify;"><b><u>Conclusion:<o:p></o:p></u></b></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; mso-layout-grid-align: none; text-align: justify; text-autospace: none;">The
above rationales make it very clear that India’s micros are stronger compared
to the macros defined under government policies and progress. India vs EM
valuation has moderated from October 2022 levels to hover at 56% levels, a little
above the 10-year average of 47%. China's doldrums will lead to more inflow into
India as this is the next destination among the Emerging markets (Taiwan, Korea
etc). Within the next 23 years Indian economy will be in a double-digit economy
followed by many global bond and equity indices adding India to their kitty.
Currently apart from India’s inclusion in the JP Morgan Global Bond Indices
beginning June 2024, Bloomberg Index Services Limited (BISL) is planning
ahead for the inclusion of India too their kitty. The macro economy of India is much stronger
compared to the Emerging market and Developed markets growth. It, 's time to investmarket's keeping 100 years of India’s independence while planning for any investments. Can any guess what will be Nifty when India celebrates 100 years of Independence?</p>INDRANEEL SENGUPTAhttp://www.blogger.com/profile/16737884422257285340noreply@blogger.com3tag:blogger.com,1999:blog-8425320452010909021.post-16670318439686052652024-01-11T13:11:00.003+05:302024-01-11T13:12:11.914+05:30Declining Indian Household Savings is Good for Economy & Stock Market<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgseQFV7Wj_uDBVNvUnxxyGz98QmY_Pq3mnkoAJlomI0Jyu7USQBL8OQO18fogHbQ7FJIcITB884jbd1-U4DNvJdn5pQLKx5YatyGEZh4_0Y68-97tNPcNyl06FoSFE62i9Ij-SMMTrNmopHOhYrahmlfoy8PU-xRzXK-WyQHWu8tpBQSmsDB2Vs4nVPCex/s1003/rtye.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="611" data-original-width="1003" height="390" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgseQFV7Wj_uDBVNvUnxxyGz98QmY_Pq3mnkoAJlomI0Jyu7USQBL8OQO18fogHbQ7FJIcITB884jbd1-U4DNvJdn5pQLKx5YatyGEZh4_0Y68-97tNPcNyl06FoSFE62i9Ij-SMMTrNmopHOhYrahmlfoy8PU-xRzXK-WyQHWu8tpBQSmsDB2Vs4nVPCex/w640-h390/rtye.png" width="640" /></a></div><br /><div class="separator" style="clear: both; text-align: center;"><br /></div><p><span style="text-align: justify;">The GST number of India speaks loudly – circulation of money within the economy, consumption boom, and change
of spending habits, Tier 2 and Tier 3 cities growth and maturity of the
consumers, growth of e-commerce industry, and every ancillary sector mapped
with the key sectors of the Indian economy. One of the biggest questions we
face today is whether the will Recession in the US will play foul for the
consumption market in India. Will the Indian economy face a slowdown as we
witnessed during the European crisis? Who is backing the Indian economy and
sector growth?</span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US"><b><u>Consumption Growth from Household (Domestic)
The Real Back Bone.</u></b><o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">• Only
during the festive season of 2023 India witnessed a huge inflow of consumption
from the e-commerce segment. It was found that e-commerce Major Amazon recorded
over 110 crore customer visits during its Great Indian Festival, with 80% from
Tier 2 and Tier 3 towns. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">• The
platform saw a 35% increase in small and medium businesses’ sales on a YoY
basis. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">• On
the other hand if we look at the other segment of consumption we find that
dining-out experiences witnessed a 40% jump followed by substantial increases
in sales for jewelry, fashion, lifestyle brands, and women’s clothing. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">• Today’s
consumers are more focused on a healthy lifestyle and hence significant
spending happened on that side too where a 137% rise in dietician consultancy
services and a 42% jump in sales of fitness equipment was found. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">• Well
the economic growth of every sector is getting inflows and witnessing sharp
growth which historically was never expected.
Diverse consumption patterns are good for the economy giving a balanced
opportunity for growth across all sectors in India.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">• Spending
capacities will grow as the per capita income of India rises to the level of
$4000 from the current level of $2500 by 2030.
Further, it is expected that as the segment of middle class and upper
middle class swells up we will find huge consumption growth. This will be at
least 85% of the e-retail spending by 2028.<o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiEcen-dEkOKL-jGz0uYoaOaTfY34l1BJdW9UXjgBvXHN2BYpUvqCSVdfGPaeT31Eagd5pgKfy2eAjjOUs2yGGtH_CNcBlZGl-_-Clsz3NDkkmGT2okjFXKvs1T6JVMhOjPhl2XEdI7ZG7ZLq2rBDeSYH5nlb6_ZLzZ_wRXZ1lyqylAi50yYlKo_G0gjhyphenhyphen4/s1105/ty.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="677" data-original-width="1105" height="392" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiEcen-dEkOKL-jGz0uYoaOaTfY34l1BJdW9UXjgBvXHN2BYpUvqCSVdfGPaeT31Eagd5pgKfy2eAjjOUs2yGGtH_CNcBlZGl-_-Clsz3NDkkmGT2okjFXKvs1T6JVMhOjPhl2XEdI7ZG7ZLq2rBDeSYH5nlb6_ZLzZ_wRXZ1lyqylAi50yYlKo_G0gjhyphenhyphen4/w640-h392/ty.png" width="640" /></a></div><br /><span lang="EN-US"><br /></span><p></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US"><b><u>Household Savings Channelized into Economic
Profit for India </u></b><o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">The savings pattern for Indians has changed
dramatically. Well if we are looking ahead for a progressive economy where
income inequality needs to be bridged up and living standards will go up
consumption will play a big role. Every person will have different savings
patterns which is needless to say but what we observe is that the pattern is
moving way ahead with the historical pattern and hence we need to understand
that the savings patterns are being rewritten. -Overall household savings
(current prices), which include financial, physical, and jewelry, have grown at
a CAGR of 9.2 percent between 2013-14 and 2021-22 (eight years). Nominal GDP
has grown at a CAGR of 9.65 percent during the same period.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">• Recently
the data of RBI came up with data related to where the net household savings
came down to a 47-year low of 5.21% compared to 7.2% in 2021-22. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">• For
the 1st time India is witnessing fruitful use of household savings getting
deployed into economic profit.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">•
In 1977-78 the household savings was 5.23%, between 1990 to 2010 the average
stood at 10.4%, between 2011-2013 the average was 7.7%. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">• Many
people worried about the falling household savings but that savings was
deployed to other sectors and primarily to the consumption sector.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">• The
Gross Fixed capital Formation (GFCF) by household went 100% up from Rs.13.8lakh
cr in 2011-12 to Rs.27.5lakh cr in 2021-22. Further, most of the savings went
into the real estate sector and automobile and other consumption items. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">• Banks
credit to household sector went up from Rs0.6lakh cr in 2007 to 5 lakh cr in 2023<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">• Unsecured
personal loans jumped more than four-fold to Rs 13.32 lakh crore as of March
2023 from Rs 4.26 lakh crore in March 2017.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">• Priority
sector housing loans grew by Rs. 2.3 lakh cr to Rs 19.5 lakh cr <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">• Most
of the investments went into long-term assets like real estate and automobiles
which comprised 62% of the total personal loan.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">• Tier
2 and Tier 3 cities witnessed a whopping 17% growth in Educational Loans to the
tune of<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US"> Rs
14000cr within a single year. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">• More
aspiration towards improved lifestyle and hunt for better living standards
leads to more fruitful use of household savings for India.<o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span lang="EN-US"><br /></span></p><p class="MsoNormal" style="text-align: justify;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhISr9f6bjgmU4iaXvfpqGsArBi3ZjGebtOE4m_s3tV82-tow0yBc9VlNxhvVk3Vb5X3BI2kFsDN6iGIY1qETWKSzgGO1eU0A-Yckg2CcCar6N936D_P7WB2dxTPfr5WABnpTBTWyPFLX6jj_wJCXHPAG08ppOhu5Quf4l6Npbw53FDnx_mQ4Ajc_aIvGxU/s1105/kll.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="677" data-original-width="1105" height="392" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhISr9f6bjgmU4iaXvfpqGsArBi3ZjGebtOE4m_s3tV82-tow0yBc9VlNxhvVk3Vb5X3BI2kFsDN6iGIY1qETWKSzgGO1eU0A-Yckg2CcCar6N936D_P7WB2dxTPfr5WABnpTBTWyPFLX6jj_wJCXHPAG08ppOhu5Quf4l6Npbw53FDnx_mQ4Ajc_aIvGxU/w640-h392/kll.png" width="640" /></a></div><br /><span lang="EN-US"><br /></span><p></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">We need to understand and observe that there is
change coming to the chronology of savings generation and investments:<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><b><span lang="EN-US">Old form of
savings New
Form of Savings<o:p></o:p></span></b></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">• Household
1) Public <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">• Corporate 2) Corporate <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">• Public
sector
3) Household <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US"> </span></p>
<p class="MsoNormal" style="text-align: justify;"><b><span lang="EN-US">Investments
Pattern New
Form of Investment <o:p></o:p></span></b></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">• Corporate
1) Household<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">• Household
2)Public Sector<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">• Public
sector
3)Corporate<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">The pattern of investments and consumption
change is very ideal for the Indian GDP to climb and cross the levels of the 5
trillion mark. We need to change our
thought process so that only the public and corporations will make investments
and drive the economic growth of India. Indian households are the biggest
strength as the population mark is more than 140cr. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">Savings and investment patterns have changed
dramatically and the same will continue and grow in the coming years. Real
estate consumption went up by 33% in CY-2023, the residential sales went up by
1.96 lakh housing units in Q3 FY24 which is 91% of the total sales of 2022. The
7 metros witnessed 31% growth in sales till Q3 FY24. Further, once the ROI
comes down from the central banks we will witness more real estate sales and
more automobile and loan-related products.
This will lead to a further fall in household savings. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><b><u><span lang="EN-US">Financial savings
breakup reflects:<o:p></o:p></span></u></b></p>
<p class="MsoNormal" style="text-align: justify;"></p><ul><li><span lang="EN-US">• FY-20 - 8.1%</span></li><li><span lang="EN-US">•<span style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span lang="EN-US">FY-21-
11.5%<o:p></o:p></span></li><li><span lang="EN-US">•<span style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span lang="EN-US">FY-22
– 7.2%<o:p></o:p></span></li><li><span lang="EN-US" style="font-family: Symbol; mso-ansi-language: EN-US; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"> </span></span><!--[endif]--><span lang="EN-US"> FY-23-5.1%<o:p></o:p></span></li></ul><p></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US"> </span></p>
<p class="MsoNormal" style="text-align: justify;"><b><span lang="EN-US">Net Financial Assets
Added to the economy we find <o:p></o:p></span></b></p>
<p class="MsoNormal" style="text-align: justify;"></p><ul><li><span lang="EN-US">• FY-21-
Rs22.8 lakhs cr</span></li><li><span lang="EN-US">• FY-22-
17.8 lakhs cr </span></li><li><span lang="EN-US">• Fy-23-
13.8lakh cr.</span></li></ul><p></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">If we look at the real estate consumption
pattern we find that in the 9 months of FY-24.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">• The
Mid Segment –Rs 50 lakhs to 75lakhs witnesses growth of 35% <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">• Ticket
size above Rs.1.5cr witnesses growth of 22% v/s 18% in FY-23.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">• This
indicates where the household savings are moving out and where the economic
benefit of the same is being deployed for Indian GDP growth.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US"> </span><b><span lang="EN-US">Conclusion:</span></b></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">Well, household savings coming down is a good
sign as long as it is not leveraged under the unsecured loans category. If the
household savings keep increasing then it will not have much impact or
contribution towards Indian GDP growth that is completely detrimental to the
economy. In 6 years the retail credit segment went up from 35% of Rs.107lakh cr
to 43% of Rs.164 lakh cr in 2023. If the household savings is coming down and
being deployed for creating long-term assets then the real benefit goes to the
broader economy. NBFC retail loans outstanding were Rs. 8.12 lakh crore in
FY22, and it went up to Rs. 10.5 lakh crore in FY23, a growth of only
29.6%. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">Household savings are moving away from
financial assets to long-term assets creating long-term economic profits and
also long-term GDP growth. India's Private Consumption accounted for 59.7 % of
its Nominal GDP in Jun 2023. Exports of
goods and services (% of GDP) in India were reported at 22.79 % in 2022. Hence
this means that domestic consumption is the real growth engine for the Indian
economy. The maturity of Tier 2 and Tier 3 are the key contributors to Indian
consumption and GDP growth. We will witness more unwinding of household savings
into long-term physical assets.</span></p>INDRANEEL SENGUPTAhttp://www.blogger.com/profile/16737884422257285340noreply@blogger.com0tag:blogger.com,1999:blog-8425320452010909021.post-42375584333514698812024-01-09T10:09:00.007+05:302024-01-09T10:09:29.549+05:30Which FPI and DII are backing your Investments in India ? <p> <a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjBGxVEuAplLi_zf5twuK55Z487ecpU-lYfI3vUUELlPQf7kbWIobU1PrDX7JCw3rjdMT39j22Kj6XugkBAMDaG3IIFht-N8CZuLJbESzcv4-z3vLG_GwF8lhNyJAm7B5GaoWMf7iTMAqvcMxwfnBN_rW5O_8OAwZIx8Vw93jFf5vSQ_HvTsbVKQZFDphJb/s879/1.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em; text-align: center;"><img border="0" data-original-height="519" data-original-width="879" height="378" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjBGxVEuAplLi_zf5twuK55Z487ecpU-lYfI3vUUELlPQf7kbWIobU1PrDX7JCw3rjdMT39j22Kj6XugkBAMDaG3IIFht-N8CZuLJbESzcv4-z3vLG_GwF8lhNyJAm7B5GaoWMf7iTMAqvcMxwfnBN_rW5O_8OAwZIx8Vw93jFf5vSQ_HvTsbVKQZFDphJb/w640-h378/1.png" width="640" /></a><br /><br /></p><p><span style="text-align: justify;">If Mr. Late Harshad Mehta were alive then what
should he have done today when the Indian Equity Market is under the sleeves of
Retail Investors and the BSE Sensex touching above 70000 levels? Well, only
guidance to print money. After almost 3 decades post we have financial
influencers who are influencing us to invest. The Indian capital market has
taken a huge change. We have a question in mind for the H1 of CY 2024, why I should
invest now? Should I stay out of the market? How low the Indices could come
down? Where I should invest keeping the Elections in Mind?</span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">What we are asking among these so many
questions is who all are investing along with me and who all are taking the risk
of any plunge? What guarantee do I have for my investments in case there is any
blue moon shock for me from the market? <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">NSE Midcap 100 and NSE Smallcap 250 advanced by
40.9% and 42%, respectively in the calendar year 2023. These are the
alpha-creating indices, but the biggest question is whether they will continue their journey and who will be investing in these high
valuations. The biggest macro front
advantage for India is inflation is coming down, corporate balance sheets are
getting deleveraged and high capacity utilization of the Indian Industries
leads to capex spending in 2024. Further stable policy reforms have created a
new plateau for Indian GDP and markets to grow.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US"><b><u>Who is Backing my Investments?</u></b><o:p></o:p></span></p>
<p class="MsoListParagraphCxSpFirst" style="margin-left: 54.0pt; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -36.0pt;"><!--[if !supportLists]--><span lang="EN-US">•<span style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span lang="EN-US">As
interest rates start coming down we will witness fixed income products inflows
coming out and getting into equities. We
witnessed a similar era in 2020 when Interest rates plunged for fixed-income
products we saw a huge inflow of investment in Equities to beat the inflation.<o:p></o:p></span></p>
<p class="MsoListParagraphCxSpMiddle" style="margin-left: 54.0pt; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -36.0pt;"><!--[if !supportLists]--><span lang="EN-US">•<span style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span lang="EN-US">The
number of stock market investors in India has surged past the 8 crore
milestone, registering a remarkable growth of 22.4% from the figure recorded on
December 31, 2022. <o:p></o:p></span></p>
<p class="MsoListParagraphCxSpMiddle" style="margin-left: 54.0pt; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -36.0pt;"><!--[if !supportLists]--><span lang="EN-US">•<span style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span lang="EN-US">Further
to the above numbers the unique direct investors (going by PAN) reached 8 Cr
for the first time, accounting for 5 Cr unique households or nearly 17% of
total Indian households. As of September 2023, India recorded around 15. Cr
demat accounts. So, three out of every 8 investors currently in the stock
market initiated the process to start investing in stocks in just the past two
years.<o:p></o:p></span></p>
<p class="MsoListParagraphCxSpMiddle" style="margin-left: 54.0pt; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -36.0pt;"><!--[if !supportLists]--><span lang="EN-US">•<span style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span lang="EN-US">The
Direct Equity investors market has some eye-popping numbers to witness and it
reflects the maturity of the investors within the cult. It has been found that total number of
contacts traded on the National Stock Exchange’s (NSE) equity derivatives
segment is 41.41 billion in just over six months of FY24, which is within
striking distance of the record 41.76 billion contracts traded in the whole of
FY23.<o:p></o:p></span></p>
<p class="MsoListParagraphCxSpMiddle" style="margin-left: 54.0pt; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -36.0pt;"><!--[if !supportLists]--><span lang="EN-US">•<span style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span lang="EN-US">80%
of the 15cr demat holders have investments of an average of Rs 50000/ in direct
equities.<o:p></o:p></span></p>
<p class="MsoListParagraphCxSpMiddle" style="margin-left: 54.0pt; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -36.0pt;"><!--[if !supportLists]--><span lang="EN-US">•<span style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span lang="EN-US">National
pension Scheme Assets have grown by 27% to ₹10.21-lakh crore as of Oct, 2023.
One of the strongest DII’s where the kitty is just getting swelled up more for
investments in Equities.<o:p></o:p></span></p>
<p class="MsoListParagraphCxSpMiddle" style="margin-left: 54.0pt; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -36.0pt;"><!--[if !supportLists]--><span lang="EN-US">•<span style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span lang="EN-US">Another
DII of India the EPFO, where corpus grew by 16.7% in FY 23 to 21.3 trillion
from 18.3 trillion. The investable corpus doubled from 2018-19 from the level
of 11.1 trillion. Out of the same around 9.2% invested in ETFs which amounts to
1.96 trillion from the levels of 0.74 trillion in FY-19. The investments in
ETFs have been rising since 2018-19 when it invested Rs 27,974 crore. It
increased to Rs 31,501 crore in 2019-20 and over the years rose to Rs 53,081
crore in 2022-23<o:p></o:p></span></p>
<p class="MsoListParagraphCxSpMiddle" style="margin-left: 54.0pt; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -36.0pt;"><!--[if !supportLists]--><span lang="EN-US">•<span style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span lang="EN-US">The
total SIP (systematic investment plan) inflow in the calendar year 2023 stood
at ₹1,83,741 crore after December witnessed a SIP inflow to the tune of ₹17,610
crore. This is pure retail money and has nothing to do with any institutional
inflows.<o:p></o:p></span></p>
<p class="MsoListParagraphCxSpMiddle" style="margin-left: 54.0pt; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -36.0pt;"><!--[if !supportLists]--><span lang="EN-US">•<span style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span lang="EN-US">If
we look at the total inflows into equity schemes in Mutual Fund space we find
it touched a whopping ₹1,61,573 crore during the calendar year 2023.<o:p></o:p></span></p>
<p class="MsoListParagraphCxSpMiddle" style="margin-left: 54.0pt; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -36.0pt;"><!--[if !supportLists]--><span lang="EN-US">•<span style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span lang="EN-US">The
age group of retail investors primarily falls between 22 and 35 years, with an
annual income ranging from ₹ 5 lakh to ₹ 30 lakhs.<o:p></o:p></span></p>
<p class="MsoListParagraphCxSpMiddle" style="margin-left: 54.0pt; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -36.0pt;"><!--[if !supportLists]--><span lang="EN-US">•<span style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span lang="EN-US">Retail
Investors holding was around 18% of total market capitalization in FY 22-23 vs.
11% in FY 18-19. The share of retail investors in the National Stock Exchange
(NSE) listed companies has reached an all-time high, hitting 7.62 percent as of
September 30, 2023, from 7.50 percent on June 30, 2023. <o:p></o:p></span></p>
<p class="MsoListParagraphCxSpMiddle" style="margin-left: 54.0pt; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -36.0pt;"><!--[if !supportLists]--><span lang="EN-US">•<span style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span lang="EN-US">Currently
retail investors now possess a wealth of Rs 60 lakh crore, which is about a
fifth of the overall wealth of all the investors in the market.<o:p></o:p></span></p>
<p class="MsoListParagraphCxSpMiddle" style="margin-left: 54.0pt; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -36.0pt;"><!--[if !supportLists]--><span lang="EN-US">•<span style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span lang="EN-US">The
largest participation category is from retail investors. In FY 2015-16, this
was 33% of total trades, in FY 2022-23
it was 36.5% and in FY20-21 it was around 45%. <o:p></o:p></span></p>
<p class="MsoListParagraphCxSpMiddle" style="margin-left: 54.0pt; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -36.0pt;"><!--[if !supportLists]--><span lang="EN-US">•<span style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span lang="EN-US">Assets
under management of insurance companies in India have crossed 60 trillion
rupees ($731 billion)<o:p></o:p></span></p>
<p class="MsoListParagraphCxSpMiddle" style="margin-left: 54.0pt; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -36.0pt;"><!--[if !supportLists]--><span lang="EN-US">•<span style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span lang="EN-US">Looking
at the retail investor's strength towards IPO well it has been a staggering
growth of more than 200% in CY 23 compared to CY 22. ( data with graph for last
5 years )<o:p></o:p></span></p>
<p class="MsoListParagraphCxSpMiddle" style="margin-left: 54.0pt; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -36.0pt;"><!--[if !supportLists]--><span lang="EN-US">•<span style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span lang="EN-US">Another
eye-popping segment to watch is Invits which is getting significantly matured
over the years. It is well expected that over the next 5 to 10 years Invits
will play a bigger role for the Indian economy and investors. <o:p></o:p></span></p>
<p class="MsoListParagraphCxSpMiddle" style="margin-left: 54.0pt; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -36.0pt;"><!--[if !supportLists]--><span lang="EN-US">•<span style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span lang="EN-US">Fundraising
through infrastructure investment trusts (InvIT) and real estate investment
trusts (REIT) jumped sharply higher to Rs 11,474 crore in 2023 from Rs 1,166
crore in 2022. The current base of clients is around 2.5 lakh which itself
gives room for more growth compared to several demat account holders in India.<o:p></o:p></span></p>
<p class="MsoListParagraphCxSpLast" style="margin-left: 54.0pt; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -36.0pt;"><!--[if !supportLists]--><span lang="EN-US">•<span style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span lang="EN-US">Post-election
results and the current government is re-elected we will witness a flood of new
demat accounts getting opened up and huge growth of investors investing in
direct equities, mutual funds, and other equity-related products. Further to this we have the inflow of FPI
funds to come to India in 2024.<o:p></o:p></span></p><p class="MsoListParagraphCxSpLast" style="margin-left: 54.0pt; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -36.0pt;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEih8B0RUWrhX8EJdlS5skd0XgzcGX2Z7Biozj_6SqY3TxW8OacMx9auN1ZtW99-jCxEhfd73qp6ofaPX_-GFp5Nei875QxFLNfahanUkogSHWbY-YvrCEEpBjPNa1KheENPpNvp-FJSdi3MVFwtvTldfacjF579GUhBGGJ0wMz94lDlPC3I0HnVQhvmBo9E/s1020/1.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="460" data-original-width="1020" height="288" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEih8B0RUWrhX8EJdlS5skd0XgzcGX2Z7Biozj_6SqY3TxW8OacMx9auN1ZtW99-jCxEhfd73qp6ofaPX_-GFp5Nei875QxFLNfahanUkogSHWbY-YvrCEEpBjPNa1KheENPpNvp-FJSdi3MVFwtvTldfacjF579GUhBGGJ0wMz94lDlPC3I0HnVQhvmBo9E/w640-h288/1.png" width="640" /></a></div><br /><span lang="EN-US"><b><u><br /></u></b></span><p></p>
<p class="MsoNormal" style="margin-left: 18.0pt; text-align: justify;"><span lang="EN-US"><b><u>2024 FPI Inflows quick snapshot</u></b><o:p></o:p></span></p>
<p class="MsoListParagraphCxSpFirst" style="margin-left: 54.0pt; mso-add-space: auto; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -36.0pt;"><!--[if !supportLists]--><span lang="EN-US">•<span style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span lang="EN-US">The
US Federal Retirement Thrift Investment Board is switching to a new MSCI index
(which includes India) as its benchmark, for its International Stock Index
Investment Fund (I Fund). This will result in an inflow of $3.8 billion is
likely to hit Indian stocks.<o:p></o:p></span></p>
<p class="MsoListParagraphCxSpMiddle" style="margin-left: 54.0pt; mso-add-space: auto; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -36.0pt;"><!--[if !supportLists]--><span lang="EN-US">•<span style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span lang="EN-US">Another
change in the benchmark of the US pension fund. The Thrift Savings Plan’s (TSP)
International Stock Index Investment Fund (I Fund). From 2024, the fund is
transiting to the MSCI All Country World ex USA ex China ex Hong Kong
Investable Market Index (also called MSCI ACWI IMI ex USA ex China ex Hong Kong
Index). TSP participants had invested $68 billion in the I Fund. Well, the
impact will be slow for the markets but the acceptance of Indian equities in
the global portfolio is a long-term win of trust and inflows for the Indian
market. <o:p></o:p></span></p>
<p class="MsoListParagraphCxSpMiddle" style="margin-left: 54.0pt; mso-add-space: auto; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -36.0pt;"><!--[if !supportLists]--><span lang="EN-US">•<span style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span lang="EN-US">The
outgoing MSCI EAFE index, covering 21 developed markets across Europe, Asia,
Australia, and the Far East, did not include India.<o:p></o:p></span></p>
<p class="MsoListParagraphCxSpMiddle" style="margin-left: 54.0pt; mso-add-space: auto; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -36.0pt;"><!--[if !supportLists]--><span lang="EN-US">•<span style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span lang="EN-US">With
the transition, Indian equities are expected to gain prominence in the MSCI
ACWI ex-USA and ex-China index, potentially attracting significant capital
inflows.<o:p></o:p></span></p>
<p class="MsoListParagraphCxSpLast" style="margin-left: 54.0pt; mso-add-space: auto; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -36.0pt;"><!--[if !supportLists]--><span lang="EN-US">•<span style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span lang="EN-US">In
2023 we have witnessed many foreign funds increasing their allocation stake in
India likewise Swedish Investment house EQT AB, US-based Barings, and BlackRock
have increased their allocation to India. Several sovereign wealth funds, the
Public Investment Fund of Saudi Arabia, Abu Dhabi’s Mubadala Investment Co.,
and Qatar Investment Authority, have also increased their investment in India.
The allocations to India used to be in the range of 5% of their total
allocation, which has increased up to 15% in some cases.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><b><u><span lang="EN-US">Conclusion:<o:p></o:p></span></u></b></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">Social media which is the new Equity teacher
has changed the investor’s mindset for investing in equities particularly
Futures and options in the last few years.
SIP is no longer restricted to Mutual Funds but towards direct Equities
also. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">The maturity of retail investors has been going
up very high. The maturity conviction is proven when it's found that From April
to November 2023, the net inflow into small-cap mutual funds – which largely
invest in small-cap stocks – has been Rs 30,246 crore out of the total inflow
of Rs 95000 in equity oriented Mutual Funds during the period which is around
30%. Where during the same period in the previous 4 years it was found that the
net inflows into small-cap mutual funds averaged less than 12% of the overall
net inflow into equity mutual funds. From April to November 2022, they had
averaged at around 14%. The retail investor’s behavioral aspect of
understanding risk and long-term returns has matured significantly.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">The whole question while investing gets halted
when we try to figure out who is investing and if am I the fool who is
investing in these levels. Investing decisions are going to be tough in the
coming days as the market and India both will rise and set new bars. The
clarity factor will be blurred enough while doing investments and that’s where
you need financial advisors to come and navigate the way. The asset allocation
matrix will require to be reworked but those looking for long-term have no other
option but only Equities.</span></p>INDRANEEL SENGUPTAhttp://www.blogger.com/profile/16737884422257285340noreply@blogger.com4tag:blogger.com,1999:blog-8425320452010909021.post-83157660037531031802024-01-04T19:50:00.008+05:302024-01-05T18:01:03.697+05:30THE DECAD FOR CAT II & ALTERNATES AIF FOR INDIA <div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiiNwEPB4TRYMdvBAPtehUX_DxqFhX54ftVRCQGVz9kwFvUFUMqhI0QJAqX5BkjVps9C0dDnaAd3Pn1T1mFdZH64nfGV0eNDn3U8hBfNCQPazxYAp9f5AU3Mig3mpOiQTX2mKOIllcpATQzJa7rOr5lZnhSR63JkFImHaX1Kkcze3A4USlQ2r2Q_QjaQ8y_/s1200/IMAGE_1644678287.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="675" data-original-width="1200" height="360" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiiNwEPB4TRYMdvBAPtehUX_DxqFhX54ftVRCQGVz9kwFvUFUMqhI0QJAqX5BkjVps9C0dDnaAd3Pn1T1mFdZH64nfGV0eNDn3U8hBfNCQPazxYAp9f5AU3Mig3mpOiQTX2mKOIllcpATQzJa7rOr5lZnhSR63JkFImHaX1Kkcze3A4USlQ2r2Q_QjaQ8y_/w640-h360/IMAGE_1644678287.jpg" width="640" /></a></div><br /><div class="separator" style="clear: both; text-align: center;"><br /></div><p style="text-align: justify;"><span style="font-size: 13.5pt;">The
Financial Distribution and Asset Management Industry is changing stupendously
and we will witness more changes in the next 5 years. It is high time to
identify the key spaces where the growths are going to catch our attention, We
find that many new products and Industries will grow exponentially and new AMC
under the new product innovation category will explore the Indian capital
markets. SEBI is also under discussion under the same category as per the last
communication hence we are here to witness a new capital market economy.
Moreover, the real players for these products are the growing sophistication
among the investors who will be investing in these products.<o:p></o:p></span></p><p style="text-align: justify;"><span style="font-size: 13.5pt;"> The Indian alternate market is all
set for stupendous growth, particularly the CAT 1 and 2 Alternative Investment
Funds. It is found that the Indian financial market is yet to bloom from what
we witness now. Many new opportunities are yet to be discovered in India for
investors. Over the next 5 to 10 years we will new breed of risk-driven
investors coming up mostly in HNI and UHNI space and retail. The startup
ecosystem married with Indian GDP growth will get huge demand for many existing
products that are yet to burst out.<o:p></o:p></span></p><p style="text-align: justify;"><span style="font-size: 13.5pt;">The Indian financial market has already
taken a huge change where the Mutual Fund Industry is heading towards Rs 50lakh
cr whereas the SIP AUM witnessed 9.31 lakh crore. The industry witnessed 125%
growth in CY-23. For example, the Industry data shows that 37.16 lakh new
investors joined the MF industry from April 2023 to November 2023, around 38%
higher than the new investor addition during the corresponding period of FY
2022-23.<o:p></o:p></span></p><p style="text-align: justify;"><span style="font-size: 13.5pt;">On the other hand, Alternates PMS and AIF
grew significantly. The PMS industry stands hovering around reaching up to Rs
15 lakh crore. The Alternative investment fund space has 3 categories where the
category I and II are the largest. As per the SEBI data, we have 1096
Registered AIFs and around 58% of the same is under CAT 2 as of 31st March
2023. If we look at the pace of AIFs getting registered we find that in FY-22
around 157 and 235 in FY-23 got registered. 53% of 1096 AIFs were registered in
the last 4 years.<o:p></o:p></span></p><p style="text-align: justify;"><span style="font-size: 13.5pt;">CAT II AIFs grew from Rs.1053 billion in
2018 to Rs 6939 billion in FY-23 which is itself 6.5 times. Total commitments
of AIFs have seen an astronomical 580x rise in the past ten years from ₹ 1,437
crore in 2013 to ₹8,33,774 crore in March 2023. Cat II segment AIF will attract
more inflows as the segment is married with Make in India & PLI primarily.
AI and Robotics will play a huge role in the transformation of Make in India
hence quality funds will chase these products. Innovation in offering is just
about to hit to roads post the election of 2024. Sector-focussed funds,
especially AI and deep-tech-focussed investments AIF will attract easy money in
coming years.<o:p></o:p></span></p><p style="text-align: justify;"><span style="font-size: 13.5pt;"> If we look at the return perspective
of the AIF that invested in private markets in the last decade (2013-23)
generated a 13.5% alpha over the public market index (S&P BSE Sensex TRI).
The evolution of the unlisted space will attract more inflows for the
Alternative investment space, particularly CAT I & II. As more IPOs will
hit the market and more rich valuations of the capital market are reaped
married with the 5 trillion GDP growth of India we will witness huge returns
from these CAT II AIF segments. This will attract more investors and
investments in this category. Even the Pre IPO opportunities are also huge
which adds alpha opportunities for CAT II AIFs.<o:p></o:p></span></p><p style="text-align: justify;"><span style="font-size: 13.5pt;"> The CAT I and CAT II space of AIF
will be significant as the Indian economy needs a huge inflow of funds and
investment for infrastructure to make in India's manufacturing space. The VC
and Private equity market will influence many startups and make these companies
become Midcaps and Large caps in the next 5 years hence we will find the
opportunity for AIF space. <o:p></o:p></span></p><p style="text-align: justify;"><span style="font-size: 13.5pt;">Family offices have become active while
looking towards CAT 1 and 2 we will find huge inflows coming from retirement
funds, and insurance fund companies to invest in AIF which will lead to
significant growth for the Industry.<o:p></o:p></span></p><p style="text-align: justify;"><span style="font-size: 13.5pt;"> The most interesting thing is that
AIF's commitment to GDP stands at 3% as of 31st March 2023 which will become 6%
by and before 2027. The prime reason behind such a spike will be large
houses will invest in these categories and also the GIFT city AIF segment will
attract many NRI and FIIs inflows into these products. <o:p></o:p></span></p><p style="text-align: justify;"><span style="font-size: 13.5pt;"> If the Indian GDP is going to grow
to 5 lakhs cr and aspires to grow 10 lakh corer even within the next 10 years
from now we will witness huge inflows coming from VC and Private Equity
followed by overseas institutional money coming into Indian infrastructure we
will find new innovate CAT 1 and 2 funds in the AIF space. <o:p></o:p></span></p><p style="text-align: justify;"><span style="font-size: 13.5pt;"> If we look into the investment as %
of funds raised in CAT I and II rose from 71% as of March 2013 to 91% as of
March 2023 which is over and above the average of 80% in the past 10 years.
Category II AIFs, including venture capital, private equity, real estate funds,
and private credit, have experienced exponential growth, fuelled by heightened
interest from HNIs and UHNIs.<o:p></o:p></span></p><p style="text-align: justify;">
</p><p style="text-align: justify;"><span style="font-size: 13.5pt;"> On the PMS front, we find that Data
from the Securities and Exchange Board of India (SEBI) shows that the total
assets under management (AUM) of the PMS industry have nearly trebled in the
last seven years—rising from Rs 10.45 lakh crore in March 2016 to nearly Rs 28
crore in March 2023 and might end up March 2024 around 30 lakh cr. 15 years
before the industry was hovering around Rs 2 lakh cr.Technology, financial
education and digital media have played a significant in developing the
knowledge for investors for investing in the financial market.<o:p></o:p></span></p>INDRANEEL SENGUPTAhttp://www.blogger.com/profile/16737884422257285340noreply@blogger.com0tag:blogger.com,1999:blog-8425320452010909021.post-39149049016947716952023-08-15T13:49:00.006+05:302023-08-15T13:55:03.372+05:30Where to Invest & what to Expect in Different Asset Class <p> <a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj7rUP9pd1CDRaK3A5dv8JKY3xgY-bOb5PhDbO_nVkBdVHes8JO-iRxy7JBb1pH5XGVPMZWh9eyTkbqlvTNV1dvtyN8mfR53XvnnxldsHIuxKxpjPA_my2LxjR-BaUdCg375HWoumuwynem5iJdhrQJWnMc2PXUhLvdudsdKhhwaPvH8I_PGYfyJXD7UxZO/s2048/F3fA8O4XoAAe47R.jpg" style="margin-left: 1em; margin-right: 1em; text-align: center;"><img border="0" data-original-height="1128" data-original-width="2048" height="352" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj7rUP9pd1CDRaK3A5dv8JKY3xgY-bOb5PhDbO_nVkBdVHes8JO-iRxy7JBb1pH5XGVPMZWh9eyTkbqlvTNV1dvtyN8mfR53XvnnxldsHIuxKxpjPA_my2LxjR-BaUdCg375HWoumuwynem5iJdhrQJWnMc2PXUhLvdudsdKhhwaPvH8I_PGYfyJXD7UxZO/w640-h352/F3fA8O4XoAAe47R.jpg" width="640" /></a></p><p></p><p><span style="text-align: justify;">The biggest question which will be chasing every investor is which asset class to invest in and where the investments will be safe. What type of rebalancing needs to be adopted? </span><span style="text-align: justify;"> </span><span style="text-align: justify;">Before that, we all need to know how the different asset classes will be influenced. </span><span style="text-align: justify;"> </span></p><p style="text-align: left;"><span style="text-align: justify;">Well, Berkshire was a net seller of stocks in both the first and second quarters of 2023 and also scaled back its share repurchases in Q2 – which hints that the legendary investor is </span><span color="windowtext">not too comfortable with valuations of publicly traded companies</span> or his own Berkshire Hathaway stock at current levels.</p><p class="MsoNormal" style="text-align: justify;">The current pile of Debt of the U.S. and China is a matter of threat to the global market. Indian markets might be discounting the threat for the time being but it cannot evade the liquidity risk. One of the biggest questions which comes to mind when we look into the U.S. treasuries and the pile of debt and interest rate flow, is the only question that comes to mind when investors stop treating US Treasuries as "risk-free"?</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjRZNBWn3Sn35KXt8XwMZ_8B8-MJYMSn4XGVv2Cx4yhkcAGeox7189PfCHhzjdqRvGV_jsh2FqJLQE19LK9M-VsVICzXZxyQB4-3qjhD3GNvRi3d9uMt59TxhHNsAtGJVgNMV608w-reZtZFqejmAcB-sdgODzWTmeK_HAVONXgBpex3EyUUJrHAZPhal5N/s1452/F3fF1Z7WcAApWK4.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="866" data-original-width="1452" height="382" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjRZNBWn3Sn35KXt8XwMZ_8B8-MJYMSn4XGVv2Cx4yhkcAGeox7189PfCHhzjdqRvGV_jsh2FqJLQE19LK9M-VsVICzXZxyQB4-3qjhD3GNvRi3d9uMt59TxhHNsAtGJVgNMV608w-reZtZFqejmAcB-sdgODzWTmeK_HAVONXgBpex3EyUUJrHAZPhal5N/w640-h382/F3fF1Z7WcAApWK4.jpg" width="640" /></a></div><br /><div class="separator" style="clear: both; text-align: justify;"><span style="text-align: left;">The US spends another $73.3 billion on interest in July 2023 alone bringing YTD total to $726 BILLION. We will soon see the first-ever 12-month period with $1 trillion+ in interest expense on US debt. The banks of the U.S are significantly a risky zone as Banks have 2tillion of CRE exposure over the next 3 years, this higher for longer rates is fantasy because under the bonnet of Bidenomics manipulative economic data is a high debt economy that is unsustainable if we look at the history. The US 10-year yields hit 4.2%, the highest level since November and just 4bp away from an October level that was the highest since 2007. The US 10Y has been on the move this week, climbing back to 4.17%. Back to levels last seen last November, and before that, mid-2008.</span></div><div class="separator" style="clear: both; text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjCj8RBwmBgj4HU0jbg5zim5JLjb2PTImvn4ZZIlolkVLrJXVIx2mLx0TqnBW7HQHVt6OAju16XgYWiDBUa17MV1150yW6kmSyxMSvs0vKiGXvrEky6Sk6gC19sfFwxxNJzTr6jyFSPVUsPh-CmCGw4fBhVtRNY6ajL-qAKhZabfrz42sO3-_X_NNnuyjhf/s1458/F3fF1Z5W0AATTTA.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="844" data-original-width="1458" height="370" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjCj8RBwmBgj4HU0jbg5zim5JLjb2PTImvn4ZZIlolkVLrJXVIx2mLx0TqnBW7HQHVt6OAju16XgYWiDBUa17MV1150yW6kmSyxMSvs0vKiGXvrEky6Sk6gC19sfFwxxNJzTr6jyFSPVUsPh-CmCGw4fBhVtRNY6ajL-qAKhZabfrz42sO3-_X_NNnuyjhf/w640-h370/F3fF1Z5W0AATTTA.jpg" width="640" /></a></div><span style="text-align: left;"> On the other hand, the U.S... 30-year Mortgage rates surpassed 7.5% recently, marking the first time in 23 years they have been so high. "The economy is currently experiencing a significant tightening of financial conditions, largely driven by the persisting fragility in the Treasury market".</span></div><div class="separator" style="clear: both; text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgaQuhQ1jiLuPTFMD9nYO9_vdFERSsCrcEiSzdJemPoegAm9714U5WhkJyPzZVEW1GWGzOjJKo7ZpofF7CPrNbN7VEfCASY8IovuptU3cQEgCkMgjyPtVIdNxZJ8vMbxj3DjgwtjO1Ufdm6xsQQyzXxZGHEKLRYFnfWK_pfj_1WTR-0X46aGM9Jh2ot2N3B/s684/F3gti5pboAEPzN5.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="466" data-original-width="684" height="436" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgaQuhQ1jiLuPTFMD9nYO9_vdFERSsCrcEiSzdJemPoegAm9714U5WhkJyPzZVEW1GWGzOjJKo7ZpofF7CPrNbN7VEfCASY8IovuptU3cQEgCkMgjyPtVIdNxZJ8vMbxj3DjgwtjO1Ufdm6xsQQyzXxZGHEKLRYFnfWK_pfj_1WTR-0X46aGM9Jh2ot2N3B/w640-h436/F3gti5pboAEPzN5.png" width="640" /></a></div><br /><div class="separator" style="clear: both; text-align: center;"><span face=""Segoe UI", "sans-serif"" style="color: #0f1419; font-size: 7.5pt; text-align: left;"> </span></div></div><div class="separator" style="clear: both; text-align: justify;">Coming to China healthy interest rate cuts have already taken place followed by stimulus packages and some more significant announcements to come. But the depth of buyout of this pile of Debt Mountain will force all asset classes to go for a significant volatility ride. The debt market volatility will impact the pension funds and retirement funds will be huge as margin calls will trigger a sell-off in equities. Industrial inflation will fall more in the coming months.</div><p class="MsoNormal" style="text-align: justify;"> The S&P GSCI Industrial Metals Index, which tracks the industrial metals sector through futures contracts, is down nearly 18 percent from this year’s peak. The IFO shortage indicator, a survey of German manufacturers by the IFO economic institute, fell to 31.9 in June 2023 from 80.2 in March last year, marking a “significant” reduction. The price cut down in raw material cost is being witnessed in many companies where the benefits are being passed to the buyers. For example, LG Electronics Inc. has slashed raw material and transportation costs by 2.12 trillion won ($1.6 billion) in the first half. Another company Jinko Solar Co.<span style="text-align: start;">, one of the world’s largest panel producers, reported first-half profit surged 325% as lower raw materials costs helped the sector cut prices and spurred demand.</span> Hence industrial inflation has already come down significantly.</p><p class="MsoNormal" style="text-align: justify;">Crude prices will remain elevated backed by production cuts down. The production cutdown comes when the demand is low and hence there will not be much benefit from falling demand.</p><p class="MsoNormal" style="text-align: justify;">For emerging markets like India, it’s time for rebalancing and being cautious with markets. Widespread changes for investors during the quarter were a focus on resetting or upgrading the core of the portfolio in a shift “back to basics. Across the board, it being found that investor clients in ‘Portfolio Solutions’ focus on resilience, risk, and re-evaluating the core of the portfolio – getting the basics right. The rising debt pile across many economies leads to investors flocking for high-grade corporate bonds followed by sovereign bonds. Investors in fixed income should continue to see a strong focus on investment-grade credit versus higher-yielding segments. Without rebalancing and reinvesting wealth cannot be made hence it's time to get back to basics.</p><p class="MsoNormal" style="text-align: justify;">More focus will shift towards quarterly earnings and cherry-picking of quality long-term stocks in India where the opportunities of growth are mapped with GDP and industrial growth of India. PLI stocks will be in big focus followed by BFSI which cannot be ignored.</p><p class="MsoNormal" style="text-align: justify;">ETFs will be one of the hot flavors for the market and investors across the globe. Any correction in global equities will lead to a significant inflow into ETFs. ETFs have grown enormously in popularity over the past two decades. The total amount invested in ETFs has grown from around $200bn globally in 2003 to more than $9.5trn in 2022 translating into a growth of 20% and its projected to reach $15 trillion in the next 5 years. Retail participation will grow more in ETFs which will change the climate for investment advisory. In volatile times investors will divide between ETFs and active fund management and most will prefer to Passive where economic and market volatility is high.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgbeNb6L3XAuUj4IXnQsVKFrv-XHAI_523zd-QuJHYX6fiX38sXx7S5Vv1lErcWYrVo6uN2Z_4KPKP-AiQSiK_S_y5sfHP1rl0szVhd39tgXJYk7j7ojqWJNNOw1sG0s0PuocaUuIWqArRg0zCXQXA1O91_0JrRDssG3SKNFExwdJbqSkiqmAQ4LHqgjJUC/s1600/035d9364-e272-4bf6-a6c0-0c1f7da65b9d.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="536" data-original-width="1600" height="214" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgbeNb6L3XAuUj4IXnQsVKFrv-XHAI_523zd-QuJHYX6fiX38sXx7S5Vv1lErcWYrVo6uN2Z_4KPKP-AiQSiK_S_y5sfHP1rl0szVhd39tgXJYk7j7ojqWJNNOw1sG0s0PuocaUuIWqArRg0zCXQXA1O91_0JrRDssG3SKNFExwdJbqSkiqmAQ4LHqgjJUC/w640-h214/035d9364-e272-4bf6-a6c0-0c1f7da65b9d.jpg" width="640" /></a></div><br /><p class="MsoNormal" style="text-align: justify;">New investors' acquisitions towards the market it growing consistently covid times. Recently in the month of July 2023, it was found that a total of three million new demat accounts were opened which is the highest in 18 months. As the Indian market maturity increases we will find more investors joining the market. In the last two years, Indian equity investors have grown from 2.8% to 4.8% which is below 5% currently compared to the developed economies. Whereas 13 percent in China, 33 percent in (the) UK, and 55 percent in the USA. India has therefore still got a long way to go before more of the population participates in the stock market directly. </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjDRgIvLB3c_s3xQTECy_9FR8MDRk4sfQUVZ1DQcUnW2t_9DwBPTrk4K7JN4QfHJriWr9LTzpFx8A1YCqloiujTn4R2BfS-22U1uxkkDcyaLyGcB6YrhtsrjkCkc50wKCMTyyNmcd2TPQS_VAuclQvB-dsOpEm_fBAiL5_sSBJB6PXOpQBBrrg6M2UjERxI/s1600/8868cf78-cb20-4bdd-8e91-c13b8d75dace.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="874" data-original-width="1600" height="350" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjDRgIvLB3c_s3xQTECy_9FR8MDRk4sfQUVZ1DQcUnW2t_9DwBPTrk4K7JN4QfHJriWr9LTzpFx8A1YCqloiujTn4R2BfS-22U1uxkkDcyaLyGcB6YrhtsrjkCkc50wKCMTyyNmcd2TPQS_VAuclQvB-dsOpEm_fBAiL5_sSBJB6PXOpQBBrrg6M2UjERxI/w640-h350/8868cf78-cb20-4bdd-8e91-c13b8d75dace.jpg" width="640" /></a></div><p class="MsoNormal" style="text-align: justify;">Well as per CDSL and NSDL, the 3 million demat account opening in July is the highest since January 2022 and about 50 percent more than the previous 12-month average of 2 million. India emerges as a beacon of stability and growth, its stock market is poised to surge at an anticipated rate of 15 percent annually.</p><p class="MsoNormal" style="text-align: justify;">Hence investors will be looking ahead for equities for every fall in the market and will get into investment opportunities through SIP in direct equities and MF. ETFs will find the most flavored products for 1<sup>st</sup> timers. Debt will lose its glory once the interest rates start coming down and all Fixed Deposit inflows will come back to equities. </p>INDRANEEL SENGUPTAhttp://www.blogger.com/profile/16737884422257285340noreply@blogger.com0tag:blogger.com,1999:blog-8425320452010909021.post-22813213464697825702023-08-13T10:08:00.003+05:302023-08-13T14:37:41.512+05:30The U.S & China Liquidity Issues is an Alarm<p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhOB_IzK5JSRbp1SRgPtUwCMV257l3pu7Zg-wgm6ilC1xTots2rVzxwlZDUMM38tETcvCUCIbPmOZ7fdA5QSW6fVespYzlp9OoS8YzZmz9S8QnEdJUgQohSLTymX87nhlpUqaweWT8ppRqu3kGseP5hpGV2j8xV844gxdEBMlnH4xjmtV7d67NGeElIQK7P/s299/images.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="169" data-original-width="299" height="362" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhOB_IzK5JSRbp1SRgPtUwCMV257l3pu7Zg-wgm6ilC1xTots2rVzxwlZDUMM38tETcvCUCIbPmOZ7fdA5QSW6fVespYzlp9OoS8YzZmz9S8QnEdJUgQohSLTymX87nhlpUqaweWT8ppRqu3kGseP5hpGV2j8xV844gxdEBMlnH4xjmtV7d67NGeElIQK7P/w640-h362/images.jpg" width="640" /></a></div><span style="font-size: 12pt;"><p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span style="font-size: 12pt;"><br /></span></p>In
continuation to the previous article </span><a href="https://www.ianalysis.co.in/2023/08/us-crisis-will-be-soon-global-guest.html" style="font-size: 12pt;"><span style="color: blue;">https://www.ianalysis.co.in/2023/08/us-crisis-will-be-soon-global-guest.html</span></a><span style="font-size: 12pt;"> , the
global economy and the two largest economies are getting into a liquidity trap
and this might impact global economics going ahead. Very soon we might find a
downgrading of ratings for China and if not publicly but might be internally.
The income inequality in China and U.S. are both wide enough. Chinese
households retain the country’s GDP—roughly 60 per cent versus the roughly 80
per cent typical in the United States. The low household share of GDP has the
same effect on demand as income inequality. This inequality is going
to create more problems for these two economies and this is the place where
developing economies will grow big.</span><p></p><p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span style="font-size: 12pt;">Well, we
heard about Deflation in China and we made a quick comparison with Japan this
week based on its macro numbers. Very soon you should all expect the
authorities to ease financial and budgetary policies, housing regulations, and
borrowing caps to finance infrastructure. Further, there will be here might
even be measures that look consumer-friendly. This pushes the global markets
into new highs and Asian markets too. But the biggest question is
that will the same help China to get out of the slowdown snowball and also how
this snowball is benefitting other countries. But sorry this time
China may not be able to come out of the issues which have now turned to
mountains.<o:p></o:p></span></p><p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiW9IBWJMz4u_OmycTxFfwQesY0pnkvMcbOmS251-iGadHhM0EsyqKUbxCyrDBj3fUOKxLpw_3v6I2cBy2ueR2JZVLhfuEY7GFEfxDZtQxtcpsTIl7y_5jjfQKW_M0D6OPKLn0AsQ1my4SXeRYaVStuF-7Qwz7hn1kxCMfvchukW5r-NsZxerObgZH4vynz/s284/download.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="177" data-original-width="284" height="399" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiW9IBWJMz4u_OmycTxFfwQesY0pnkvMcbOmS251-iGadHhM0EsyqKUbxCyrDBj3fUOKxLpw_3v6I2cBy2ueR2JZVLhfuEY7GFEfxDZtQxtcpsTIl7y_5jjfQKW_M0D6OPKLn0AsQ1my4SXeRYaVStuF-7Qwz7hn1kxCMfvchukW5r-NsZxerObgZH4vynz/w640-h399/download.png" width="640" /></a></div><span style="font-size: 12pt;"><p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span style="font-size: 12pt;"><br /></span></p>Being in
India or Mexico every country will pray that China should lose its power of
trade and investments and the share of control should now head towards
developing nations. We have heard many times that the global supply chain is
changing but what we did not look into is the speed of change.</span><p></p><p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span style="font-size: 12pt;">The shift
in manufacturing and trade is happening much faster. For example, Mexico’s share
of U.S. imports matched China’s in June. The free-trade agreement between
the U.S., Mexico and Canada has made Mexico a strong contender against
China and other Asian nations as a supply base to the U.S. When the dollar
values of exports and imports are combined, Mexico is now the U.S.’s No. 1
trading partner, followed by Canada, pushing China to third place. Buyers are
turning to Mexico, Europe and other parts of Asia for wares ranging from
computer chips and smartphones to clothing. India’s share of U.S. smartphone
imports reached 5.3% for the year ending in June, up from 1.8% for the 12
months ending in December.<o:p></o:p></span></p><p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgm1jXx1kNYan2mk62MSHFAatbeKDERC1K01-OnVd3kBws9t0Sn-A3kW3ww3zQO16QUggQ4EUjupvsI4p9klOzTsGLfOHymog8C0Ip_8idq5MJRnHmweT5IADdW8ci4UERiFEyQJcrKUlmU1uTpJpDt_FE1wlAjI5q2Q2AU4bKC1Mq-ka9M3JlHyYCO9Ty0/s1304/chart.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1304" data-original-width="1288" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgm1jXx1kNYan2mk62MSHFAatbeKDERC1K01-OnVd3kBws9t0Sn-A3kW3ww3zQO16QUggQ4EUjupvsI4p9klOzTsGLfOHymog8C0Ip_8idq5MJRnHmweT5IADdW8ci4UERiFEyQJcrKUlmU1uTpJpDt_FE1wlAjI5q2Q2AU4bKC1Mq-ka9M3JlHyYCO9Ty0/w632-h640/chart.png" width="632" /></a></div><span style="font-size: 12pt;">Some of
the countries that are becoming popular destinations for companies that are
moving manufacturing out of China include Vietnam, India, Mexico, Indonesia,
and Bangladesh. These countries offer lower labour costs, a more stable
political environment, and closer proximity to major markets.</span><p></p><p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span style="font-size: 12pt;">The recent
Mr Biden semiconductor and chip policy is a major blow over and above the Mr Trump trade war policies. China might come up with billions
of packages and other stimulus measures but that won’t work this time of the
Decade since major importing countries from China now knows the mistake of over-dependency on one country. This time the impact on the Chinese
economy will be longer despite takings several measures for revival of the
business and trade within China.<o:p></o:p></span></p><p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span style="font-size: 12pt;">Few key
points to dig our why China will fail despite stimulus measures announced by
its own:<o:p></o:p></span></p><p class="MsoNormal" style="line-height: normal; margin-left: 54.0pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -36.0pt;"><span style="font-size: 12pt;">• Its
employment is dependent on FDI investments and any shift out from the same
creates significant outflow and leads to higher unemployment<o:p></o:p></span></p><p class="MsoNormal" style="line-height: normal; margin-left: 54.0pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -36.0pt;"><span style="font-size: 12pt;">• Higher
unemployment leads to significant savings by Chinese households and hence less
consumption. You must remember that China does not have social measures like
other countries.<o:p></o:p></span></p><p class="MsoNormal" style="line-height: normal; margin-left: 54.0pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -36.0pt;"><span style="font-size: 12pt;">• Current
consumption has generally been very subdued, especially for big-ticket items
such as cars and houses, and private investment, the backbone of China’s
economy.<o:p></o:p></span></p><p class="MsoNormal" style="line-height: normal; margin-left: 54.0pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -36.0pt;"><span style="font-size: 12pt;">• When
domestic consumption takes set back and people are sceptical about the job
market and higher unemployment of youth creates a significant slowdown for
domestic manufacturers.<o:p></o:p></span></p><p class="MsoNormal" style="line-height: normal; margin-left: 54.0pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -36.0pt;"><span style="font-size: 12pt;">• Youth
unemployment has topped 21%, or double what it is in the UK and almost three
times the rate in the US.<o:p></o:p></span></p><p class="MsoNormal" style="line-height: normal; margin-left: 54.0pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -36.0pt;"><span style="font-size: 12pt;">• Private
sector of China has been spending very less as the norms are stringent and
hence Private firms and entrepreneurs are not spending much on investment or on
hiring people.<o:p></o:p></span></p><p class="MsoNormal" style="line-height: normal; margin-left: 54.0pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -36.0pt;"><span style="font-size: 12pt;">• If
we look at the number of employment we find that the annual graduation of 11-12
million students in the summer is aggravating an already difficult situation
because of the problems of finding suitable work.<o:p></o:p></span></p><p class="MsoNormal" style="line-height: normal; margin-left: 54.0pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -36.0pt;"><span style="font-size: 12pt;">• Pay
wages are falling and as high tech and FDI are slowly moving out due to the
so-called Supply Chain shift the jobs are mostly in the lower-pay, low-skill,
gig or informal economy compared with higher quality jobs in manufacturing and
construction.<o:p></o:p></span></p><p class="MsoNormal" style="line-height: normal; margin-left: 54.0pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -36.0pt;"><span style="font-size: 12pt;">• Most
of the housing stock, overbuilding, collapse in transactions and weakness in
prices are not in big agglomerations such as Beijing, Shenzhen and Shanghai,
but in hundreds of smaller cities and towns that rarely make news.<o:p></o:p></span></p><p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span style="font-size: 12pt;"> Well,
U.S Election and Mr Biden's strategy are well played for targeting to create
domestic jobs at the time of elections scheduled for Nov -2024. Every
Presidential election attracted some type of war and now the trade war is the
new weapon. Now this strategy has been identified by Britain and the European
Union who have signalled their intention to move along similar lines, and the
Group of Seven advanced economies agreed in June that restrictions on outbound
investments should be part of an overall.<o:p></o:p></span></p><p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span style="font-size: 12pt;">A quick
look towards the economic Numbers of China<o:p></o:p></span></p><p class="MsoNormal" style="line-height: normal; margin-left: 54.0pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -36.0pt;"><span style="font-size: 12pt;">• Year-to-date,
China's exports are down 5% compared to last year, while imports have dipped
7.6%<o:p></o:p></span></p><p class="MsoNormal" style="line-height: normal; margin-left: 54.0pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -36.0pt;"><span style="font-size: 12pt;">• Manufacturing
activity has contracted for four straight months<o:p></o:p></span></p><p class="MsoNormal" style="line-height: normal; margin-left: 54.0pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -36.0pt;"><span style="font-size: 12pt;">• July
exports declined at the sharpest rate in three years, at 14.5% annually<o:p></o:p></span></p><p class="MsoNormal" style="line-height: normal; margin-left: 54.0pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -36.0pt;"><span style="font-size: 12pt;">• The
US Census Bureau reported Chinese exports to the US dropped 23.7% in June,
hitting a six-month low of $42.7 billion<o:p></o:p></span></p><p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span style="font-size: 12pt;">The recent
numbers from China speak loudly- China accounted for 13.3% of U.S. goods
imports during the first six months of this year, below a peak of 21.6% for all
of 2017. The current level is the lowest since 12.1% for the year 2003, two
years after China’s accession to the World Trade Organization.<o:p></o:p></span></p><p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span style="font-size: 12pt;">This shift
out leads to a big hole for the Chinese economy since, over the past 2 decades
they have created a huge mountain of debt unprofitable and un-commercial
infrastructure and real estate, empty apartment blocks and little-used
apartments and transport facilities, and excess capacity in, for example, coal,
steel, solar panels and electric vehicles. Now these facilities are going to be
turned into ideal and youth unemployment will create major setbacks. Further
Chinese domestic investments will not rise so early nor can fill up the GAP
created under the current circumstances.<o:p></o:p></span></p><p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span style="font-size: 12pt;">We will
witness commodity prices will fall which might trigger margin calls in
commodities and industrial inflation will be on the lower side giving immense
benefit to developing nations. Financial and liquidity crises from China might
come up and most of the funds will be used for bailout.<o:p></o:p></span></p><p>
</p><p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span style="font-size: 12pt;">The global
risk is now for liquidity crisis and in certain ratings getting upside down
across various sectors and assets class. The debt market will witness a major
setback in coming late 2023. <o:p></o:p></span></p>INDRANEEL SENGUPTAhttp://www.blogger.com/profile/16737884422257285340noreply@blogger.com0tag:blogger.com,1999:blog-8425320452010909021.post-53672507748129675632023-08-12T13:43:00.006+05:302023-08-12T14:04:20.125+05:30U.S Crisis will be Soon Global Guest<p style="text-align: justify;"> </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjZRNlS8GVyByjYQ_e10bnTPJXLyTKCPgvpb7S9XlTi_ULB0h4Cgu-qm_aE8rSgRvmcNB3SULvcndl_VDtTOBoWbjnGhKZynTwkxLYgV5FsN_2qUTmSyMfGEkrQgvDqn0fwkXPle5K7_VNIT0dUFskkdaoT6lau9QbsS00-p28kl22WI9hnTmUU68VTL9Br/s275/download.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="183" data-original-width="275" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjZRNlS8GVyByjYQ_e10bnTPJXLyTKCPgvpb7S9XlTi_ULB0h4Cgu-qm_aE8rSgRvmcNB3SULvcndl_VDtTOBoWbjnGhKZynTwkxLYgV5FsN_2qUTmSyMfGEkrQgvDqn0fwkXPle5K7_VNIT0dUFskkdaoT6lau9QbsS00-p28kl22WI9hnTmUU68VTL9Br/w640-h426/download.jpeg" width="640" /></a></div><br /><p></p><p style="text-align: justify;"><span style="color: #0e101a;">Many people across the world have been shocked to find that Mr. Biden economic policies have been a miracle where despite increasing interest rates inflation is not yet under control (as per the Fed Benchmark) but the job creation numbers are on the higher side. Let’s look at the numbers where inflation has come down to 3% in the US in June, down sharply after peaking at more than 9% last year as global commodity prices came down significantly across the globe and the same inflation also came down across all countries. Well the truth is hidden and it is snowball getting preapred for late 2023 and early of 2024.</span></p><p style="text-align: justify;"><span style="color: #0e101a;"> Whereas the interest rates need no numbers to be explained how expensive it has become in living cost. Most of the US jobs are created in the contraction industry ( excluding real estate) as federal investments in infrastructure (Infrastructure Investment and Jobs Act), semiconductor chip plants (CHIPS and Science Act), and green energy construction.</span></p><p style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; color: #0e101a; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><span data-preserver-spaces="true" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; margin-bottom: 0pt; margin-top: 0pt;">Based on recent data shows that the combined U.S. credit card balances have passed over $1 trillion, which is for the first time in the US economy. The buy now pay later (BNPL) has taken a significant quantum jump within the economy. Further, it has been found that Credit card balances during the 2023 second quarter rose by $45 billion to a series high of $1.03 trillion, according to a report this week from the New York Federal Reserve Bank. Retail credit cards and other consumer loans climbed by $15 billion during the quarter. The average credit card currently charges a near-record 20.53% interest rate. This category of debt also has the highest 90+ day delinquency rate at 5.08%. Well, credit card delinquencies are at an 11-year high, as measured using a four-quarter average, the data showed.</span></p><p style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; color: #0e101a; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><span data-preserver-spaces="true" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; margin-bottom: 0pt; margin-top: 0pt;"><br /></span></p><p style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; color: #0e101a; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiD0865KhqniJrn2gwU3Wf3z1OEdk9j0tZDXk9Ft0w_pxPyxDx76IKS79rqLjlz6wCVaV8jmeGmgewn9dz1I_beNc4rPdOlpr5qn8ogtNVWvLOA7IXS4YU_88Lmx8hNREcoNavW-lObxubBtSLPjj9lU_C4lHS4hJ1VCPveOyO9VVN6PLPSfcnBWKYPOeHu/s900/bnW2_q7p.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="533" data-original-width="900" height="380" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiD0865KhqniJrn2gwU3Wf3z1OEdk9j0tZDXk9Ft0w_pxPyxDx76IKS79rqLjlz6wCVaV8jmeGmgewn9dz1I_beNc4rPdOlpr5qn8ogtNVWvLOA7IXS4YU_88Lmx8hNREcoNavW-lObxubBtSLPjj9lU_C4lHS4hJ1VCPveOyO9VVN6PLPSfcnBWKYPOeHu/w640-h380/bnW2_q7p.jpeg" width="640" /></a></div><br /><p></p><p style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; color: #0e101a; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><span data-preserver-spaces="true" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; margin-bottom: 0pt; margin-top: 0pt;">Getting deeper it's being found that the Millennials are having around total balances hit more than $4.2 trillion in the fourth quarter of 2022, a 27-percent jump from late 2019. Adding more to this it has been found in a survey that 57 percent of American consumers say they are living paycheck to paycheck. More than 72 percent of people making less than $50,000 a year live paycheck to paycheck, while 60.9 percent of people making between $50,000 and $100,000 annually live that way.</span></p><p style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; color: #0e101a; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><span data-preserver-spaces="true" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; margin-bottom: 0pt; margin-top: 0pt;"><br /></span></p><p style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; color: #0e101a; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><span data-preserver-spaces="true" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; margin-bottom: 0pt; margin-top: 0pt;">This speaks very loudly that with current high levels of interest rates in the US the cost of paying interest on the same will be manifold high as compared to any historical number and any default on the same will suck out liquidity from the US banking industry. This time it seems that the retail banking crisis is well prepared to be reserved on the table. Well, this credit card debt is not enough to make the global economy cry for liquidity but we have a few other segments to add full momentum to get a complete dry down. Total household debt increased by $16 billion in the quarter, totaling around $17 trillion. The cost of serving debt items is many like auto loans, student loans, mortgage loans, and business loans which finally leads to a retail debt trap. Further Federal student loan borrowers have not been required to repay their debt since 2020. The payment pause will resume in October, and the resumption of student loan payments will be a huge test for many cardholders and the economy as a whole. The impact on the living cost and consumption will be huge.</span></p><p style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; color: #0e101a; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiMGqnZTRmC7FH6mjSSWH6i0FON9rF5aJAxnx8mJpoQEo8dPGO1OrdKkgldAKFpkwLWRKMyklomUr5msBpR21g40Iwz9xpSQl475d9w0UU9ec-cHIHXuNIzb51dDkkdC4xoFWNKUduSsr5MB7rQr4_2NMDn6J-RRxngPpyHW2JM43MnKQAgL18M2v0DTBS3/s554/F3DSf_WXkAAGYTz.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="554" data-original-width="554" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiMGqnZTRmC7FH6mjSSWH6i0FON9rF5aJAxnx8mJpoQEo8dPGO1OrdKkgldAKFpkwLWRKMyklomUr5msBpR21g40Iwz9xpSQl475d9w0UU9ec-cHIHXuNIzb51dDkkdC4xoFWNKUduSsr5MB7rQr4_2NMDn6J-RRxngPpyHW2JM43MnKQAgL18M2v0DTBS3/w640-h640/F3DSf_WXkAAGYTz.jpeg" width="640" /></a></div><br /><span data-preserver-spaces="true" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; margin-bottom: 0pt; margin-top: 0pt;"><br /></span><p></p><p style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; color: #0e101a; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><span data-preserver-spaces="true" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; margin-bottom: 0pt; margin-top: 0pt;">More importantly, we need to know that U.S. overall household debt has spiked by $2.9 trillion since the end of 2019.</span>The high-interest cost serving is going to be a major reason for getting the whole retail market getting under collapse. </p><p style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; color: #0e101a; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><br /></p><p style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; color: #0e101a; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;">The long-term impact of this high debt and high-interest rate will be:</p><ul style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; color: #0e101a; margin-bottom: 0pt; margin-top: 0pt;"><li style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; list-style-type: disc; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><span data-preserver-spaces="true" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; margin-bottom: 0pt; margin-top: 0pt;">Banks will have to write off these loans and take a hit on books</span></li><li style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; list-style-type: disc; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><span data-preserver-spaces="true" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; margin-bottom: 0pt; margin-top: 0pt;">Retail consumption from the US will slow down impacting GDP and stocks.</span></li><li style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; list-style-type: disc; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><span data-preserver-spaces="true" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; margin-bottom: 0pt; margin-top: 0pt;">Consumption numbers will come down</span></li><li style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; list-style-type: disc; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><span data-preserver-spaces="true" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; margin-bottom: 0pt; margin-top: 0pt;">The bubble of job creation will get halt</span></li><li style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; list-style-type: disc; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><span data-preserver-spaces="true" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; margin-bottom: 0pt; margin-top: 0pt;">Unemployment numbers in the U.S and other countries will increase as the liquidity crisis will spill over.</span></li><li style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; list-style-type: disc; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><span data-preserver-spaces="true" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; margin-bottom: 0pt; margin-top: 0pt;">Federal Funds are to be deployed for the revival of the banks</span></li><li style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; list-style-type: disc; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><span data-preserver-spaces="true" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; margin-bottom: 0pt; margin-top: 0pt;">US federal income will take a hit resulting less investments within the economy</span></li><li style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; list-style-type: disc; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><span data-preserver-spaces="true" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; margin-bottom: 0pt; margin-top: 0pt;">Borrowings will go up for the US government impacting more interest rate demand by the lenders.</span></li><li style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; list-style-type: disc; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><span data-preserver-spaces="true" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; margin-bottom: 0pt; margin-top: 0pt;">Banking M&A will begin in the US and in other countries where interlinked trades and businesses are holding these assets</span></li><li style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; list-style-type: disc; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><span data-preserver-spaces="true" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; margin-bottom: 0pt; margin-top: 0pt;">Emerging markets assets will find sell-off</span></li><li style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; list-style-type: disc; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><span data-preserver-spaces="true" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; margin-bottom: 0pt; margin-top: 0pt;">Markets across the globe will correct and might take some time to revive back based on different economic parameters.</span></li></ul><div style="text-align: justify;"><span style="color: #0e101a;"><br /></span></div><p style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; color: #0e101a; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><span data-preserver-spaces="true" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; margin-bottom: 0pt; margin-top: 0pt;">This is the place where interest rate cuts down will be faster to save the US economy and the global economy from the liquidity crisis. The US bond market will face more tough times in the coming months as the spike in yields and the decline in bond prices will impact the banks. We all know that Lenders are traditionally big buyers of government bonds, so when the value of those investments declines, it can spell trouble. Well, find more liquidity crises emanating from the US and spreading to different parts of the world. We will find more rating cut-down in different banks in the US which will slowly place pressure on inter-related trades and papers held by other countries' banks. </span></p><p style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; color: #0e101a; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><span data-preserver-spaces="true" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; margin-bottom: 0pt; margin-top: 0pt;"><br /></span></p><p style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; color: #0e101a; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><span data-preserver-spaces="true" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; margin-bottom: 0pt; margin-top: 0pt;">The recent rating cut down by different Agencies might get again revised in the coming months as the median debt-to-GDP ratio of AAA-rated sovereign debt issuers is currently 39.3 percent; for AA-rated issuers, 44.7 percent. The current US debt-to-GDP ratio is 112.9 percent. This high level of retail debt and repayment is a matter of concern that might turn out to be a headache for the global markets and economy.</span></p>INDRANEEL SENGUPTAhttp://www.blogger.com/profile/16737884422257285340noreply@blogger.com0tag:blogger.com,1999:blog-8425320452010909021.post-77806140308749391862023-07-09T20:43:00.003+05:302023-07-09T20:44:37.230+05:3019000 Sensex to Nifty 19000... Moving to NIFTY 65000..Invest for Long term <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 12.0pt; line-height: 115%; mso-ansi-language: EN-US;"></span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhDSb5NOScHC2rZ2xghU7HSiE-ZYoD3_zWYtrz36Kwkv1e7KRer8rlD-VNRVvotL0qx2C9wxoboMV3L2UeKjeziByhHgdh2Nn-o9TGY64G-hMN9zkymRVq18-JUODwm5VpvVVEv-5kb9fuIRmdgcpPQLKMkGMrFKrIMVtUy6LNuMDP94nyNoCB_97Kw9fw4/s300/download%20(1).jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="168" data-original-width="300" height="358" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhDSb5NOScHC2rZ2xghU7HSiE-ZYoD3_zWYtrz36Kwkv1e7KRer8rlD-VNRVvotL0qx2C9wxoboMV3L2UeKjeziByhHgdh2Nn-o9TGY64G-hMN9zkymRVq18-JUODwm5VpvVVEv-5kb9fuIRmdgcpPQLKMkGMrFKrIMVtUy6LNuMDP94nyNoCB_97Kw9fw4/w640-h358/download%20(1).jpeg" width="640" /></a></div><br /> <span style="font-size: 12pt;">Every time the market goes up
the heartbeat goes up for two types of investors 1) Those that missed the
investment opportunity for making quick bucks 2) those types of investors who
want to do the investment at higher levels but are scared to invest. Recently
in a couple of client meetings ad investor seminars, I came across those
investors who are more sceptical to accept that the market has yet more
journeys to cover in the next 7 years till 2030. Investors commented that
historically whenever they have done investment in higher levels of the market
they have witnessed a sharp fall and it never back to the price at which they
invested when the market was high. Well, this time history may not get repeated
since there are a number of factors which have changed.</span><p></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 12.0pt; line-height: 115%; mso-ansi-language: EN-US;">19500 might go up to 20000 but that
level is not the end of the world. Profit booking short-term hiccups are going
to remain there but the current Indian is not the old India. The fundamental
aspect of the market and economy has changed which one should accept and
understand. Those who are thinking that one should have done an investment when
the market was 17000 levels well today’s 19500 might be cheap keeping 25000
levels for NIFTY in the next few years.<o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 12.0pt; line-height: 115%; mso-ansi-language: EN-US;">In FY-23 it was found that the
Systematic Investment plan increased 77 per cent in the year ended March to
₹84,224 crore against ₹47,619 crore logged in the previous financial
year. The total amount as of date stands around Rs 1.5laks cr. Further
around Rs. 1.57-lakh crore into index funds and ETFs in FY23. All these funds
have simply got deployed into the financial market. These numbers will only
grow over the next 10 years or maybe more.<o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 12.0pt; line-height: 115%; mso-ansi-language: EN-US;"> If we look at the market data
of BSE Sensex and NIFTY 50 over the last 20 years from different perspectives
we find that a particular segment of investors have always lost who lived by
short-term gains and went for frequent redemptions and stoppage of
investments. In short, those investors who did not have any belief
in their investment or financial advisors and always tried to out beat the
basic principle of long-term investing. When the Nifty was 2008 in 2004 Sensex
was at 6493, over the next 5 years Nifty became 6135 whereas Sensex
became 19445 and Today in 2023 the Nifty is 19445 and the Sensex is 65000. This
reflects that over the next 10 years, we should be prepared for some higher
numbers keeping the compounding factor in mind. Now, one can realize
where and which type of investors lost money and could not make much return as
compared to what the market gave.</span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhQ7Khen9D0jPhuXEFYRDB9d1ZoaqovC4TJ6joYsvW-vI2dFr8JQ7V1LCn43wyjzataT1xPLjaPKomtAse9gPoMGooEnks2Te65xt7v1mhNMzNKO9Ea6AUhQ4E9WkS8ho-NSaz3DOtkjgNiw2Jjk7s8baQHMwNg2shZnunI_BvuOdtdUHtRPouNRCavUL35/s670/market.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="670" data-original-width="487" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhQ7Khen9D0jPhuXEFYRDB9d1ZoaqovC4TJ6joYsvW-vI2dFr8JQ7V1LCn43wyjzataT1xPLjaPKomtAse9gPoMGooEnks2Te65xt7v1mhNMzNKO9Ea6AUhQ4E9WkS8ho-NSaz3DOtkjgNiw2Jjk7s8baQHMwNg2shZnunI_BvuOdtdUHtRPouNRCavUL35/w466-h640/market.jpg" width="466" /></a></div><br /><o:p></o:p><p></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 12.0pt; line-height: 115%; mso-ansi-language: EN-US;">The current rally of the market is
based on many positive factors domestically but most importantly it’s the new
generation of investors who are more focused, calculative and have a strong
vision about wealth creation. This generation does not come from the background
of the Harsahd Mehta and Ketan Parekh generations. This generation does not
have the fancy of having investments only in real estate and gold just like
the previous generation. It has been found as per the RBI data that Indian
households have 76% investments in real estate followed by 15% in Gold, 4.8% in
equities and the rest in banks/FD and debt.<o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 12.0pt; line-height: 115%; mso-ansi-language: EN-US;">Now this 76% exposure in real estate
is getting diverted into the Indian financial market followed by debt
investments from retail clients getting diverted into the equity
market. Retired investors have understood that Interest volatility
does not leave the historically lucrative option of doing investment and
staying invested for 5 years or 7 years in Bank FD or corporate FD products.<o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 12.0pt; line-height: 115%; mso-ansi-language: EN-US;">The market will witness short-term
profit booking and based on the current numbers of vegetable prices it seems
that inflation for July and August might be on the higher side due to issues
coming out of climate. Rural demand is not expected to be poor since the current
prices lead to significant earnings for rural India. Urban consumption might
get slowed but not much is expected from rural India.</span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjqSIgxPnvgGBMIRE04YPhLKsFHlTAvXFNleSWZg4WOCJE2ZiZbj-IZNRUkvjkP8CeEe-n9fsqJMB5B9RspOmmTzjXrslbmBZniE_-vH-pKXvUE8ir0IgHzKkhx_6n-3LIFLMpJGzwutcB3n7wurs2m616h4N44MDjG_kid80tWXWXEah6wibdX3uboJeux/s1271/GST.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="545" data-original-width="1271" height="274" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjqSIgxPnvgGBMIRE04YPhLKsFHlTAvXFNleSWZg4WOCJE2ZiZbj-IZNRUkvjkP8CeEe-n9fsqJMB5B9RspOmmTzjXrslbmBZniE_-vH-pKXvUE8ir0IgHzKkhx_6n-3LIFLMpJGzwutcB3n7wurs2m616h4N44MDjG_kid80tWXWXEah6wibdX3uboJeux/w640-h274/GST.jpg" width="640" /></a></div><br /><o:p></o:p><p></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 12.0pt; line-height: 115%; mso-ansi-language: EN-US;">The current GST numbers reflect that
capital rotation within the Indian economy is active and the demand and supply
factors are well placed. The Indian banks and NBFCs are well poised for
stupendous growth with less baggage of NPA which has been a historical barrier
for growth. Indian banks' gross bad loans fall to a 10-year low of 3.9% as
per the RBI Financial Stability Report. Further, the job market has grown up
significantly and also the EPFO fund also does 15% investment in the Indian
capital market from other different sources. The share of women among new
subscribers grows to 26% in FY23 from 21% in FY19; the share of young people (18-28
age groups) getting formal jobs has risen to 66.5% in FY23 from 62.1% in FY21.
This leads to more inflow of investments through SIPs and other formats into
the capital market.</span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhw5NXX4V2znpWO295QwqIT2qSX1J972DqLXcesB7gQan2OBoVbcx9YBcAzUAsN1IHh9qLjI48wrbWKPKXklCkDzgLeTLCmaeQ5dBpVr6C7BTsqwaqD2VOlDeRrAVrmVd9YB8lwPo5YP4IOYzgC3zWPnBnA4eYZQPr12HGQhwJt7jaLYPpE0bkgKFNnRMSn/s621/EPFO.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="559" data-original-width="621" height="576" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhw5NXX4V2znpWO295QwqIT2qSX1J972DqLXcesB7gQan2OBoVbcx9YBcAzUAsN1IHh9qLjI48wrbWKPKXklCkDzgLeTLCmaeQ5dBpVr6C7BTsqwaqD2VOlDeRrAVrmVd9YB8lwPo5YP4IOYzgC3zWPnBnA4eYZQPr12HGQhwJt7jaLYPpE0bkgKFNnRMSn/w640-h576/EPFO.jpg" width="640" /></a></div><br /><o:p></o:p><p></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 12.0pt; line-height: 115%; mso-ansi-language: EN-US; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-hansi-font-family: Calibri;">Further, the consumption
market has changed dramatically and Digital services are fast becoming
integral to India’s 700M+ internet users, which includes 350M digital payment
users and 220M online shoppers. Well Apple SHOP in BKC which got opened in May
2023 Delhi and Mumbai have grossed monthly sales of more than Rs 22-25 crore
each which itself is big proof of consumption.</span><b><span style="font-size: 12.0pt; line-height: 115%; mso-ansi-language: EN-US;"><o:p></o:p></span></b></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 12.0pt; line-height: 115%; mso-ansi-language: EN-US;">India’s per capita net national
income (at current prices) for 2022-23 stands at INR 172,000, according
to estimates from the National Statistical Office (NSO). This marks an
almost 100 per cent increase from the per capita income in 2014-15 – INR
86,647 – when the Narendra Modi government first came to power. The per capita
income of India has also grown to $2,257, in 2021 by 18.12%
from 2020.</span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEih7yANB4ouplR_cGCcCE_hCVygHlWpr2WVuRaHVE4EswFDqLpVlRNXHfuWIy9N2yVp6mY-axWOJdPeokKFVhrlXVvStki0qFJ5XcKufVl_as7jeAMRwgTwewxXBH2txFnxukSlvhxk1_Cl2Ue97ImGRs7Yb6aZXJq7I76TP0PQJaUA_cAhxIVUOVEDwXev/s486/Income.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="477" data-original-width="486" height="628" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEih7yANB4ouplR_cGCcCE_hCVygHlWpr2WVuRaHVE4EswFDqLpVlRNXHfuWIy9N2yVp6mY-axWOJdPeokKFVhrlXVvStki0qFJ5XcKufVl_as7jeAMRwgTwewxXBH2txFnxukSlvhxk1_Cl2Ue97ImGRs7Yb6aZXJq7I76TP0PQJaUA_cAhxIVUOVEDwXev/w640-h628/Income.jpg" width="640" /></a></div><br /><o:p></o:p><p></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 12.0pt; line-height: 115%; mso-ansi-language: EN-US;"> The historical journey of the
market is known to every investor but the behavioural aspect of the
investors towards short-term return, and profit booking followed by SIP
investments gets stopped every moment. Today the Mutual Fund Industry has an
SIP book of Rs.14000 cr but the actual SIP which gets into the market is around
RS.7500 cr. The net inflows accounted for 54 per cent of the highest-ever gross SIP
inflow of ₹1.56-lakh crore logged in FY23, according to data from the
Association of Mutual Funds in India.<o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 12.0pt; line-height: 115%; mso-ansi-language: EN-US;"> The reason is that we Indians
are always focused towards short-term gains and less focused towards the
long-term goals of wealth creation. Before investment, every
investor needs to have a details idea about the behavioural aspect of
investment and his belief system. Yes, the belief system of an investor towards
investment is the key factor to be ascertained then only an investor can make
wealth. Those who will follow the financial advisor and will not try to
outsmart the market will be real wealth creators.<o:p></o:p></span></p><p>
</p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 12.0pt; line-height: 115%; mso-ansi-language: EN-US;">Stop timing the market and stop all
activities which lead to an investor not creating long-term
wealth. Understanding one’s own belief system for investing and
having a clear vision for the same is highly required if you want to be part of
Nifty to 65000 from the current Sensex of 65000 levels.<o:p></o:p></span></p>INDRANEEL SENGUPTAhttp://www.blogger.com/profile/16737884422257285340noreply@blogger.com0tag:blogger.com,1999:blog-8425320452010909021.post-34557051269108700562023-06-11T18:08:00.007+05:302023-06-11T18:08:58.208+05:30Registered Investment Advisor...New Model..New India <p class="MsoNormal" style="text-align: justify;"><span lang="EN-US"> <a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjs2GqlqiXfSYbOhuZeDmSQJkCVEGytDcjDj5Qkj-Ykp5DFnjwbQXA_03v0JB7bmHkodW7NV2eMlPC0FQmQEi-JpBu6yWOp_-pEhjJuU5UOWHx1LftqoMewft5PoV-_2ThINIoZ38CFEpAO94dMEc24Zlgd0d455Q4trkn-_A4johUF59am5oWB8AnROA/s1200/60f552ece544e27b5339783c_RIA.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em; text-align: center;"><img border="0" data-original-height="400" data-original-width="1200" height="214" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjs2GqlqiXfSYbOhuZeDmSQJkCVEGytDcjDj5Qkj-Ykp5DFnjwbQXA_03v0JB7bmHkodW7NV2eMlPC0FQmQEi-JpBu6yWOp_-pEhjJuU5UOWHx1LftqoMewft5PoV-_2ThINIoZ38CFEpAO94dMEc24Zlgd0d455Q4trkn-_A4johUF59am5oWB8AnROA/w640-h214/60f552ece544e27b5339783c_RIA.jpg" width="640" /></a><br /><br /></span></p><p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">In my last couple of articles, I have been
highlighting about the strength of the Indian economy under the current global
recessionary fears and reality. The Indian economy will grow by 6 % or 7% for the
next 10 years as per the projections from various agencies. In the last 2
decades, the Indian GDP has grown 7 folds from half trillion to $3.4 trillion GDP</span> so
as did the Indian capital market BSE Sensex and NIFTY. The financial market has
also dramatically changed in the last 2 decades. The so-called word “Agents” got converted into
Advisory and India witnessed a radical change in financial advisory. SEBI
introduced Registered Investment Advisory Model along with Mutual Fund
Distributors (MFD).</p><p class="MsoNormal" style="text-align: justify;"><o:p></o:p></p><p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">The RIA business model went through many changes
where the initial advantages of earning were changed dramatically making it fall
like a pack of cards. Some RIAs also
operate the MFD business in their relative’s name to circumvent SEBI norms. Even a few RIA started giving stock tips etc
under the name of RIA. Many reputed companies shut down their RIA models of
business and even a few sold their businesses to competitors and left the Indian
financial market. From 1800 RIAs the
number came down to 900 individuals and 470 around corporates in the last 10 years.
As per the Ministry of Finance In India,
there is only one Registered Investment Advisor (RIA) for more than 76000
Mutual Fund investors and Demat account holders. Well in one way it is good to have a low number of RI since quality matters in this type of profession. Further, as the maturity of the Indian investor and RIA grow the number will grow.<o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">The Fee-based model of RIA demands new
abilities and significant knowledge and more importantly a mature market. The
current Indian investors are yet to mature since for them free tips and free advice
makes them believe that they have invested in the best of the funds. Direct scheme
concepts have been exploited and further to that financial advisory has been restricted
to only MFDs and not to proper advisory models.<o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">Now in 2023, we hear about financial advisors
asking about client risk profiles and asset allocation strategy but prior to
that the maturity of the MFDs and RIAs lacked and the investor’s maturity will take
another 5 to 10 years where the fee will be paid by an investor with happy in
mind. This mindset will change only when RIA's will think out of the box.<o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">Today’s RIA needs to understand that you need
to create wealth and lifestyle solutions for goals moving ahead from selling
dreams. This generation of clients demands
transparency, wealth creation and most importantly trust. Today smartphone has changed
the dynamics of investment and advisory but a human touch-based RIA will
make a quantum impact compared to an online model. In many cases, regulatory
rules and guidelines have been blamed for RIA numbers to come down but the fact
is India needs serious players in the financial industry.<o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">If you remember there was a time when Fidelity
AMC, Goldman Sachs and many others left India when the mutual fund upfront commission
used to be around 7%. All these AMC had quality products but they believed in performance
whereas others believed in the commission model. This
era got over Finance Ministry firmly holds the matter and changes the MF
industry. <o:p></o:p></span></p><p class="MsoNormal" style="margin-top: 7.5pt; text-align: justify;"><span lang="EN-US">Today if you want global RIA like Woodley
Farra Manion, Albion Financial Group, The Burney Company, Luther King Capital Management etc. to come and open up
shops in India then you want fair play rules where performance of advisory
speaks loud. <o:p></o:p></span></p><p class="MsoNormal" style="margin-top: 7.5pt; text-align: justify;"><span lang="EN-US">Let me remind you Citibank, FirstRand
Bank, ANZ Grindlays, RBS, Commonwealth Bank of Australia, and Barclays scaled down</span>
in 2012, likewise, Bank of America-Merril Lynch, Barclays and Standard
Chartered scaled down their operations in 2015. Hence the global RIAs
getting into JV with the Indian RIAs model of joint collaboration will be the next
big change which India needs and might witness provided the current RIA’s belief
in Indian GDP growth to 5 trillion marks. RIAs are the only ones who can
replace these bank's wealth platforms and create immense growth opportunities by
joining hands with global RIA’s. <o:p></o:p></p><p class="MsoNormal" style="margin-top: 7.5pt; text-align: justify;"><span lang="EN-US">In this decade we will find global
RIAs joining hands with local RIAs to set up business models in India since
Indian investors are changing dramatically. This is very much possible since in
the developed economies you have now left with managing retirement corpus which
has already been done and the young population is struggling with BNPL and
high borrowed cost of living which leaves fewer savings for investment planning. Hence the opportunity
of joining hands with global RIAs with
local Indian ones to start operations is a very strong business proposition which
comes to keep the changing investors' mindset in India. Further, the biggest advantage
will quantum jump in technical expertise and know-how followed by
technological enhancement. <o:p></o:p></span></p><p class="MsoNormal" style="margin-top: 7.5pt; text-align: justify;"><span lang="EN-US">As per the latest report, its being found
that in India 308 Indians entered the ultra-rich category. Globally, in 2021,
the number of HNWIs increased by 7.8% to 22.5 million, with an 8% rise in their
overall wealth.</span> Some 90% of the country’s population is below the
$10,000 mark. According to the World Wealth Report, the bottom 70% of India’s
households own about 20% of the country’s household or private wealth.
This number is changing dramatically and with Ideas getting funded easily
through the startup community, the numbers will shoot up significantly. As new industries and manufacturing 4.0 gets bigger in India the quality of clients will need service as compared to the Foreign banks in terms of wealth advisory.<o:p></o:p></p><p>
</p><p class="MsoNormal" style="margin-top: 7.5pt; text-align: justify;"><span lang="EN-US">Indian RIA’s need to understand that
quality clients exist and that every client is not for RIA. If we look at the outflows
for investment in international stocks and bonds under LRS rose to an all-time
high of $747 million in FY22, up 58% from $472 million in FY21, according to
RBI data.</span> This shows how the Indian investors are changing and what type
of opportunity waits for the RIA’s doing JV with global ones. <o:p></o:p></p>INDRANEEL SENGUPTAhttp://www.blogger.com/profile/16737884422257285340noreply@blogger.com4tag:blogger.com,1999:blog-8425320452010909021.post-26150248635929733692023-04-02T11:03:00.006+05:302023-04-02T11:03:45.335+05:30 Guaranteed Products… non-guaranteed Financial Planning<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhw02ZV2Gg6GnQP04m2ZtpV2-vuQkbAnb-QvdggTwrhm-ymoTrHpo9uQDIMI_5aJmHckUQoktU4yCARnkoCNsbpjvxBVprvAdrhr2EEEU6FladmGkikpSioJhrDH3Uc6mLGWEQSH74je55pQlbh_kqpzeE30G7kT0Ag7ECztrgxg9bQ0h3wbX5JZtj6bA/s292/images.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="163" data-original-width="292" height="357" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhw02ZV2Gg6GnQP04m2ZtpV2-vuQkbAnb-QvdggTwrhm-ymoTrHpo9uQDIMI_5aJmHckUQoktU4yCARnkoCNsbpjvxBVprvAdrhr2EEEU6FladmGkikpSioJhrDH3Uc6mLGWEQSH74je55pQlbh_kqpzeE30G7kT0Ag7ECztrgxg9bQ0h3wbX5JZtj6bA/w640-h357/images.jpg" width="640" /></a></div><p style="text-align: left;"><span style="text-align: justify;"><br /></span></p><p class="MsoNoSpacing" style="text-align: justify;">Do you know why
the GST numbers for March 2023 were so high? The dynamics of investment and
investors have changed dramatically in the last couple of years. Forgetting the 2020 pandemic rally we have now become part of a
continuously changing market where it is becoming difficult for investors to
invest. Adapting to a continuous change market is the new art that every
investor needs to engrave in their behavioral investment journey. Job loss has
become a common buzzword and rising fluctuating EMI is now a trap for
investors. Investing has become more complicated and the time frame of keeping a SIP
alive is falling every day within these uncertainties. In a country like India financial data is often so late that the real
pattern of the state of the economy is hard to predict. Obligations of
investment and commitment need to be understood well above highlighting the
returns and inflation-adjusted returns. Even inflation accounting is understood
by very less people and that’s too from the financial industry. <o:p></o:p></p><p class="MsoNoSpacing" style="text-align: justify;">31<sup>st</sup> March
2023 has been a record month for the Insurance industry where investors parked
huge amounts of money in guaranteed products. In many cases, it has been found
that the premium was to the tune of 5cr (regular premium) getting deployed in
guaranteed products. Well, we doubt how much got into health insurance and how
many people have increased or doubled their insurance coverage compared to
guaranteed products. The guaranteed products have garnered huge premiums but
these are investment products and not insurance against life risk or
uncertainty.<o:p></o:p></p><p class="MsoNoSpacing" style="text-align: justify;">Well, investors who
have purchased these products are like the same ones who thought in the last 2
decade that banks and FD is the best and safest product while inflation came
haunting at the time of retirement leaving no wealth. In the next 10 years or
20 years, the cost of gas cylinders will be Rs.2000 to Rs.4000. Now at the time
the inflation might be at 4% or 5% but the cumulative inflation impacting price
increases will be 100% above in the next 10 years. So now these guaranteed
products will remain at the same value as the FDs which after 20 years one
investor at the age of 65 is getting.<o:p></o:p></p><p class="MsoNoSpacing" style="text-align: justify;">Guaranteed or
non-guaranteed, health insurance or any other type of Insurance of them needs a
judgment matrix so that priority is set towards investment products and risk
coverage. The insurance word has been so much misused that India has always
suffered from huge Out-Of-Pocket-Expenditure (OOPE) for health Out-Of-Pocket-Expenditure
(OOPE) for health. India’s Out-Of-Pocket-Expenditure (OOPE) for health
is one of the highest in the world at 63 percent in 2018. Indians pay more
money out of their pockets than some of the poorest countries in the world for
availing of healthcare.<o:p></o:p></p><p class="MsoNoSpacing" style="text-align: justify;">Out of what Indians
spend on healthcare, medicines constitute the highest share (72 percent in
rural, 70 percent in urban), followed by hospitalization (getting
admitted, tests, consultation) and non-hospitalization (transit, food, etc.)
expenses.<o:p></o:p></p><p class="MsoNoSpacing" style="text-align: justify;">Further new
variants of covid getting discovered every now and then leads to a significant
increase in the cost. Health insurance coverage has fallen short in all angles
and will turn out to be minuscule in the coming years compared to the rising
cost of healthcare. In the last couple of years, we have witnessed how people
have lost their life from a sudden heart attack. The list of people s endless
that have died suddenly from heart attacks with no signs of prevailing
symptoms. In a country like India financial planning and insurance
planning is very poor. People of India are more aware of Bollywood
rather of health and health-related products.<o:p></o:p></p><p class="MsoNoSpacing" style="text-align: justify;">Lack of Insurance
planning and creating an investment and insurance matrix is important to delve
into the behavioral aspect of an investor and to guide him accordingly.
Words like guaranteed leads a completely wrong financial
advisory and high-risk game for the investor's life.<o:p></o:p></p><p class="MsoNoSpacing" style="text-align: justify;">The word Insurance
and premium have turned out to be nightmares and burdens on the shoulder.
Insurance planning is one of the most miscalculated and misguided investments
where a family suffers in the long term.<o:p></o:p></p><p class="MsoNoSpacing" style="text-align: justify;">Smartwatch has
replaced the traditional watch but monitoring and analysis of the heartbeat
data have taken a backseat. India suffers from insurance and despite healthy
eating medical cost eats up the financial assets. The question is how we plan
our investments, life style and align the same with gadgets to safeguard
against massive wealth erosion.<o:p></o:p></p><p class="MsoNoSpacing" style="text-align: justify;">The biggest risk of
long-term commitment to these guaranteed products in these changing times is
that in many cases the investor may not be able to meet the liability of
investments in the guaranteed products. In India when the stock market falls we
stop our SIP which is one of the best rupee cost-averaging products benefiting
the investor over the long term in wealth creation. </p><p class="MsoNoSpacing" style="text-align: justify;">Now how will the investor
keep paying the high premiums for guaranteed products? Well the number of
premiums sold in guaranteed products in the JFM will get more clarity in the
next financial year when a significant % of the same will not pay. Many
of the wealth firms will face the heat of bounced cases for premiums and the
ultimate suffers will be the clients who did investments based on herd
mentality.<o:p></o:p></p><p class="MsoNoSpacing" style="text-align: justify;">Well while paying
insurance premiums the GST is paid separately hence now ones get clarity why
the numbers are so high and will also remain high in April 2023.</p>INDRANEEL SENGUPTAhttp://www.blogger.com/profile/16737884422257285340noreply@blogger.com0tag:blogger.com,1999:blog-8425320452010909021.post-68831222070918024552023-03-25T17:05:00.000+05:302023-03-25T17:05:05.752+05:30Debt Crisis of Bank Papers can only be saved Through Equity Market <p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjw8MN1L1-AChf_BQ4E3J94hIAka-KvCX7xeXYYeYtPV9HUtwIEaoZVKvogQusEyTMxIfAVQH9n5SFASazWzYIDFHROXJ2UwSXk2Bk6fOFLiWAhggAT4ZMidcBsLHQqRFJu1M5ZrIu-k7IjzCaNA9o6tk1A0mcobngomByz_SD20n75o-Z0zd0YxpUQog/s1080/Untitled%20-%20Made%20with%20PosterMyWall.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1080" data-original-width="1080" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjw8MN1L1-AChf_BQ4E3J94hIAka-KvCX7xeXYYeYtPV9HUtwIEaoZVKvogQusEyTMxIfAVQH9n5SFASazWzYIDFHROXJ2UwSXk2Bk6fOFLiWAhggAT4ZMidcBsLHQqRFJu1M5ZrIu-k7IjzCaNA9o6tk1A0mcobngomByz_SD20n75o-Z0zd0YxpUQog/w640-h640/Untitled%20-%20Made%20with%20PosterMyWall.png" width="640" /></a></div><br /><p></p><p><span style="background-color: #fcfcfc; text-align: justify;">Very soon global inflation will come down and equities will find space
for interest rate cuts down. The time will be sooner than later since the way
the debt conditions of the global banks interlinked Equity can only help them
to survive. What we ignored and became deaf to hear the warnings about the
Credit Susie Deutsche Bank valuations has now created a big loss for
global investors. We need to know the depth of the risk and its place of birth
in order to know how much liquidity will be required to save these banks or
sell these banks. One might be happy that other banks are buying and saving the
falling banks but do remember that the good bank's absorption of bad
banks raises the risk of the equality of credit ratings of good banks. The
banks will have to face tough times to write off, readjust and reprise their
own holding and credit quality. The reason is simple when toxicity is high it
has its own pain to reduce it.</span></p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiDMzRMDZZPo6DPzRNY_bUWnehkQ6AP-3pvgYHRtVNzL5msKF8eq6_FNeK0_y8YBZ_YQd2xaQGWn_XohWfs71p6oaVehkCoOeI30EWxl5LiT9W2mYUx7kwQcOQz3-pCZXgPiChtv36v7h_wJyGRUFrog-Wd7QHB2Ij0u3xTnT_2pVJkS9xGwojsf7l1UA/s1162/FsBIeZmX0AEPoMo.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="671" data-original-width="1162" height="370" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiDMzRMDZZPo6DPzRNY_bUWnehkQ6AP-3pvgYHRtVNzL5msKF8eq6_FNeK0_y8YBZ_YQd2xaQGWn_XohWfs71p6oaVehkCoOeI30EWxl5LiT9W2mYUx7kwQcOQz3-pCZXgPiChtv36v7h_wJyGRUFrog-Wd7QHB2Ij0u3xTnT_2pVJkS9xGwojsf7l1UA/w640-h370/FsBIeZmX0AEPoMo.jpg" width="640" /></a></div><br /><span style="background-color: #fcfcfc; text-align: justify;"><br /></span><p></p><p class="MsoNormal" style="text-align: justify;"><span style="background: #FCFCFC; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-language: EN-IN;"><o:p> </o:p></span>The
MOVE index soared 14.71% to 173.66 today. Continuing its string of large
one-day moves after the last several weeks of very illiquid trading within US
Treasury markets. Volatility due to illiquidity is the new trading regime in
credit markets. Be careful out there.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgqzC2XoKc7bdSQyreJJ62srGhvZ49pq_bXpEVd38MS-WlmoemfqEA0QA6lxndlclJnrYoBZrvU1wX10edSObvXvqiBvev9SW7B-QvPxG6xNmbnc2Dy3GBV1hNwlarx8JR7Twz7dSIpC7U9bHejyaPUCwYaPk9wDZnYFjL8xVen_aAR9180jiOldG-t7w/s1439/FsBMGRhWAAIlz3X.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1024" data-original-width="1439" height="456" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgqzC2XoKc7bdSQyreJJ62srGhvZ49pq_bXpEVd38MS-WlmoemfqEA0QA6lxndlclJnrYoBZrvU1wX10edSObvXvqiBvev9SW7B-QvPxG6xNmbnc2Dy3GBV1hNwlarx8JR7Twz7dSIpC7U9bHejyaPUCwYaPk9wDZnYFjL8xVen_aAR9180jiOldG-t7w/w640-h456/FsBMGRhWAAIlz3X.jpg" width="640" /></a></div><br /><p class="MsoNormal" style="text-align: justify;"><span style="background-color: #fcfcfc;">According to Deutsche Bank’s Basel III
Pillar III Risk Disclosures, as of the end of December 2022, Deutsche
Bank’s Liquidity Coverage Ratio was 135%, higher than the minimum requirement
of 100%. The figure tells us that at the end of 2022.
But the way interest rates are going up the risk of credit quality and
liquidity raises the eyebrow for the global banks. We are far from the levels
of Too Big to fail type notions since the global economy is yet to come out of
various issues impacting the sentiments of survival.</span></p><p class="MsoNormal" style="text-align: justify;"><o:p></o:p></p>
<p class="MsoNormal" style="text-align: justify;"><span style="background: #FCFCFC; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-language: EN-IN;">In October 2022 it was found that Credit Suisse’s credit default
insurance (CDS) levels resemble the same CDS levels Lehman Brothers had just
before the bank’s bankruptcy. I found during October 2022 that “[Credit Suisse]
is trading at 0.23 x tangible books [and] Deutsche Bank is trading at 0.3x
tangible book value. So the alarms were already high much before. Investors'
demand goes up when the rate of interest rates goes up and simultaneously the
risk and quality of debt raise the risk further and liquidity risk too.<o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi3xVzg0DqROQ0b7V2_GmlYM0H2aAKG7f733SFJZGYET00ZuJ_IhD1MlGGjWjUlgz1KrshXU92sf-u6Pn1-cZgDXxh1htKNNf7F-sZLFTW2DfGShSF9H51ibGD5smE1_hAAmqzH_9S9OCNQqRM0Zr2hzpm6FWAMYPZmOVaAA9r8roH42IgBdye2q4IAUQ/s1000/1000x-1.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="562" data-original-width="1000" height="360" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi3xVzg0DqROQ0b7V2_GmlYM0H2aAKG7f733SFJZGYET00ZuJ_IhD1MlGGjWjUlgz1KrshXU92sf-u6Pn1-cZgDXxh1htKNNf7F-sZLFTW2DfGShSF9H51ibGD5smE1_hAAmqzH_9S9OCNQqRM0Zr2hzpm6FWAMYPZmOVaAA9r8roH42IgBdye2q4IAUQ/w640-h360/1000x-1.png" width="640" /></a></div><br /><span style="background: #FCFCFC; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-language: EN-IN;"><br /></span><p></p>
<p class="MsoNormal" style="text-align: justify;"><span style="background: #FCFCFC; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-language: EN-IN;">Investors now demand annual interest payments of about 9 per cent a year
from US businesses with low scores from rating agencies, up from just below 5%
in March 2021. The current small bank crisis will spook up the speculation
further and hence would lead to a major cry out for help.</span><o:p></o:p></p>
<p class="MsoNormal" style="text-align: justify;"><span style="background: #FCFCFC; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-language: EN-IN;">The small banks' collapse has led to a significant slowdown threat to
the global economy. It’s being found that not only consumption slowdown will
begin but also industrial consumption will be slower. Credit off-take from
banks will be slower and also consumers will prefer to save more keeping the
weak global banking system. The housing loan market will slow down as most of
the consumers from the middle-class segment will place a pause on buying. The
nightmare of 2008 is very much alive hence consumption will be slow and
investments will also take the hit of pause.</span><o:p></o:p></p>
<p class="MsoNormal" style="text-align: justify;"><span style="background: #FCFCFC; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-language: EN-IN;">The reason is that most of the clients of the small banks are middle
class hence they play a significant role in the economy. Smaller banks are
crucial drivers of credit growth. Banks smaller than the top 25 largest
accounts for around 38% of all outstanding loans: Fed data. They account for
67% of commercial real estate lending. The risk has no spilt over to
other asset classes and we need to have a deep understanding of the risk
arising from the same. As the lending tightens more risk will spill over to the
CDS and other paper quality of debt.</span><o:p></o:p></p>
<p class="MsoNormal" style="text-align: justify;"><span style="background: #FCFCFC; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-language: EN-IN;">So who can save the Debt Crisis? Well, it’s the equity which can help
prevent debt from falling down and leading to a massive crash. The
conversion of debt into equity is the option left for the global corporates and
all those debt papers. The convertibles market has reopened
with a bang in the US and will be moving ahead aggressively in other countries
keeping the current contagion fallouts. The pressure is already
building with a slowdown in lending, which will spill to bond repayments and
liquidity, followed by increasing investors' demand.</span><o:p></o:p></p>
<p class="MsoNormal" style="text-align: justify;"><span style="background: #FCFCFC; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-language: EN-IN;">This means that global equity markets have to halt interest rate hikes
at the earliest so that conversion into equity becomes a life saviour for the
global debt market. Banks have to move to tighten their lending standards and
seek to improve their duration and interest rate</span> gaps
so that increasing interest rates does not impact them. This is the place where
the slowdown or recession factors will play. As I said earlier the recession
definition has changed dramatically so as has the banking collapse.<o:p></o:p></p>
<p class="MsoNormal" style="text-align: justify;"><span style="background: #FCFCFC; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-language: EN-IN;">Total bank deposits have been </span>falling
for nearly a year — to $17.6 trillion last week from $18.1 trillion last
April — as Americans shift money out of bank accounts that pay little interest
to higher-yielding savings vehicles, like Treasury bills and money market
mutual funds. The demand for investing in equities is growing up and the same
will initiate a massive bull run across the globe and particularly in emerging
economies.<o:p></o:p></p>INDRANEEL SENGUPTAhttp://www.blogger.com/profile/16737884422257285340noreply@blogger.com0tag:blogger.com,1999:blog-8425320452010909021.post-73833262003790992942023-03-12T18:27:00.002+05:302023-03-12T18:36:25.732+05:30List of Indian Startups (may be) Impacted by Silicon Valley Bank<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi_sDglrHKwDDIvFkUoHWTbY5gHPLQN-qRZ5e2Sz_ram0Dz8rnR9AbsAluavnkGkViGZi8T-gYcVE1451amTqB66RvzwUE8QqjGP-a320LPyjS1LqwldK5uvDCgjg_03aNyNPj7JYGjZ0pyeLeADo8QWco5Ddino4GIeGUdSrMEljn4NvNQKxmps9hyLA/s1371/FrAIhAnWcAELvIm.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1371" data-original-width="1170" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi_sDglrHKwDDIvFkUoHWTbY5gHPLQN-qRZ5e2Sz_ram0Dz8rnR9AbsAluavnkGkViGZi8T-gYcVE1451amTqB66RvzwUE8QqjGP-a320LPyjS1LqwldK5uvDCgjg_03aNyNPj7JYGjZ0pyeLeADo8QWco5Ddino4GIeGUdSrMEljn4NvNQKxmps9hyLA/w546-h640/FrAIhAnWcAELvIm.jpg" width="546" /></a></div><div class="separator" style="clear: both; text-align: justify;"><p class="MsoNormal">We have experienced many
instances of very qualified people totally mess with Big Financial Institutions. At this point in my life, we do not need a
Havard Graduate to teach us finance. Silicon Valley Bank collapse may lead to
1,00,000 layoffs, impacting 10,000 startups as per statements from Y Combinator
to US Treasury Secretary. The most important thing to find out is what was the
problem with SVB? SVB had a gigantic investment portfolio as a % of total
assets at 57% (average US bank: 24%) and 78% was in Mortgage-Backed Securities
(Citi or JPM: around 30%). SVB was among the top 20 American commercial banks,
with $209 billion in total assets at the end of last year, according to the
FDIC.<o:p></o:p></p></div><p class="MsoNormal"><o:p></o:p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEig09jm5qhgeNoTLcITxb1K54rOnhLM6C96qqMRFeCNWUAHo_3rwRIrMqaknFJuwWr2m923rETM1v4vrP4Muba8dPYvSWrHeFbZ-mKY6bj6ApP3ISSaIVRgjapRH-26Sx2zT3WpswCW8m36m8sJW1usLJZY5-pSNhbDEFEG5ceRiXGoa2NR1qMzc4O2rQ/s744/Fq9ZhKlXwAA85FP.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="609" data-original-width="744" height="524" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEig09jm5qhgeNoTLcITxb1K54rOnhLM6C96qqMRFeCNWUAHo_3rwRIrMqaknFJuwWr2m923rETM1v4vrP4Muba8dPYvSWrHeFbZ-mKY6bj6ApP3ISSaIVRgjapRH-26Sx2zT3WpswCW8m36m8sJW1usLJZY5-pSNhbDEFEG5ceRiXGoa2NR1qMzc4O2rQ/w640-h524/Fq9ZhKlXwAA85FP.png" width="640" /></a></div><p class="MsoNormal"><o:p> </o:p></p><p class="MsoNoSpacing" style="text-align: justify;">
</p><p class="MsoNormal" style="text-align: justify;">They did not hedge interest rate risk at all! The duration
of their huge portfolio before and after interest rate hedges was the same?!
Effectively, there were NO hedges. This means SVB was not applying basic risk
management practices and exposing its investors to interest rate risk. Well,
don’t be shocked. The bank a $120 bn bond portfolio with a 5.6y duration means
that every 10 bps move higher in 5-year rate lost the bank almost $700 million.
Basically, the entire bank’s capital was wiped out. Prominent block chain venture capitalists have over $6 billion worth of
assets held by the now-defunct financial entity.<o:p></o:p></p><p class="MsoNormal"><span style="font-family: "Times New Roman", "serif"; font-size: 13.5pt; line-height: 115%;"><o:p></o:p></span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgR3panLQH8OiWvkx_oESZ8raw7YFgAEe-gfqIme_saX7by2Fi9NR0OAkdZ1xRxAZYGX4cq4Qs9Q0IdmBN4-8t-hyZTtpC8ySwo7gjySq4M1_GpKaoBTcA1YBP8I3lmhwnQ7msma--wFlGd8BtmmQyvYx5RsqOezGwQz4I35Ll4E6YC_70JtvW56Rt-UQ/s722/Fq9ZxICWwAA7XJO.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="394" data-original-width="722" height="350" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgR3panLQH8OiWvkx_oESZ8raw7YFgAEe-gfqIme_saX7by2Fi9NR0OAkdZ1xRxAZYGX4cq4Qs9Q0IdmBN4-8t-hyZTtpC8ySwo7gjySq4M1_GpKaoBTcA1YBP8I3lmhwnQ7msma--wFlGd8BtmmQyvYx5RsqOezGwQz4I35Ll4E6YC_70JtvW56Rt-UQ/w640-h350/Fq9ZxICWwAA7XJO.png" width="640" /></a></div><p class="MsoNoSpacing" style="text-align: justify;">In
December 2021, SVB had about $10 billion of interest rate swaps. The most
shocking part is that Crypto investment firm Morgan Creek Capital was found to be a
large depositor at Silicon Valley Bank. Bitcoin maxi Anthony Pompliano is a
partial owner of the firm and has been urging the government to bail the bank
out. This means the preparation of bailing out and collapse was triggered long
back. Now, the question comes to mind does this mean that the current interest
rate of the US is becoming unsustainable for the US banks?</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjNgsg06D8TbW9UprGlzozn-EXbE3UbRFnxwUxoCyW2F2WZWvBojkBQQ6hyULaZg_lHmHluBNPSYENIsCIiJULbGjSPXuXU1stAN8VdMFoGS8hgvrRIqX-45L5S9kvuDUBoht2rlPO5r03cclVw4UCU4e9lafN5_ewfBIFul7sXplZ9nLNWl30y50aAwg/s760/Fq9aWgrWIAID4wN.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="760" data-original-width="760" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjNgsg06D8TbW9UprGlzozn-EXbE3UbRFnxwUxoCyW2F2WZWvBojkBQQ6hyULaZg_lHmHluBNPSYENIsCIiJULbGjSPXuXU1stAN8VdMFoGS8hgvrRIqX-45L5S9kvuDUBoht2rlPO5r03cclVw4UCU4e9lafN5_ewfBIFul7sXplZ9nLNWl30y50aAwg/w640-h640/Fq9aWgrWIAID4wN.png" width="640" /></a></div><p class="MsoNoSpacing" style="text-align: justify;">The Fed moved aggressively, and higher
borrowing costs sapped the momentum of tech stocks that had benefited SVB.
Valuations came down and equity earnings
were falling out. </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiVzV9H7iVPNTX_6tWa_LCxLj6mdTijOngZCvpVG-tnmpOp05e2c01nZc4vYQBRNnDe4FOnde9akTKFE6MeGhyxFhdwqW6NYRMfu_jB_MWgcQXWoo56aJRsYidsazNC4VcexP1u_JO4W4IVSvrcToIPwAaQQsCimi6v1isze7bW7vO4KziGMwIytJHH_A/s1934/FrA_UWYX0AEiOuU.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="974" data-original-width="1934" height="322" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiVzV9H7iVPNTX_6tWa_LCxLj6mdTijOngZCvpVG-tnmpOp05e2c01nZc4vYQBRNnDe4FOnde9akTKFE6MeGhyxFhdwqW6NYRMfu_jB_MWgcQXWoo56aJRsYidsazNC4VcexP1u_JO4W4IVSvrcToIPwAaQQsCimi6v1isze7bW7vO4KziGMwIytJHH_A/w640-h322/FrA_UWYX0AEiOuU.jpg" width="640" /></a></div><p class="MsoNoSpacing" style="text-align: justify;">Higher interest rates also eroded the value of long-term
bonds that SVB and other banks gobbled up during the era of ultra-low,
near-zero interest rates. This was a massive blow when it is found that
the SVB’s $21 billion bond portfolio was yielding an average of
1.79% — the current 10-year Treasury yield is about 3.9%.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgFy438MCDy3g_mtDZK6YOjggHHLoLdpKKIb5bych1jbJLFtQKKiqHfRiYfk-AvVyk4Wcr_zYhAtPPATEYw8nZ3ZPSOZDlLCf55fq9Xn2DB5mdRy0sHGaBNEzTSQ6WyjI6Eur4cDQbxsQ6ZiOHkmcFwL94OHLtQoE-c6y04RtqfbFH2RLz_FxsQlv6MEw/s1926/Fq8PQY_WAAYXX-F.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1016" data-original-width="1926" height="338" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgFy438MCDy3g_mtDZK6YOjggHHLoLdpKKIb5bych1jbJLFtQKKiqHfRiYfk-AvVyk4Wcr_zYhAtPPATEYw8nZ3ZPSOZDlLCf55fq9Xn2DB5mdRy0sHGaBNEzTSQ6WyjI6Eur4cDQbxsQ6ZiOHkmcFwL94OHLtQoE-c6y04RtqfbFH2RLz_FxsQlv6MEw/w640-h338/Fq8PQY_WAAYXX-F.jpg" width="640" /></a></div><p class="MsoNoSpacing" style="text-align: justify;">The impact on the capital market will
be that banks' stocks will fall and financial contagion calls will trigger
resulting in more correction for the stocks. Further startups will get stuck in the vicious cycle of funding crisis spilling over to other segments. Layoff numbers
will come up higher.</p><p class="MsoNormal" style="text-align: justify;">SVB has invested in around 21 Indian startups,
as per Tracxn data, but the exact investment amount is
unclear. Other startups that raised funds from SVB include Bluestone, Carwale,
InMobi, and Loyalty Rewardz. Tracxn data also shows that SVB has not made
significant investments in Indian startups after 2011. The Tracxn list includes
Paytm, Paytm Mall, and One97 Communications.<o:p></o:p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjrx8xN7tf-PWP__m06kS1jcffwYypqBKVzuyHqSfSVTZUEJdJlGP_zBkyU8CjnaKSi3TZQpizoSqRxst4yL603Kg4_1MetI0KhDvD3yIo28D6W7raf2qiH6wDO6kZUtu0_Rx9khbNsszFlDhPVoCjQFT0aTIgW_zhLfmoCEXLNZKsa5v8u_KBouh6PZQ/s603/FrBRQapXgAcTSx0.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="452" data-original-width="603" height="480" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjrx8xN7tf-PWP__m06kS1jcffwYypqBKVzuyHqSfSVTZUEJdJlGP_zBkyU8CjnaKSi3TZQpizoSqRxst4yL603Kg4_1MetI0KhDvD3yIo28D6W7raf2qiH6wDO6kZUtu0_Rx9khbNsszFlDhPVoCjQFT0aTIgW_zhLfmoCEXLNZKsa5v8u_KBouh6PZQ/w640-h480/FrBRQapXgAcTSx0.jpg" width="640" /></a></div>INDRANEEL SENGUPTAhttp://www.blogger.com/profile/16737884422257285340noreply@blogger.com0tag:blogger.com,1999:blog-8425320452010909021.post-61529798882373387272023-03-12T15:41:00.003+05:302023-03-12T15:52:20.333+05:30Silicon Valley Bank is Contagion on the Global Equity Market from Monday<p> <a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhXg5jkUCWV9AD1ASUt7by2RW04sfOg49G_t9enSQ-fxUQOyIMxGPLEKSpUrEdPahxnfZzwnqJZQWVLhHvU4qIuZTWtb8ChAKYHZXO06q1fdThNoHEzaC0h9WvwVuNl60MT9sBJbwooEcFYOzLQ_4m8ySdbSe1zWqii0PAq6ABPPGIkiURVCANdZIse/s1200/1200x799.jpg" style="margin-left: 1em; margin-right: 1em; text-align: center;"><img border="0" data-original-height="799" data-original-width="1200" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhXg5jkUCWV9AD1ASUt7by2RW04sfOg49G_t9enSQ-fxUQOyIMxGPLEKSpUrEdPahxnfZzwnqJZQWVLhHvU4qIuZTWtb8ChAKYHZXO06q1fdThNoHEzaC0h9WvwVuNl60MT9sBJbwooEcFYOzLQ_4m8ySdbSe1zWqii0PAq6ABPPGIkiURVCANdZIse/w640-h426/1200x799.jpg" width="640" /></a></p><p></p><p style="text-align: justify;"><span lang="EN-US">Don't be shocked that before the collapse information came to light that the Silicon Valley Bank employees received their annual bonuses Friday just hours before regulators seized the failing bank, according to people with knowledge of the payments. The size of the bonuses has not been determined but Glassdoor.com states that they typically range from $</span>12,000 for associates to $140,000 for Managing Director.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiDq9ryQdMfIfpS2BDU1gQBv6vaGrOCqNFKJSkaI-255tAhewZuHfCT6BB4tOFHrgAeXgbEDwDvm1CqAyleSqmRMFM9280_GHovSaVk0PqehkpSFJ0XRE5qDIZe1wp-XvIi_FWgKCSgzdYF9CRTwSNlqCSfbqFyNkmohZp9gOcNUy2mQ_QXF81J1HJbaQ/s960/FrAn1BwaQAA0S43.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="866" data-original-width="960" height="578" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiDq9ryQdMfIfpS2BDU1gQBv6vaGrOCqNFKJSkaI-255tAhewZuHfCT6BB4tOFHrgAeXgbEDwDvm1CqAyleSqmRMFM9280_GHovSaVk0PqehkpSFJ0XRE5qDIZe1wp-XvIi_FWgKCSgzdYF9CRTwSNlqCSfbqFyNkmohZp9gOcNUy2mQ_QXF81J1HJbaQ/w640-h578/FrAn1BwaQAA0S43.jpg" width="640" /></a></div><br /><p style="text-align: justify;"><span lang="EN-US">The collapse of the Silicon Valley Bank (SVB) is going to be a big blow for the Indian tech unicorns and SaaS startups which were the biggest customers of </span><span color="windowtext">SVB</span>. Yes, this might sound to be too harsh but the truth is that liquidity crunch carnage is about to begin and we will witness a serious impact on many companies that are listed in the market across the globe. Since a majority of YCombinator-backed startups, typically deposit their first cheques in Silicon Valley Bank (SVB). They are now scrambling for working capital as the bank collapsed. Nearly $175 billion of the bank's customer deposits are now under the control of the Federal Deposit Insurance Corporation, or FDIC.</p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgRcy8pWLjmLlooCVm5arYukQ4YYrwyb4Ls45cygpHL9VQPW4_vIGhuY57yyDINJKLcfJPLzOVGxINDbVfgoHogMORap_TQxluD9lwUrCOYZoRm2V5pzRLgLg7w_6k490jbwh8wlDRRR6R3ajoPdvseFDIzcFJddrQVbrstulsyOdHkX794m4dBbwqa/s2424/FrAVPigX0AIV8Ln.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1516" data-original-width="2424" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgRcy8pWLjmLlooCVm5arYukQ4YYrwyb4Ls45cygpHL9VQPW4_vIGhuY57yyDINJKLcfJPLzOVGxINDbVfgoHogMORap_TQxluD9lwUrCOYZoRm2V5pzRLgLg7w_6k490jbwh8wlDRRR6R3ajoPdvseFDIzcFJddrQVbrstulsyOdHkX794m4dBbwqa/w640-h400/FrAVPigX0AIV8Ln.png" width="640" /></a></div><span style="text-align: justify;">This carnage is a contagion that will spill over to other assets and markets. For example, the SVBCollapse has also caused hefty share price losses for German banks. Half of this year's price gains have been wiped out within less than a week. German Banks Index trading at 1980s levels. Silicon Valley Bank. Silicon Valley Bank closed in 2nd biggest bank failure in US history, sending shock waves around the world. The market is treating this as a potential contagion risk.</span><p></p><p class="MsoNormal" style="text-align: justify;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgou8W89XuMxkCuZKcTAOAOejEGMTOcxx91MDPBXB6lFPZhpq9G2p6aKus3YmoTa9ugNVK_rnjDojl0N3QS9vGTSd0B91PyBuvZfcAKXDCINZaeKAl4tuMV_NIGhqHmlJMvr7_gWPEo1lVlwTm9DhHrgGr1bdX3Atj0sQHhsAVIEWIixf_gi4JTGNLK/s2430/Fq7L07BX0AEjeeK.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1522" data-original-width="2430" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgou8W89XuMxkCuZKcTAOAOejEGMTOcxx91MDPBXB6lFPZhpq9G2p6aKus3YmoTa9ugNVK_rnjDojl0N3QS9vGTSd0B91PyBuvZfcAKXDCINZaeKAl4tuMV_NIGhqHmlJMvr7_gWPEo1lVlwTm9DhHrgGr1bdX3Atj0sQHhsAVIEWIixf_gi4JTGNLK/w640-h400/Fq7L07BX0AEjeeK.png" width="640" /></a></div><span lang="EN-US"><div style="text-align: justify;"><span lang="EN-US">Startup companies that had Silicon Valley Bank accounts with more than the $250,000 maximum insured by the FDIC have become unsecured creditors, banking experts</span>. The bank lost $1.8 billion in part to losses in a $21 billion Treasury bond portfolio. Fears of contagion have reached Canada, where the bank’s loan book has doubled in the past year. SVB had branches in China, Denmark, Germany, India, Israel, and Sweden, too. Founders are warning that the bank’s failure could wipe out startups around the world without government intervention. As of December, more than 95% of the bank’s deposits were uninsured, according to regulatory filings. Many of these depositors are startups, and many are concerned that they will not be able to make payroll this month, which in turn could spark a wide wave of failures and layoffs in the tech industry.</div></span><p></p><p class="MsoNormal" style="text-align: justify;"><o:p></o:p></p><p class="MsoNormal" style="text-align: justify;">Global indices will correct and will fall since as many startups will not be able to make any payment as the liquidity is now trapped under the beds of SVB. Markets will take this hit for a long until the problem of liquidity is resolved. Many layoffs might happen and this will have an impact on global consumption. At the same time MSME exchanges will get a massive hit and short selling might be a risky trade. Further many billionaires will rush to buy SVBs in pursuit of getting hold of startups across the globe. Questions on valuations will rise and getting funding will be difficult when the VC and Pe have already pulled their hands off the funding.</p><p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">Emergency funding programs might come up from the government end but in the scenario of high-interest rates, it would be interesting to witness whether these programs are zero interest ones how they pan out to be. The biggest impact will be on the countries like India where the startup impact will be extended and funding will dry down completely.<o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">Fund managers are reworking currently the new investment framework due to rising interest rates creating alternative opportunities for investing apart from equity or VC funding. The current dry-down is creating opportunities and cleaning up the system of high valuations. Gone are the day when napkin a business proposal used to get funded even before the product came to life. Strategies of startups have come under big questions and now running the business is tougher since<o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">VC funding has dried up and one of the key reasons is that they raise money from Limited partners such as endowments and pension funds. Since 2020 these funds failed to generate a return from the Debt product segment as interest rates were zero. With the sudden hike in interest rates debt has become more attractive and hence the ocean of VC has dried up. With this SVB issue, the crisis will deepen and spill over to major uncertainties. </span></p>INDRANEEL SENGUPTAhttp://www.blogger.com/profile/16737884422257285340noreply@blogger.com0tag:blogger.com,1999:blog-8425320452010909021.post-79327840779413577842023-03-05T08:52:00.010+05:302023-03-05T13:19:48.489+05:30COST ACCOUNTANTS CAN ONLY GROW WHEN THEY MOVE OUT .<p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"> <a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiWBX52hiZn21v-dLvNnFK-4ERsBz-gH5XeANOGYUxBnTNcTZxRJQk2-BqGYcVa2AlkZ18qlWWDJkTqp2_5Yg3wS38aIZp1f2y_pP62vbgJWyd2gQ5A3UF3oyEANta-9fgoi23jQfN0tRFdUb6BSZ1skH2cKtlB7iuhmekTsiNH4tN6BKM9FNJ9iEiWPg/s2400/mindset-webinar-2.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em; text-align: center;"><img border="0" data-original-height="1256" data-original-width="2400" height="334" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiWBX52hiZn21v-dLvNnFK-4ERsBz-gH5XeANOGYUxBnTNcTZxRJQk2-BqGYcVa2AlkZ18qlWWDJkTqp2_5Yg3wS38aIZp1f2y_pP62vbgJWyd2gQ5A3UF3oyEANta-9fgoi23jQfN0tRFdUb6BSZ1skH2cKtlB7iuhmekTsiNH4tN6BKM9FNJ9iEiWPg/w640-h334/mindset-webinar-2.jpg" width="640" /></a></p><p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">The condition of the West Bengal
economy speaks very loudly that Industrial development is far away to happen
and the contribution of the state towards the $ 5 trillion Indian GDP will be
very minuscule. The condition of the state in terms of education has become a
nightmare after the latest unveiling of the corruption
scandal. There was a time in the period late 1980s and early
1990 the West Bengal Board exam question paper used to get leaked
now the teacher himself is less educated to teach your kids in the
new age of 2020s.<o:p></o:p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgFOXM3fBVjDqxt0jOmD7yUnAF7NuNxwVXDN4SMoSCmGWS9qSzWkmcnjmIXuiIn5MacxvM_yNJ0oXJdAihvQcUsBSnWepZzreHOvUoOGmOwfroRnKQVCVxRdigH748HfM9wbVWzAoIa3_n8XMlO2YQ7N8hSAoRswWtT8GiVz-pZGX3SxLSTDj8iZD-Z7Q/s640/1657020854_State_Start_up_ranking_Drishti_IAs_English.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="542" data-original-width="640" height="542" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgFOXM3fBVjDqxt0jOmD7yUnAF7NuNxwVXDN4SMoSCmGWS9qSzWkmcnjmIXuiIn5MacxvM_yNJ0oXJdAihvQcUsBSnWepZzreHOvUoOGmOwfroRnKQVCVxRdigH748HfM9wbVWzAoIa3_n8XMlO2YQ7N8hSAoRswWtT8GiVz-pZGX3SxLSTDj8iZD-Z7Q/w640-h542/1657020854_State_Start_up_ranking_Drishti_IAs_English.png" width="640" /></a></div><br /><p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span lang="EN-US">Going by the
size of the economy in terms of gross state domestic product, or GSDP, West
Bengal ranked sixth among Indian states in 2011-12. Its rank remained the same
in 2018-19 according to both current prices and constant (2011-12) prices.</span> Freebies
to support people through various schemes are not a successful road map for
state development. Making states poor through lack of industrial opportunity
leaves no other options for the government to come up with freebies used a
stool to make people live for voting and also for vote bank.</p><p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><o:p></o:p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjtqbaiqA1mEAej6lMiWl0fzumeDeSl6ho8vVJi_psrCx-BcSBpskkMeyxIWfvYD924nrPTRvpret0JhG1C55X28qO6VAOsEfZ53gP0M4suJyirJbDdGNUTZzPEQqK4P-0GBVgS7Ne1a6O1kDZ0-1nyqyuJ8XARQnALKEqrKQgYcMnho357dBfpKX4z8Q/s1200/start-up_gf-1_1.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="908" data-original-width="1200" height="484" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjtqbaiqA1mEAej6lMiWl0fzumeDeSl6ho8vVJi_psrCx-BcSBpskkMeyxIWfvYD924nrPTRvpret0JhG1C55X28qO6VAOsEfZ53gP0M4suJyirJbDdGNUTZzPEQqK4P-0GBVgS7Ne1a6O1kDZ0-1nyqyuJ8XARQnALKEqrKQgYcMnho357dBfpKX4z8Q/w640-h484/start-up_gf-1_1.jpg" width="640" /></a></div><br /><p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">The lack of
industrial opportunities has created thousands of Food Bloggers who are roaming
the street to create and provide restaurant reviews. Well, thanks to YouTube to
make an earning but the number of restaurants is less and now the food bloggers
are 3 times the number of restaurant. The lack of jobs has compelled these
people to become food bloggers.</p><p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><o:p></o:p></p><p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span lang="EN-US">In terms of
Startups and Research and Development, the state is so behind that no one
bothers to dig the original numbers. Further, the numbers of startups you find
in West Bengal are Wow! Momo, Hoicho. The state has been able to garner around
$153 Mn in funding raised between 2014 and H1 2022. If we compare it with other
states one will be surprised. These are neither
manufacturing startups nor MSMEs. This is the reason why you find so many food
bloggers roaming on street. The intellectual capital of the state has migrated
long back and every year migration numbers are increasing due to a lack of
scope and extensive political interference.</span><o:p></o:p></p><p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiQpaA8mRLPzrIB0ZzDsu8X9y9wjFnO3wtdye5nQXUKHi5HKuc73VQueK3SSaiuryBQbqesZlHnrY1kHUgc1j_KYgPEZdTNmMvjzEonLqCye57--quAejVwCWVbTggHheVQ2nxTNIMs1bZHVZEMdGSSiA21SWisezXUdKVDmaLBXTW6xNElKYgb3xlvUA/s1200/start-up_gfx-2_1.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="837" data-original-width="1200" height="446" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiQpaA8mRLPzrIB0ZzDsu8X9y9wjFnO3wtdye5nQXUKHi5HKuc73VQueK3SSaiuryBQbqesZlHnrY1kHUgc1j_KYgPEZdTNmMvjzEonLqCye57--quAejVwCWVbTggHheVQ2nxTNIMs1bZHVZEMdGSSiA21SWisezXUdKVDmaLBXTW6xNElKYgb3xlvUA/w640-h446/start-up_gfx-2_1.jpg" width="640" /></a></div>In this
context, many National levels governing bodies have moved out of West Bengal or
have shifted their operational activities out of the state to other developing
states keeping the Old buildings as just a mark of memory.<p></p><p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><o:p></o:p></p><p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span lang="EN-US">The Institute
of Cost Accountants of India/ ICWAI/ ICMAI head office is based in West Bengal.
Well, when there is hardly any industry development the same Headquarter Office
should be shifted from west Bengal, and if not Delhi make it shift to the West
or Southern part of India where major Industrial development is happening. The
production Linked Incentive has pointed out very Cleary where the capital of
investments is flowing to which state. There have been long debates
about shifting the H.O. to Delhi where the other two National Bodies – The
Institute of Chartered Accountants and the Institute of Company Secretariat are
based. But due to the dual qualification-based members of ICWAI, the same was
never acted upon. Hence the profession has kept losing its sheen. Well, place
of location also creates an impact in today’s world of 2023. This is the fact
that the profession has lost many opportunities due to dual qualification-based
politics. </span><o:p></o:p></p><p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span lang="EN-US">There was a
time when many Cost accountants used to earn from sales tax and income tax
–where doing setting with the various “Babus” used to make a living for them
and hence that used to be treated as an opportunity for the profession to grow.
Well, now that living is now Dinosaurs' time. </span><o:p></o:p></p><p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span lang="EN-US"> Having
the H.O. in west Bengal has created only negative impact and loss for the
profession for the last 2 decades. Shifting of the H.O. will lead to the
creation of opportunities for better service and recognition to the industries
beyond Felicitation on the stage of members. The cost Accountant
salary packages of the top 10 guys do not reflect that everyone gets the same
package. The recognition of the institute is not to be taken as only cost
management but strategic cost management. The Institute of Cost Accountants of
India / ICWAI/ICMAI/ has the ability through is curriculum to play a
significant role where it can provide the following things.</span><o:p></o:p></p><ul type="disc">
<li class="MsoNormal" style="background: white; line-height: 18pt; text-align: justify;"><ul type="disc">
<li class="MsoNormal" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; line-height: 18pt; text-align: justify;"><span lang="EN-US">Institutional support
for entrepreneurship and innovation</span><o:p></o:p></li>
<li class="MsoNormal" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; line-height: 18pt; text-align: justify;"><span lang="EN-US">Equitable access to
resources, funding, and market incubation</span><o:p></o:p></li>
<li class="MsoNormal" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; line-height: 18pt; text-align: justify;"><span lang="EN-US">Mentorship support</span><o:p></o:p></li>
<li class="MsoNormal" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; line-height: 18pt; text-align: justify;"><span lang="EN-US">Enabling capacity
building</span><o:p></o:p></li>
<li class="MsoNormal" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; line-height: 18pt; text-align: justify;"><span lang="EN-US">Future readiness and
focus on sustainability</span><o:p></o:p></li>
</ul></li>
</ul><p class="MsoNormal" style="background: white; line-height: 18.0pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span lang="EN-US">But being based out of West Bengal leads to shame for the profession and
for the H.O. to act compared to what it deserves to Act. If the
state of West Bengal has such a poor corrupted state of its education system
and industrial growth then what type of opportunities it will be able to
provide for the Institute is a big question mark. It’s high time to
shift the H.O. from West Bengal to Delhi. The biggest question for the people
of Bengal is what contribution you find the state will add to the objective of
the $5 trillion economy of India.</span><o:p></o:p></p><p class="MsoNormal" style="background: white; line-height: 18.0pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span lang="EN-US">We will be coming across a broader perspective of the professional role
in Today’s new age economy and how it can be part of the $ 5 trillion economy
moving away from the word Cost. If the profession of Cost Accountants wants to
flourish/grow exponential and be a key contributor to the new age of the Indian
economy toward the path of $5 trillion GDP it’s high time to move the institute
to West Bengal.</span><o:p></o:p></p><p class="MsoNormal" style="background: white; line-height: 18.0pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span lang="EN-US">West Bengal industrial development means, currently having small size
restaurants and becoming and Microenterprise. Well, corruption can be of many
forms but when the same comes to the form of education, then it destroys a
particular generation for at least 3 to 4 decades which creates an immense
impact on the state economy. We have seen the impact in the 80s era and now we
are witnessing the intellectual mindset of the citizens. When teachers are
non-qualified the education level drops at the national level making it more
competitive and tough for the students at home to fight for
recognition. One needs to move ahead of “<b>Maach and Bhaat”</b></span></p>INDRANEEL SENGUPTAhttp://www.blogger.com/profile/16737884422257285340noreply@blogger.com0tag:blogger.com,1999:blog-8425320452010909021.post-10804919253621465822022-10-11T09:35:00.005+05:302022-10-11T09:35:35.487+05:30EU SLOWDOWN Brings Opportunity for India<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjTV-i1CcmGjKkPwVam1KeOiO7WQxcVo4QAbYoQXQfEUyTh2W-oVqBkW5_WA0lOMdiHUoQdqiFL2GhoQWnjxmdKCIvUOH2UvkspzUR4zsJ1n_f1kVm37ZNJ3AViKQkDntwbtDrB7gPVeA5q0V_3Yg0to1JUUfR_akRwvPm5NO4d73E1uJNAs4nSFq91gQ/s318/download%20(1).jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="159" data-original-width="318" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjTV-i1CcmGjKkPwVam1KeOiO7WQxcVo4QAbYoQXQfEUyTh2W-oVqBkW5_WA0lOMdiHUoQdqiFL2GhoQWnjxmdKCIvUOH2UvkspzUR4zsJ1n_f1kVm37ZNJ3AViKQkDntwbtDrB7gPVeA5q0V_3Yg0to1JUUfR_akRwvPm5NO4d73E1uJNAs4nSFq91gQ/w640-h320/download%20(1).jpg" width="640" /></a></div><p class="MsoNormal" style="text-align: justify;">Many investors are in dilemma to
understand that the current slowdown of the EU and US economies is completely
different and will have a marginal impact on emerging economies like India.
Further Rupee deprecation is being taken in a setback manner keeping history in mind but this time the rupee depreciation will play a big advantage
for the Indian economy.</p><p class="MsoNormal" style="text-align: justify;"><o:p></o:p></p><p class="MsoNormal" style="text-align: justify;">The investors are not able to get
clear that this slowdown of developed economies is very much different when
compared to the historic slowdown impacting emerging economies. We don’t rule
out that emerging economies like India will not have any impact from this
slowdown but the depth of the impact will much mild as compared to
history. Currently developed economies are working out
on governmental subsidies, the ordinary people's daily lives don't
see a major change, but in the long term, the high debts and the weakening
national strength will eventually impact the people's livelihoods in the
continent. This is going to be a broader problem going ahead.<o:p></o:p></p><p class="MsoNormal" style="text-align: justify;">In another way, it is found
that emerging economies like India will benefit from the slowdown. In the
coming months, India’s exports will grow and currency depreciation will big boon
for Indian corporate. The current slowdown of the EU and US economy is a different picture altogether where manufacturing is getting halted due to high
energy costs not due to financial crisis. But as the demand remains in place the
cost of manufacturing becomes less feasible and hence import becomes a wise
decision. This is the grey place where Indian manufacturing and its exports
will grow. For example, <span style="color: #404040;">as
manufacturers in Germany face energy bills of up to 10 times more than what
they paid two years ago, one in five engineering firms saw the risk of
relocating at least some of their business overseas, a survey by the German union
IG Metall showed last month.</span><o:p></o:p></p><p class="MsoNormal" style="text-align: justify;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFgDyOqcyXp2YQLVIjlZ1WNBnXZ-4iW83SitYrA-8ks-gPX8JQPkulusYFcOtFfNGz45Qabm09ULb2riKmovrWz1pAnr5Hn43v8bKLd4413CVytB8Kz-dvMC0k1C_sTqycEBRt3aKqOM5uwvUFzaZCCyi9pj3UbklIKuvlYDdcap3dRf7cYh8UWRXz6Q/s608/10-10-22-5.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="428" data-original-width="608" height="450" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFgDyOqcyXp2YQLVIjlZ1WNBnXZ-4iW83SitYrA-8ks-gPX8JQPkulusYFcOtFfNGz45Qabm09ULb2riKmovrWz1pAnr5Hn43v8bKLd4413CVytB8Kz-dvMC0k1C_sTqycEBRt3aKqOM5uwvUFzaZCCyi9pj3UbklIKuvlYDdcap3dRf7cYh8UWRXz6Q/w640-h450/10-10-22-5.jpg" width="640" /></a></div>If we look at the EU car
sales figures. Eight months into 2022, overall volumes contracted by
almost 12% to reach some 6 million new cars sold. These numbers will fall down
more as production is getting halted and demand is getting disappeared from the EU
market. The input cost index from the JPMorgan Global Manufacturing
PMI survey, compiled by S&P Global, edged higher in September, indicating a
slightly faster rate of the price increase. We will witness major shocks from
developed economies' macro numbers in coming quarters. the number of companies
reporting average input costs to have been driven up by energy prices rose in
September, jumping to 4.7 times the long-run average – the highest seen since
data were first available in 2005.<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEioKi9fnGEC_ctGAxpWzCx5BV3lvRSlSKPEXfhLLof1JJDEyExBQ2hytQLMRNcR2iaFwc7m8kcbIvXwbys-QQq-YZKt_CjXSpXATO_QhezGiwIfSX4b93Znrkn-1h-tWVhUFBxBwylWO2IWDBSQAh0Hsw5YsOWsolxXZcV7-orCJmVwkoWHKiymCuGfcQ/s724/10-10-22-9.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="724" data-original-width="562" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEioKi9fnGEC_ctGAxpWzCx5BV3lvRSlSKPEXfhLLof1JJDEyExBQ2hytQLMRNcR2iaFwc7m8kcbIvXwbys-QQq-YZKt_CjXSpXATO_QhezGiwIfSX4b93Znrkn-1h-tWVhUFBxBwylWO2IWDBSQAh0Hsw5YsOWsolxXZcV7-orCJmVwkoWHKiymCuGfcQ/w496-h640/10-10-22-9.jpg" width="496" /></a></div><p class="MsoNormal" style="text-align: justify;">Coming back to the global market
opportunities for India well, more importantly, this problem of the energy crisis is
not short-lived and will continue for a longer time frame for the developing
nations. The energy crisis will not disappear so easily and moreover, this
winter is not going to be the last winter for the energy crisis. Further
many manufacturing bases will shift out from the EU and will move to India in the coming
days. In major EU economies, purchasing energy from the US with extremely high prices
is a situation forced by the geopolitical crisis but this does not solve the
manufacturing industries' high cost of operations reducing margins and further
corporate profits. High labor and other costs in Germany have been driving
many companies to relocate parts or all of their business to cheaper locations
in emerging economies.</p><p class="MsoNormal" style="text-align: justify;"><o:p></o:p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjRs88SxVtFCLHIRsHUftxOBNBehVL-zMGa_LveYlLTyauUA01ay4Sl8PLBvWkjcRuPZHEMcsjoxwTTs9TXfiRYdZuN_L5qmUJ9zSe37xkCLfBRP2ouvIkYSnH0eo3bmGdqJv-jTq_GDdUEpYWrDxWHk7gOICnUJ5zGT5XfEnUI8eIiQ5AmAgxFR6t6rg/s594/10-10-22-6.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="428" data-original-width="594" height="462" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjRs88SxVtFCLHIRsHUftxOBNBehVL-zMGa_LveYlLTyauUA01ay4Sl8PLBvWkjcRuPZHEMcsjoxwTTs9TXfiRYdZuN_L5qmUJ9zSe37xkCLfBRP2ouvIkYSnH0eo3bmGdqJv-jTq_GDdUEpYWrDxWHk7gOICnUJ5zGT5XfEnUI8eIiQ5AmAgxFR6t6rg/w640-h462/10-10-22-6.jpg" width="640" /></a></div><p class="MsoNormal" style="text-align: justify;">Most importantly in the coming Q4 and Q1
results of developing nations will be very poor due to these high energy cost-driven manufacturing halts which will bring down their markets in the coming
Quarters. This will further divert a significant amount of inflows into
emerging markets where returns are much better when compared to EU markets.</p><p class="MsoNormal" style="text-align: justify;"><o:p></o:p></p><p class="MsoNormal" style="text-align: justify;">The sharp depreciation of the Indian rupee
followed by developed nations' slowdown and huge market potential for Indian
markets leads to a shift of manufacturing base to India. Cost competitiveness
plays the dice and clear winner in India only. The depreciating rupee
not only helps export but also will transform the manufacturing of India
since the opportunity for buyers is here not in the EU or in the US. This is
a major area that has been left unidentified.<o:p></o:p></p><p class="MsoNormal" style="text-align: justify;">At the same time, many investors
are thinking that the international crude prices are rising above $100 levels and may breach $110 before October ends might be a major problem for Indian
inflation. Well, India is buying crude from Russia at much-discounted prices
hence the impact of higher international crude prices is negligible for the
Indian market.<o:p></o:p></p><p class="MsoNormal" style="text-align: justify;">Indian economy and its exports will
find significant growth due to the ongoing high energy
cost-driven slowdown in coming quarters till the energy crisis is
resolved in developing nations. </p>INDRANEEL SENGUPTAhttp://www.blogger.com/profile/16737884422257285340noreply@blogger.com0tag:blogger.com,1999:blog-8425320452010909021.post-18193880754726251322022-09-18T20:33:00.003+05:302022-09-18T20:33:42.630+05:30WEALTH MANAGERS TO FAMILY OFFICE...DISTRIBUTION INDUSTRY 4.0<p style="text-align: justify;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjt-LwVcdZUmTYeueXCJSoHPo3V7t4nLM2P2Nx9gfAn-YLfUjOgiJgcQYtt36RsUEm4p7sLOMaL3Q9XtVW_mcGoimQPoc4L2hBthZsCzTbKeqGYZ57igGHtrGic320sxnX0e2Bqx7l0JqXaajZN9R55H3dUdlDLYWwyJZfZaW0X0eTS8WBTG0c3wNxxzQ/s658/Screen+Shot+2020-07-30+at+8.32.48+PM.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="628" data-original-width="658" height="610" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjt-LwVcdZUmTYeueXCJSoHPo3V7t4nLM2P2Nx9gfAn-YLfUjOgiJgcQYtt36RsUEm4p7sLOMaL3Q9XtVW_mcGoimQPoc4L2hBthZsCzTbKeqGYZ57igGHtrGic320sxnX0e2Bqx7l0JqXaajZN9R55H3dUdlDLYWwyJZfZaW0X0eTS8WBTG0c3wNxxzQ/w640-h610/Screen+Shot+2020-07-30+at+8.32.48+PM.png" width="640" /></a></div> <p></p><p style="text-align: justify;"><span style="text-align: justify;">If you are looking ahead to setting
up your own Family Office or becoming an IFA from being a wealth manager then
this is the best phase of your time. The rules of the game have changed and the
speed of change is much faster than ever it has been for the distribution
Industry in the last 30 years. </span><span style="text-align: justify;"> </span><span style="text-align: justify;">The
financial planning, advisory, and client management ecosystem will take a quantum jump
in the coming 2 to 3 years when the well-experienced wealth managers from
distribution outfits come up to start their own businesses.</span></p>
<p class="MsoNormal" style="text-align: justify;"> 3 years before in 2019, we came up that
Distribution Industry 3.0 depicted the transformation of the industry where
distributors need to become Manufacturers. We find NJ coming up into AMC and
Groww taking over Indiabulls AMC. In the next 2 years down the line, we will find a significant changeover in the wealth vertical where Ex bankers and wealth managers in
distribution houses will be coming up aggressively to start their own businesses.
This is nothing new but we will find a quantum
jump in terms of these family offices starting up and growing a significant AUM
base.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhQDVnmGwy7rig-Y0E8C766S6c6AXpCxxw-zBklVbUZ4XJatKOgCkHzR_YJIVnDORUeStU0OqFQFTXRKrGmMngHrSrsA2wtz6dL4E2VieRbAhjW7bL9q_kwRhmeEHypi2ZXXOkTf0C4L-7ssbFbaXawScDRnHaPx8ZPqiE9wkeGnJ5_wUsvYyVd51d7xA/s620/1648109779-6749.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="369" data-original-width="620" height="380" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhQDVnmGwy7rig-Y0E8C766S6c6AXpCxxw-zBklVbUZ4XJatKOgCkHzR_YJIVnDORUeStU0OqFQFTXRKrGmMngHrSrsA2wtz6dL4E2VieRbAhjW7bL9q_kwRhmeEHypi2ZXXOkTf0C4L-7ssbFbaXawScDRnHaPx8ZPqiE9wkeGnJ5_wUsvYyVd51d7xA/w640-h380/1648109779-6749.jpg" width="640" /></a></div><br /><p class="MsoNormal" style="text-align: justify;">In every wealth, vertical PMS and
AIF have started playing a very pivotal role in the survival of the employees.
This is well reflected in terms of the AIF industry where the AUM jumped from Rs.
3lakhs cr in 2019 to Rs.7 lakh cr as of
today. This is no doubt an upfront revenue business model which makes quantum earning
and survival way for the cutthroat competition prevailing in the distribution
Industry. PMS and AIF are going to be in high demand as the Indian economy and markets are going to reach new highs. Further new structured products will be coming
up in the next few years which will also drive significant revenue and growth for
the distribution Industry. Hence it is wise to start your own rather than working
for someone to fight for justification of 5 times revenues. For example, the unlisted share is a significant area where distribution wealth
managers turned into family offices and IFA are earning huge compared to what they used to get as salary.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgnaASEY3UaNRaomHtvoWE9nrb9t2FyW20gK7fT7SY0jUIQlSS6TiydSdC97NxvdCQdQf48rdbDiFe_OKOkIawjhu3MIztPgR-VqTmUoYud0ssddfKaosF6FkytrpTi_39cjASfM4FfokeFFQNgUFFHX6_k_YNEmXC-s4r0Eicx8S35AChym-cuvDGu1w/s640/image-40.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="480" data-original-width="640" height="480" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgnaASEY3UaNRaomHtvoWE9nrb9t2FyW20gK7fT7SY0jUIQlSS6TiydSdC97NxvdCQdQf48rdbDiFe_OKOkIawjhu3MIztPgR-VqTmUoYud0ssddfKaosF6FkytrpTi_39cjASfM4FfokeFFQNgUFFHX6_k_YNEmXC-s4r0Eicx8S35AChym-cuvDGu1w/w640-h480/image-40.jpg" width="640" /></a></div><br /><p class="MsoNormal" style="text-align: justify;"> In the last few years, we have seen that physical
assets are declining and financial assets are increasing and this trend will
continue for the next 10 years as of now. Hence there is a wide opportunity for newcomers.</p>
<p class="MsoNormal" style="text-align: justify;">On the other hand, clients are
also looking ahead for niche products away from traditional products like
Mutual Fund and direct equities. The structured products segment has taken a quantum jump due to changes in taste and preferences among the clients. PMS has
taken a sharp jump since investors don’t have much time compared to covid times
and their portfolios have increased by many folds making PMS one of the
best products.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjgyF8xDj17L3l1ItALmY5pDkSg3nO6ApVTbJbNNnrn8BYM32RTlXKJzZ3V4TUSOqS9GpzpiCSgsViHcErmuaq3PJCtyAdrjsIvtq6VlPh1sRlfWRcH3nNkUzFa-M66vgkd1mT-WJpUd6MJ1iVtjIa7p79oWRkePYwCTbT8r2Y2HEqIw9kx2G1DIP0Pjg/s640/image-39.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="480" data-original-width="640" height="480" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjgyF8xDj17L3l1ItALmY5pDkSg3nO6ApVTbJbNNnrn8BYM32RTlXKJzZ3V4TUSOqS9GpzpiCSgsViHcErmuaq3PJCtyAdrjsIvtq6VlPh1sRlfWRcH3nNkUzFa-M66vgkd1mT-WJpUd6MJ1iVtjIa7p79oWRkePYwCTbT8r2Y2HEqIw9kx2G1DIP0Pjg/w640-h480/image-39.jpg" width="640" /></a></div><br /><p class="MsoNormal" style="text-align: justify;">A wealth manager who deals
directly with clients is in the best sweet spot today. After working for
10 years and accumulating a good set of clients building up an AUM of Rs 10 cr
or more in the next 2 years is now quite easier compared to slogging one's ass
in the distribution platform. You might be called it entrepreneurship or family
office or IFA but in the end, it's freedom from this immense pressure of distribution. The stockbroking business has lost its glory due
to discount broking. Now it is just baiting to catch new clients. Today the client
does not only do diversification in investment asset class but also in terms of
the distributors and avenues through which they do investment. We have found
that in many cases wealth managers are scared that if partial or full profit
booking is done by the client the client will open up new doors for doing
fresh investments rather than getting back to the ones with whom he started.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgYRBarCzIXatXRo_MUITfYJDD48mEMHbe4J5vALt9g_Cv2X1qJgtbRlYv0kw-qhhexKxhFRPXh_QTov58U5y1TcaUqa2k1i3Yf1mtnSrViR599atvHaPz1r4Pto6NHafgDk3CRq1iOdLbZzyIZyJsMrn6P_LHGEmXWAFtbNiACp7aMFV5a8zL7BsSV7A/s640/image-41.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="480" data-original-width="640" height="480" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgYRBarCzIXatXRo_MUITfYJDD48mEMHbe4J5vALt9g_Cv2X1qJgtbRlYv0kw-qhhexKxhFRPXh_QTov58U5y1TcaUqa2k1i3Yf1mtnSrViR599atvHaPz1r4Pto6NHafgDk3CRq1iOdLbZzyIZyJsMrn6P_LHGEmXWAFtbNiACp7aMFV5a8zL7BsSV7A/w640-h480/image-41.jpg" width="640" /></a></div><p class="MsoNormal" style="text-align: justify;">The Distribution industry will
witness new breeds of quality wealth managers starting as IFA and later coming
up with their own PMS and AIF products backed by PE and VC. The dynamics of the
game have changed today. Platform service
providers are struggling today since so many 1000 platform service providers
have come up reducing the margins and glory enjoyed 5 years before. This has led to a significant reduction in the setup cost of the family office or becoming an IFA.</p>
<p class="MsoNormal" style="text-align: justify;">Most of the wealthy outfits are
now struggling with manpower and with the Indian economy and markets being in a strong position over the next 10 years it has become a very wise decision to
start and build their own AUM and own distribution setup. If anyone is looking ahead to expanding at the National level PE and VC make it much easier. We all know that bank wealth
managers are under the highest grade of pressure and this is the place where most
of the next generation IFAs are coming up.</p>
<p class="MsoNormal" style="text-align: justify;">The power of pricing and control
has moved away from the Asset Management to the Distributors in the last 10
years now the same is moving output from the hand of Distribution to the wealth
managers who are coming up and building 10 cr or 100 cr AUM over the next 3
years. The speed of building AUM has become much faster driven by social media and
knows tricks and strategies by the wealth managers. </p>
<p class="MsoNormal" style="text-align: justify;">The reason behind such aggressive
family offices opening up is intense pressure in the distribution Industry
5 times justification asked by the company.
In many cases, a misselling attitude takes birth and in many cases, wrong products are sold where margins are high in order to save from losing the
justification game. The maturity of the market has changed dramatically; now
NRI client segment is aggressively looking ahead to doing investments in India
and hence starting its own business is now the best option. Building a client base over the 10 years and
then starting your win is the best match-winning formula. Further, it is not compulsory
that you need to work for 10 years to start your own even joining hands with
others will expedite your opportunities. The earnings are also quite high since
having a book size of 10cr or 100cr leads to significantly higher income compared
to the salary you earned every month. </p>
<p class="MsoNormal" style="text-align: justify;">The power of the distribution
Industry is shifting and in the coming years, we will find significant M&A
which is nothing but consolidation in times of revenue war. </p>INDRANEEL SENGUPTAhttp://www.blogger.com/profile/16737884422257285340noreply@blogger.com0tag:blogger.com,1999:blog-8425320452010909021.post-42846555650449663782022-09-11T10:35:00.008+05:302022-09-11T12:11:18.192+05:30NEW HIGHS - BANK INDEX GROWTH ...LINKED WITH INDIAN GDP GROWTH<p style="text-align: justify;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiiuwoYeUAWFzkGqT9oY5Dfs5KgJsAnHDRw_9MZuTk5o45k8kxeiXS01KY0oXGNAe0PH10RF3883UluhtFqwi3Tkq2lqN6MHc0VU8Vv19Clz117sVeWOUlEKWYBIBuMwGueY8TikbG1uQXLYnNLTM3sI9pF2UyZ1BvXTyHFoPiulDSRHHOxCd1sU-UbxQ/s1080/Untitled%20-%20Made%20with%20PosterMyWall.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1080" data-original-width="1080" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiiuwoYeUAWFzkGqT9oY5Dfs5KgJsAnHDRw_9MZuTk5o45k8kxeiXS01KY0oXGNAe0PH10RF3883UluhtFqwi3Tkq2lqN6MHc0VU8Vv19Clz117sVeWOUlEKWYBIBuMwGueY8TikbG1uQXLYnNLTM3sI9pF2UyZ1BvXTyHFoPiulDSRHHOxCd1sU-UbxQ/w640-h640/Untitled%20-%20Made%20with%20PosterMyWall.png" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><span style="font-size: 14pt;"><div style="text-align: justify;"><span style="font-size: 14pt;">Do you know that FIIs were
tired of pulling out Rs.2.6 lakhs cr from the Indian market? What
makes Indian markets to be completely segregated from the U.S and EU market is
the real rationale behind the markets climbing new highs in the coming
days. Do You Know why FII's are coming back again and what makes Indian markets to be so good? The dollar Index is currently 20 years high for India
stating at 109 against the 2001 level of 120 which is negative since the higher
dollar index is bad for equities. U.S 10 years yield is now 3.3% followed by
higher gas prices for U.S and EU. Whereas for India the energy prices are down
by 30% followed by 10-year yields that rose 7.2% from
June 2022.</span></div></span><p></p>
<p class="MsoNoSpacing" style="text-align: justify;"><span style="font-size: 14pt; mso-ansi-language: EN-IN; mso-fareast-language: EN-IN;"> </span><span style="font-size: 14pt;">Well, the Nifty is up by
14% compared to S&P and DowJones. On the other hand, the BFSI industry will
be playing a big role in the coming quarters behind the market. Banks have also
accelerated tech investments for F22-23. We think F24-25 could surprise the
upside on cost-to-income ratios. We need to understand the rationales and
factors driving the market away from the U.S and EU market and their economic
impacts.</span></p><p class="MsoNoSpacing" style="text-align: justify;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhRYKa1RLEfqBDn3M1u604um4OJeqvyl-hyqqeL9A2u0uAJBrN2J0tDhyve5dehninNPpZYy2KZ-lAtqO2Mb9nXkO25StxLVfYn4vAYQzgd71khDmuoBdbmyaF2nzwkmFcpXGClxlyNY-8vQqWekvK9_sBT3EJYF50iRm2q_wKcyMuyx1Omr-40AU-HEA/s941/gdp%20to%20pro.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="510" data-original-width="941" height="346" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhRYKa1RLEfqBDn3M1u604um4OJeqvyl-hyqqeL9A2u0uAJBrN2J0tDhyve5dehninNPpZYy2KZ-lAtqO2Mb9nXkO25StxLVfYn4vAYQzgd71khDmuoBdbmyaF2nzwkmFcpXGClxlyNY-8vQqWekvK9_sBT3EJYF50iRm2q_wKcyMuyx1Omr-40AU-HEA/w640-h346/gdp%20to%20pro.jpg" width="640" /></a></div><p></p><p class="MsoNoSpacing" style="text-align: justify;"><span style="font-size: 14pt;">The corporate profit to GDP
of India is climbing up and has a long way to go. After rising significantly
from FY20 onwards, the aggregate profit of listed India companies stood at
Rs11.2trn, or 4.5% of GDP on a TTM basis (TTM: trailing 12 months). The ROE of
the Indian equities is yet to touch the all-time high of 2007-08
of 25-30% which is currently hovering around 15%. The prime reason
behind the same is that capacity utilization is still at 69% far from the
pre-covid phase levels. On the other hand, the credit growth of the Indian
corporates is yet to come up which is currently just around 10% YoY till July
2022.</span></p>
<p class="MsoNoSpacing" style="text-align: justify;"><span style="font-size: 14pt; mso-ansi-language: EN-IN; mso-fareast-language: EN-IN;"> </span><span style="font-size: 14pt;">To date, we had a healthy
monsoon followed by a festive season falling early which significantly pushes
up the consumption climate. The August to October GST numbers will speak very
loudly on the same. The revival of the rural demand and falling
industrial inflation adds significant margins to the corporate profits in the coming
quarter result. The pent-up demand for festival celebrations is adding more
value to the consumption which will get reflected in the quarter results.</span></p><p class="MsoNoSpacing" style="text-align: justify;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgpQPHjyfma1ksukmu0O3olWegww2ORxoDPjrpU0jFFx6W882x5g2vwgVXBVHpc94HT0Ww2wMnvB9pywi1ay3pw9qCqLgFRVumFPH7j-J4Ww3UFkLqzZ_L83bHavl9-UDFe88luQ9TImlL811D_BhRa-6Gd86jUIL6EFsNwY2jky3VTG0TWZ_ibgeU6tA/s663/capex%20to%20gdp.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="413" data-original-width="663" height="398" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgpQPHjyfma1ksukmu0O3olWegww2ORxoDPjrpU0jFFx6W882x5g2vwgVXBVHpc94HT0Ww2wMnvB9pywi1ay3pw9qCqLgFRVumFPH7j-J4Ww3UFkLqzZ_L83bHavl9-UDFe88luQ9TImlL811D_BhRa-6Gd86jUIL6EFsNwY2jky3VTG0TWZ_ibgeU6tA/w640-h398/capex%20to%20gdp.jpg" width="640" /></a></div><span style="font-size: 14pt;"><div style="text-align: justify;"><span style="font-size: 14pt;">If we look at the
government CAPEX we find significant growth and a path for significant growth
too. Government CAPEX continues to be robust (Q1FY23 saw a 57% YoY rise in
Central government Capex at Rs1.75trn resulting in a TTM Capex of Rs6.5trn).
This is getting reflected in the GVA in FY-22 to the level of 18% which is
heading towards a new all-time high. The banking credit is also supportive of
the same GAV contribution. Credit growth improved further although core sector
growth moderated. Fortnightly non-food credit growth in Aug’22 exceeded the 15%
YoY mark. Core sector growth in Jul’22 however moderated to 4.5%. If we look at the number of Capex to GDP we find that during 2012-13 it was around 35% to 40% which is currently around 28%, hence their significant way to crossover the historical highs.</span></div></span><p></p>
<p class="MsoNoSpacing" style="text-align: justify;"><span style="font-size: 14pt; mso-ansi-language: EN-IN; mso-fareast-language: EN-IN;"> </span><span style="font-size: 14pt;">This is further supported
by the manufacturing and service Index numbers
where PMI-manufacturing and PMI-services are at 56.2 and 57.2
respectively. Exports on the other side have been very strong for
India with a depreciating rupee and a robust pipeline of exporting orders. With
higher crude prices many countries are cutting down on the production of Goods
and this opens up the demand for Indian companies to produce and export. </span><u style="font-size: 14pt;">This
further supports and backups any domestic slowdown as well as supports the
growth of Indian macro numbers.</u></p><p class="MsoNoSpacing" style="text-align: justify;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi41gT_EkAHstdm1nhKDKgzeKK2SDZZAgauG_nrB4sNaVS2gjY2Ipn511nlcxqyC94-JcROsLVQZBa5LXlka20eD1DK_b-QnH9TMg94WNTexK-oXNUa07ciZxg9kyf3YvX-324EHWHoCvTNfDtqxS9Bi_0EmqWiE8P6PATNIK4VPdLQykrAMjrY44jDxg/s634/banks.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="398" data-original-width="634" height="402" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi41gT_EkAHstdm1nhKDKgzeKK2SDZZAgauG_nrB4sNaVS2gjY2Ipn511nlcxqyC94-JcROsLVQZBa5LXlka20eD1DK_b-QnH9TMg94WNTexK-oXNUa07ciZxg9kyf3YvX-324EHWHoCvTNfDtqxS9Bi_0EmqWiE8P6PATNIK4VPdLQykrAMjrY44jDxg/w640-h402/banks.jpg" width="640" /></a></div><span style="font-size: 14pt;"> </span><span style="font-size: 14pt;">The banking sector is just
on the verge of significant upheaval in terms of ratings as well as
growth. The asset quality improvisation has already happened in the
last 2 years and now the robust demand climate will come up which improves the
growth of the Industry. The loan growth acceleration sets an
earnings upgrade cycle for the industry in coming quarters. New
Capex cycles, an increase in Industrial utilization of capacities, corporate
sector profitability, and deleveraged banking sector balance sheets will help
the Banking index to climb new highs. PLI is also playing its cards
behind the Indian GVA and GDP growth.</span><p></p><p class="MsoNoSpacing" style="text-align: justify;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEijisfiG76unfAayyGmyC0_vpNSZryE07PfZqU78zz7nv1_rkowowPHlfThYUO7rtpfoWGgWXCon2p8IRD_Ppa4X8SygA8AdBS8Zbg7xkE6dDp32NpObjM-gRtZji_poeP3L4K-y-e4hsyuI_aTEqS2VNSJrJwDWtKnnq19CE6I62BL0o7E3pa9S9_UoQ/s639/capacity.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="442" data-original-width="639" height="442" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEijisfiG76unfAayyGmyC0_vpNSZryE07PfZqU78zz7nv1_rkowowPHlfThYUO7rtpfoWGgWXCon2p8IRD_Ppa4X8SygA8AdBS8Zbg7xkE6dDp32NpObjM-gRtZji_poeP3L4K-y-e4hsyuI_aTEqS2VNSJrJwDWtKnnq19CE6I62BL0o7E3pa9S9_UoQ/w640-h442/capacity.jpg" width="640" /></a></div><span lang="EN-US" style="font-size: 14pt;"><div style="text-align: justify;"><span lang="EN-US" style="font-size: 14pt;"> </span><span style="font-size: 14pt;">The recent Apple </span><span style="font-size: 14pt;"> </span><span style="font-size: 14pt;">decision for the Apple 14 manufacturing plant
in India is a big eye-opener of future growth outlooks. Digital
banking has improvised the credit market followed by significant job
creation and healthy pay packages in one segment of the economy plays a key
role behind consumer loan market growth. The SME segment doesn’t think of any
slowdown but is planning for expansion and growth which is more supported by
the PLI segment. For the quarter ending June 2022, the applicants
under this PLI scheme had undertaken sales of Rs 1,67,770 crore, including
export of Rs 65,240 crore, a NITI Aayog release said on Friday (9 September).</span></div></span><p></p>
<p class="MsoNoSpacing" style="text-align: justify;"><span style="font-size: 14pt;">This PLI is becoming bigger
since the govt will get more manufacturing hubs in India replacing china and
this would improve the performance of quarterly results. If we look at the bank
index we find that the Bankex has risen 73% over the past two years, compared
to 53% for the Sensex. Capital ratios of the banks have improved significantly
which creates significant growth opportunities for the banking industry to
contribute to the market.</span></p>
<p class="MsoNoSpacing" style="text-align: justify;"><span style="font-size: 14pt; mso-ansi-language: EN-IN; mso-fareast-language: EN-IN;"> </span><span style="font-size: 14pt;">The Indian macro is completely
riding on a different track which is not linked with EU or U.S slowdown
factors. Short-term hiccups are not be termed as a slowdown for the
Indian economy.</span></p>INDRANEEL SENGUPTAhttp://www.blogger.com/profile/16737884422257285340noreply@blogger.com1tag:blogger.com,1999:blog-8425320452010909021.post-6151249647482820552022-09-10T21:14:00.008+05:302022-09-11T08:43:18.528+05:30EU WILL GET $105/BARREL<p style="text-align: justify;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhrEDMJo3ngbhOQJ8Hdumx0f2jfOeNhAwi7FAh_AKuaOKSNnS-pZQmnO8ZiSxMeBe_ATXduUQ2JZ5yJz1YS3ZXVt6LNjy-8kyKh6hOVmJeV1Bz9gOxjwRGwaj2FzKzY3lKALppWwMQHN5xBlF0GjBbS-sMkW9V0vY-0Zd2cXGD3duEGkIVhXcOwBnfUuw/s284/images.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="177" data-original-width="284" height="399" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhrEDMJo3ngbhOQJ8Hdumx0f2jfOeNhAwi7FAh_AKuaOKSNnS-pZQmnO8ZiSxMeBe_ATXduUQ2JZ5yJz1YS3ZXVt6LNjy-8kyKh6hOVmJeV1Bz9gOxjwRGwaj2FzKzY3lKALppWwMQHN5xBlF0GjBbS-sMkW9V0vY-0Zd2cXGD3duEGkIVhXcOwBnfUuw/w640-h399/images.jpg" width="640" /></a></div><br /><div style="text-align: justify;"><p class="MsoNormal" style="line-height: normal;"><span lang="EN-US">There is nothing much
to be happy about for crude coming down to $85/barrel since very soon it will
be around the range of $100 to $105/ barrel and much before that India will
face some international political pressure for not buying crude from
Russia. But if the world faces any Covid-type situation crude might plunge
below $50 so as the global economic growth and stock markets across the globe.</span></p><p class="MsoNormal" style="line-height: normal;"><span lang="EN-US"> Currently, most of that oil in that build came from the Strategic Petroleum
Reserve but as soon as these reserves get depleted and refiling activity begins
the demand for crude will increase and vice versa the price. The prices came
down due to China's lockdown and slowdown fears, but these are short-lived
rumors since demand can change at any point. Once October kicks in
we will find the heat of the OPEC decision and winter speculation rising up. The threat price will be more form geo-political pressure created by U.S and the EU is haste to punish Russia before December 5th which will play its cards.<o:p></o:p></span></p><p class="MsoNormal" style="line-height: normal;"><span lang="EN-US">The complete gas
stoppage of Russia for the EU will bring significant demand for crude oil in
the coming months. LNG price will be decided more by China in
terms of demand coming from them in winter further how strong the EU winter
will be is also going to decide the crude price. This demand play will decide
the fate of crude oil. Till now all the decisions and rationales of
calculations are based on the that it will be moderate winter for the EU but if
we have a winter like 2012 where 20 billion cubic meters of gas was consumed
then we will find crude to have a very high price as the consumption will
increase being an alternative to crude.<o:p></o:p></span></p><p class="MsoNormal" style="line-height: normal;"><span lang="EN-US"> The EU problem
will not get over even in the 6 months since they will have a summer next year
and the current storage will not last till that time. Further moving from gas
to alternative energy is a long cakewalk. Hence crude is the only immediate
support for the EU in the coming days. As per the Dutch TTF gas contracts 272
Euro per megawatt. This has gone up by 400% in just one year and will go up to
500% by this winter, pinching the EU citizens. The biggest wrong decision being
adopted by the EU is cutting down industrial use of gas which means no
manufacturing and more job loss and a stronger recession. Now this decision
would be short-lived since the EU cannot manage the industrial gas cut-down
strategy for long hence dependency on crude increases.<o:p></o:p></span></p><p class="MsoNormal" style="line-height: normal;"><span lang="EN-US">It is not the EU alone
if we look at the data we find that volumes withdrawn from the Strategic
Petroleum Reserve were 7.5 million barrels, which dropped the total inventory
to 442 million barrels, the lowest level since 1984. The U.S. oil and gas rig
count fell by one last week to 762, the third-straight weekly decline.<o:p></o:p></span></p><p class="MsoNormal" style="line-height: normal;"><span lang="EN-US">Deutch Bank is saving
electricity to the tune of 49000 light bulbs for an hour whereas supermarkets
have started using dim lights in their hops for energy saving or rather unable
to pay huge bills. Many companies have adopted various strategies to save money
from high energy costs like cutting down on times of opening and closing up
shops and businesses. This is the very place where demand for crude will grow
significantly. In order to save the EU economy from recession, they have to
increase their dependency on crude and this is the place where demand and
prices will increase.<o:p></o:p></span></p><p class="MsoNormal" style="line-height: normal;"><span lang="EN-US">The most shocking thing
is that the global oil demand from gas to oil switch will cost more than 80% in
the next 6 months. Gas is currently 5 to 6 times more costly than crude now and
this spook the demand climate going ahead. It has been found that
the EU's total gas and power costs may rise to $1.4 trillion from $200 billion
before the war. Out of this 70% belongs to Electricity and 30% is gas which is
equal to 8% of the region’s economic output.<o:p></o:p></span></p><p class="MsoNormal" style="line-height: normal;"><span lang="EN-US">If anyone thinks that
packages like the UK will help out its citizens during winter and over the few
years well the 150-billion-pound box is twice the covid pandemic package. This
means balance sheets will swell with debt and currencies will remain volatile
giving less sleep to the EU and the world over the few years.<o:p></o:p></span></p><p class="MsoNormal" style="line-height: normal;"><span lang="EN-US">But the whole demand
increase of crude will not come from the EU alone but from Asian countries too
where it is expected that gas to oil demand will reach 47% in Q3 2022. Further
Demand for switching gas to oil is 43% of the total.<o:p></o:p></span></p><p class="MsoNormal" style="line-height: normal;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiMw508ObXTvtL0Jg5g4Lns1ru8Q_14K5yyLYVRMDl5Ic2iPoJJC-sDqCu4NQKaoGwtJcrQTJ9pOvm6q1Hr4lh1JRWsRElwHa7J2hlYQTUQdeJ-WWuHc0ffEyFASYuE3EOsjWPIYhPjswFK5reImUSMqL4UtHh_wuLxL07LHV9sQVe-GW-mcLLWLNBn2w/s552/FcHR0VZWYAU1Cwk.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="552" data-original-width="552" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiMw508ObXTvtL0Jg5g4Lns1ru8Q_14K5yyLYVRMDl5Ic2iPoJJC-sDqCu4NQKaoGwtJcrQTJ9pOvm6q1Hr4lh1JRWsRElwHa7J2hlYQTUQdeJ-WWuHc0ffEyFASYuE3EOsjWPIYhPjswFK5reImUSMqL4UtHh_wuLxL07LHV9sQVe-GW-mcLLWLNBn2w/w640-h640/FcHR0VZWYAU1Cwk.jpg" width="640" /></a></div>Energy transition will reshape the control
of the economies in this decade. We will witness expensive volatility before
this transition and might face higher prices of the extensive supply as a token
of punishment to become energy independent.EU & UK have more recoverable
shale gas reserves than Australia or Russia but this exploration will cost
climate and also will take significant time to reduce the energy dependency. Now
the fight will be over climate and the search for alternative energy source investments <p></p></div><p class="MsoNormal"><span lang="EN-US"><o:p></o:p></span></p>INDRANEEL SENGUPTAhttp://www.blogger.com/profile/16737884422257285340noreply@blogger.com1tag:blogger.com,1999:blog-8425320452010909021.post-90713650789185843662022-09-06T22:11:00.006+05:302022-09-06T22:17:26.077+05:30$2 TRILLION MARGIN CALL FOR EU IS ON ITS WAY <p><span style="font-size: medium;"></span></p><div class="separator" style="clear: both; text-align: center;"><span style="font-size: medium;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg6WuWqvn7PNDOz47dQJRWiGC_iq_c5Ie_oGt_Yjg50tKO5bIRVG7Gx5p1diaT6pynrMRqjWme2Z0BIcrxN759kfEK-5QHFCKWZ_aJF7kzkO88hG37aHRlgCFqg1Kf6nC7msWfmAqRdKR2qr-h49PO9R7uu33TGDsFHmTuPSD9ABJyMITB_SwBeehi9Ng/s307/default.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="183" data-original-width="307" height="381" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg6WuWqvn7PNDOz47dQJRWiGC_iq_c5Ie_oGt_Yjg50tKO5bIRVG7Gx5p1diaT6pynrMRqjWme2Z0BIcrxN759kfEK-5QHFCKWZ_aJF7kzkO88hG37aHRlgCFqg1Kf6nC7msWfmAqRdKR2qr-h49PO9R7uu33TGDsFHmTuPSD9ABJyMITB_SwBeehi9Ng/w640-h381/default.jpg" width="640" /></a></span></div><p class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;"><span style="font-size: medium;"><span style="background: white;">Forget
about the winter energy crisis of Europe, we find massive more pain before the
same where companies are heading for defaults in their commitment. The global
market is going to feel the heat erupting from the European energy company’s
crisis. In the last couple of hours, it is being found that there have been
significant Key Developments:</span><o:p></o:p></span></p>
<ul type="disc">
<li class="MsoNormal" style="background: white; line-height: normal; text-align: justify;"><span style="font-size: medium;">Equinor says $1.5
trillion of margin calls risk energy trading<o:p></o:p></span></li>
<li class="MsoNormal" style="background: white; line-height: normal; text-align: justify;"><span style="font-size: medium;">Fortum gets
2.3-billion-euro financing, Centrica seeks liquidity<o:p></o:p></span></li>
<li class="MsoNormal" style="background: white; line-height: normal; text-align: justify;"><span style="font-size: medium;">UniCredit, Intesa
earmark billions<o:p></o:p></span></li>
<li class="MsoNormal" style="background: white; line-height: normal; text-align: justify;"><span style="font-size: medium;">Uniper may need even
more funds from Germany<o:p></o:p></span></li>
<li class="MsoNormal" style="background: white; line-height: normal; text-align: justify;"><span style="font-size: medium;">Hundreds of local
utilities in Germany are under strain<o:p></o:p></span></li>
<li class="MsoNormal" style="background: white; line-height: normal; text-align: justify;"><span style="font-size: medium;">Truss drafts £130
billion plan for households, £40 billion for businesses; it risks running
out of control<o:p></o:p></span></li>
</ul>
<p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span style="font-size: medium;"> The bond
market is going to get rattled and margin calls on derivatives will bring
nightmares for companies across the globe. Short positions will be built over
and a massive sell-off might happen also separate funds will come up to manage
the calls. Till now it’s been found that E<span style="background: white;">uropean energy companies are </span>facing margin calls of a total
of $1.5 trillion in the derivatives market. Well, the number does not stop here
and it goes a long way. </span></p><p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span style="font-size: medium;">Margin calls on the energy derivatives market will
spill over to other nations too where the pain in energy companies becomes
unbearable. Rising prices have led to fear of defaults and hence the
energy crisis deepens creating massive problems for the EU. This $1.5 trillion
will soar to $2 trillion in the next week despite capping since price caps will
not help to cut down on demand.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span style="font-size: medium;">The state
government will get funds and would help grant loans to manage these margin
calls. The taxpayer’s money will again be deployed to save not only the margins
but also jobs in these energy companies. GDP numbers of the EU will
fall like a pack of cards and simultaneously credit rating agencies will be
pulling down the ratings which will get reflected in the bonds and equities of
these companies. <o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span style="font-size: medium;">The government
will bring down energy demand by cutting down on every aspect of the economy
creating massive unemployment and job loss. The taxpayer's bill will increase
and also government debt will swell to new highs.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span style="font-size: medium;">Very soon IMF
will have to come up to rescue many EU states, particularly the UK. The rise in
prices has seen 13% of manufacturers already reduce their hours of operation,
and 12% have been forced to make job cuts as a direct result of increased
energy bills. <o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span style="font-size: medium;">Furthermore,
42% of manufacturers have seen their electricity bills rise by 100% in the past
12 months, and 32% have also seen their gas bills double. As many as six
in 10 British manufacturing businesses are at risk of closure, according to a
recent survey. It’s a massive slowdown for them going ahead and will find many
business and manufacturing shift to other economies even for short term and
might turn out to be long term. Import of items for the EU will increase and
hence demand products in other countries will increase which will get inflation
control into a messy issue.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span style="font-size: medium;">On the other
hand, the UK is coming up with an $8 billion lithium battery Giga battery
factory. Yes, in the world of batteries UK might become the king in the coming
days. Well, we all know that every adversary comes up with an
opportunity. <o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span style="font-size: medium;">Overseas
investment from Taiwan has currently started flowing into the UK and we will
find many more nations to come up taking this as an
opportunity. This will create jobs and this shift from the
traditional models of energy sources will be a boon but prior to that, we have
significant pains to face.</span><o:p></o:p></p>INDRANEEL SENGUPTAhttp://www.blogger.com/profile/16737884422257285340noreply@blogger.com0tag:blogger.com,1999:blog-8425320452010909021.post-36000728956974176902022-09-04T10:22:00.008+05:302022-09-04T10:57:08.313+05:30EU NATIONS PROBLEM AND ITS IMPACT ON MARKET <p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">Forget about what IMF or the world bank is
projecting for the EU the ground reality is far more painful than these
documented texts and media prints. You will find social unrest and income
inequality in the coming months due to the energy price crisis. Before the war,
about 55% of their gas imports used to come directly from Russia which came
down to about 30% over the summer. But about half of all German homes rely on
gas for their heating.</span><span style="background: white; mso-ansi-language: EN-IN; mso-fareast-language: EN-IN;"> The savings ratio of the EU states is coming down due to the energy crisis. In Germany, the savings ratio has collapsed to 10.8% b/c German citizens can put aside less and less due to inflation. Will fall even further when the energy crisis hits full force.</span><o:p></o:p></p><p class="MsoNormal" style="text-align: justify;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh32wdCcCY-QzdsnsMu0TYpRw6XIHV_r2nWHl2B2Q1idjAQMA6qUjFbtcIPZ08GdYBuRz2YnQTsU0DxsOxr_mZRAGyyxRhEqSMBk-Uu-faoY9mF3mkFijDtvhHy3vhrnNXEqMisQVUQ3xGN8zS6ME7_LC1z1E8jChhzsAOgSmx3DZaU3vsCuf-LZ4kyTQ/s1280/b1336d2d-7eda-4c4b-9336-215d0ef62efa.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="694" data-original-width="1280" height="348" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh32wdCcCY-QzdsnsMu0TYpRw6XIHV_r2nWHl2B2Q1idjAQMA6qUjFbtcIPZ08GdYBuRz2YnQTsU0DxsOxr_mZRAGyyxRhEqSMBk-Uu-faoY9mF3mkFijDtvhHy3vhrnNXEqMisQVUQ3xGN8zS6ME7_LC1z1E8jChhzsAOgSmx3DZaU3vsCuf-LZ4kyTQ/w640-h348/b1336d2d-7eda-4c4b-9336-215d0ef62efa.jpg" width="640" /></a></div><span style="background-color: white;">Well, you will be shocked
that Deutsche Bank said that all their offices across Germany will no longer
get hot water in the washrooms. In n Berlin, where about 200 public monuments
are now not lit up at night. There are endless such acts across the
EU. Many EU states are having blackouts, two hours off for every six
hours. Natural gas prices topped $3100 per 1000 cubic meters in mid-August, a
610% increase over the same time last year as measured by the Dutch TTF market.
Britain’s National Energy Action charity projects an increase from 4.5 million
U.K. households to a full 8.5 million will face energy poverty this
winter.</span><p></p><p class="MsoNormal" style="text-align: justify;"><o:p></o:p></p><p class="MsoNormal" style="text-align: justify;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj9OqFDE-BAqZ8wveOUnk3J3CiDDlXGgfeICCSG51ag4-PpRn13Qh3FcVwqxbc3BIqYn9Jt3rKSQwFKHKSNH48AULkW6myoB8xdPfWmIHLLo6jB1djO7SUE2spEh1exdyveEt1JT9XefpRRu_I4RtUK57-J6cwqNkK__hbneVL0sM4btUgjeNgDFLbRLQ/s1280/1cf97f2e-024c-4f36-852b-0b9e42e076a8.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="682" data-original-width="1280" height="342" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj9OqFDE-BAqZ8wveOUnk3J3CiDDlXGgfeICCSG51ag4-PpRn13Qh3FcVwqxbc3BIqYn9Jt3rKSQwFKHKSNH48AULkW6myoB8xdPfWmIHLLo6jB1djO7SUE2spEh1exdyveEt1JT9XefpRRu_I4RtUK57-J6cwqNkK__hbneVL0sM4btUgjeNgDFLbRLQ/w640-h342/1cf97f2e-024c-4f36-852b-0b9e42e076a8.jpg" width="640" /></a></div>This Winter inflation in the Eurozone will be
expensive which is known by everyone but what is not being taken into
consideration is that there will be Greece-like conditions in the coming days.
Yes, we might get defaults in a few countries due to the rising cost of
Inflation. Further the way energy cost has gone up for the EU as a whole we
will find a significant slowdown in GDP rising from the stoppage of production.
In fact, the EU slowdown will be more prolonged due to the mess created over
the last decade with energy source management. The annual inflation
hit a record 9.1% in August within the eurozone, the highest since records
began. But inflation varied widely among EU countries, up 25.2% in Estonia,
11.3% in Greece, and 8.8% in Germany.<p></p><p class="MsoNormal" style="text-align: justify;"><o:p></o:p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjcDSdDt-5DIOG4MVUJZL_DB4CZaAAPoNZnvZqUyJuS9-eaaZyJG6lWXDuQbbLkKlW2iIAa2741cnNzYKhX8HeXnwCOMv2-zgQ31gnGXKpxbw_juey0rY45BI3Mal0l_GQq1Cp0584qzFiE_x0TLxiaNRRGcS5eE1yV_yAIkkCTnKwSMxh_EiWEoURpMw/s1280/0ceada3d-d84d-4854-9882-f0cacf52692c.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="702" data-original-width="1280" height="352" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjcDSdDt-5DIOG4MVUJZL_DB4CZaAAPoNZnvZqUyJuS9-eaaZyJG6lWXDuQbbLkKlW2iIAa2741cnNzYKhX8HeXnwCOMv2-zgQ31gnGXKpxbw_juey0rY45BI3Mal0l_GQq1Cp0584qzFiE_x0TLxiaNRRGcS5eE1yV_yAIkkCTnKwSMxh_EiWEoURpMw/w640-h352/0ceada3d-d84d-4854-9882-f0cacf52692c.jpg" width="640" /></a></div><br /><p class="MsoNormal" style="text-align: justify;"> The slowdown of the EU will be on the
consumption side as well as more due to cutting down on manufacturing which
will have a ripple effect on the economy. For example, those Stainless steel
mills are closing across Europe due to the ongoing energy crisis. As per the
calculation, around three million tons of Europe’s stainless-steel capacity is
at risk. Rising prices lead to defaults in demand and hence cutting down on
production is the way out. </p><p class="MsoNormal" style="text-align: justify;">German energy giant Uniper seeks an additional €4bn from a state-owned lender to support its business. Surging costs force utilities to extend more collateral. The German energy giant is losing €100mln a day as the shortfall in Russia deliveries now amounts to 80%.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjM-aGdV6KhCzZHDhQwSmo22Qq7sAAi1FXEqvNNa892V5zaBnSLmvxMEsCLuE5Ablp73ekBwSbu1zx4Yz-Bp_rG0cn2WtLzJ7Js1zPV5dlpMdhyfDG10ianqoRQkVYVIfgiNuItve7LGlVa9rgaREOxhoLe2Lq79eQ-tc3P_xY1XFRAJIRBjDbJM0_raw/s1280/271f7594-3b2c-42c3-becf-a9a90f852e74.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="692" data-original-width="1280" height="346" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjM-aGdV6KhCzZHDhQwSmo22Qq7sAAi1FXEqvNNa892V5zaBnSLmvxMEsCLuE5Ablp73ekBwSbu1zx4Yz-Bp_rG0cn2WtLzJ7Js1zPV5dlpMdhyfDG10ianqoRQkVYVIfgiNuItve7LGlVa9rgaREOxhoLe2Lq79eQ-tc3P_xY1XFRAJIRBjDbJM0_raw/w640-h346/271f7594-3b2c-42c3-becf-a9a90f852e74.jpg" width="640" /></a></div><p class="MsoNormal" style="text-align: justify;"><span lang="EN-US">On the other side energy cost in damaging
even battery production in the EU. In the coming months and quarters, we
will find macro numbers plummeting for the EU creating more pressure on the
Debt market in parallel to the Equity market. Well by debt I wanted to
draw attention to Italy’s total government debt is now up to $2.52 trillion,
150% of the country’s gross domestic product. It’s larger than the combined
government debts of Greece, Portugal, Ireland, and Spain, all of which were
given loans by the European Central Bank following the 2008 financial crash</span>.</p><p class="MsoNormal" style="text-align: justify;"><o:p></o:p></p><p class="MsoNormal" style="text-align: justify;"><span lang="EN-US"> </span>Hence the interest rate hike decision will
create a major setback for the global economy and more importantly, we will
find interest coming down and energy-related subsidies being given to tide over
the winter crisis. On the other hand, we will find stimulus packages in the
form of Direct Transfers to the EU countries this winter to battle out the
rising energy cost. There is no other alternative rather than increasing the
debt limits of the EU to enable the citizens to fight the rising energy cost.<o:p></o:p></p><div class="separator" style="clear: both; text-align: center;"><br /></div><br /><p class="MsoNormal" style="text-align: justify;"><span lang="EN-US"> </span>Falling GDP increases the Debt to GDP ratio
for any country and for the EU it is very easy to calculate the growth.
European Union Government debt accounted for 87.8 % of the country's Nominal
GDP in Mar 2022. This will soar to the level of 90% to 92% in the coming
winter. You will find more imports by the EU compared to the historical levels
since production in the EU is coming to a halt. This will also increase the CAD
for the EU. The below chart speaks about the default risk but what is now
depicted is the interlinked banking and financial services and the debt papers
involved between the EU 27 countries.</p><p class="MsoNormal" style="text-align: justify;"><o:p></o:p></p><p class="MsoNormal" style="text-align: justify;"><span lang="EN-US"> You will find significant social crime
growth in the EU due to rising energy costs and living life. Income inequality
and poverty levels will rise significantly in the EU in the coming quarters
creating longer problems for the economy. At the same time, the stimulus money
will be coming up for the society at large to save the people from the
energy-driven crisis. The French government has offered lower-income households
a €100 inflation bonus, the UK a £650 cost of living allowance</span>, and pensioners
will receive an additional one-time payment of £300 Italy is giving low and
middle-income families for their bills with a €200 bonus payment., Belgium
offered a payment of €225 and Germany paid each taxpayer a one-time sum of
€300. Well, these payouts will increase by around 25% to 40% in the
coming winter to face the energy crisis. </p><p class="MsoNormal" style="text-align: justify;">We will witness significant
development in bitterly and alternative energy sources coming up from the EU in the coming next 2 years. Every project on alternative energy is being
expedited for significant results in a shorter time frame compared to the
previous time frames.</p><p class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify; vertical-align: baseline;"><o:p></o:p></p>INDRANEEL SENGUPTAhttp://www.blogger.com/profile/16737884422257285340noreply@blogger.com0tag:blogger.com,1999:blog-8425320452010909021.post-63595486856135740012022-09-03T20:57:00.010+05:302022-09-04T13:17:40.407+05:30WHAT MAKES INVESTORS SCARED OF INVESTING IN THE CURRENT MARKET..WHAT THEY ARE UNABLE TO UNDERSTAND IN THE MARKET?<div class="separator" style="clear: both; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgAoXXnkPtr5Y9Sxr0-JPxVuzTht0mLRJJZYvb-HgnbrqtrW1XuhuJ2VZNprrRBSijUjyPqvZzzwrRw66O-e6vpsjcA9_RdNZctVF4pWDQQqViXqnaUa3t46V595sqOJhjeptT3lnDFbx0SnbWUmDW7LTescBtJ9LqXVRQAu5H1ttu3FLILSAL_BAmNBA/s580/980x.jpg" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: medium;"><img border="0" data-original-height="358" data-original-width="580" height="396" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgAoXXnkPtr5Y9Sxr0-JPxVuzTht0mLRJJZYvb-HgnbrqtrW1XuhuJ2VZNprrRBSijUjyPqvZzzwrRw66O-e6vpsjcA9_RdNZctVF4pWDQQqViXqnaUa3t46V595sqOJhjeptT3lnDFbx0SnbWUmDW7LTescBtJ9LqXVRQAu5H1ttu3FLILSAL_BAmNBA/w640-h396/980x.jpg" width="640" /></span></a></div><span style="font-size: medium;"><br /><span style="font-family: "Times New Roman", serif; text-align: justify;"><br /></span></span></div><div class="separator" style="clear: both; text-align: center;"><p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span style="font-size: medium;"><span lang="EN-US" style="font-family: "Times New Roman", serif;">This research insight is divided into 4 parts where
we have accentuated the comparison between the macro factors over the last 9
years, followed by the new DII, the impact of the U.S slowdown, and finally the
interest rate increase impact on the equity market. These 4 parts will help to
get clarity on our market expectations and outlook.</span><span style="font-family: "Times New Roman", serif;"> There is
too much lack of clarity and constant comparison of the market with the last 10 years
in order to get clarity on the direction of the market. It's nothing but
confusion and lack of clarity that is guiding the investors and not the market.<o:p></o:p></span></span></p><p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span style="font-size: medium;"><span lang="EN-US" style="font-family: "Times New Roman", serif;">You are still expecting Nifty to be around 15000
levels but I am sorry to disappoint you that NIFTY will surprise you with new
highs over the next 6 months. The prime problem of not being able to believe
this is that we are comparing Indian markets with the past 10 years' market
pattern and not data. If we look at the data we will find significant enough
rationales to find and understand the new Indian economy and market. If
we look at the macro factors comparison between 2013 and current we find huge
differences in the strength and maturing of the current Indian economy.</span><span style="font-family: "Times New Roman", serif;"><o:p></o:p></span></span></p><p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: justify;"><span style="font-size: medium;"><span style="font-family: "Times New Roman", serif;"> </span><a href="https://blogger.googleusercontent.com/img/a/AVvXsEguG38fQhBectm72mzurx2C5uojxl-N3dz9j3jg9z_D0kGfmZ3qiqXKQRi4EATdMm55Y1zLZXq5-QTpTI052GFBywIVj-D8oDDPP87r1ns3sEvYaECKP5CO1WPKtQqkUqYIOqkzSeeLRnN6XQNKZkl0oIkNyAmgu3E-hTg2qraTLSkxoGm3UGc4Ac_q4g" style="font-family: "Times New Roman", serif; margin-left: 1em; margin-right: 1em; text-align: center;"><img data-original-height="197" data-original-width="796" height="158" src="https://blogger.googleusercontent.com/img/a/AVvXsEguG38fQhBectm72mzurx2C5uojxl-N3dz9j3jg9z_D0kGfmZ3qiqXKQRi4EATdMm55Y1zLZXq5-QTpTI052GFBywIVj-D8oDDPP87r1ns3sEvYaECKP5CO1WPKtQqkUqYIOqkzSeeLRnN6XQNKZkl0oIkNyAmgu3E-hTg2qraTLSkxoGm3UGc4Ac_q4g=w640-h158" width="640" /></a><span style="font-family: "Times New Roman", serif;"><br /></span><span style="font-family: "Times New Roman", serif;">Well, the increase in the number of tax filing and growth in govt revenue plays
a critical role for the Indian equity market to grow more aggressively in
coming years. It also proves the strength of the market too.</span></span></p><p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span style="font-family: "Times New Roman", serif; font-size: medium;"> We have witnessed FII’s redemption to the
tune of Rs.2.6 lakhs cr resulting market to fall 16% from 18500 levels to 15200
levels and that’s too for continuous 8 to 9 months. If we look at the
historical redemption pattern of FII’s outflow and market fall we will find
that NIFTY should have been at 10000 levels and we should have entered the bear
market phase. But we stopped at 15200 and we rebounded from that levels back to
18000 levels within the last couple of months. The reason being the DII’s
market has transformed significantly in the last decade. The DII’s market
is so strongly matured that we are no longer much dependent on FII’s money.
Many of the readers will disagree but I accept the same with an open mind.<o:p></o:p></span></p><p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: justify;"><span style="font-family: "Times New Roman", serif; font-size: medium;"> </span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEimOrzG_hrWfKjm-EM_MjJNrGf9f8h1Ok9GnoSnYNtd8CJQYGDz129He_wWeSFW1dPPPqjI_wqxqgthvXA8QicndW3mj9Xsq8mdm_F1yfSHpqP-ISEqrBKaT0-4QCBvRmNRgSI1fJ71UKZMzp40kDFlUig9DXOVcXW9C0OsHf3x_xzaKKFJiERaZCyNlQ" style="margin-left: 1em; margin-right: 1em;"><span style="font-size: medium;"><img data-original-height="259" data-original-width="654" height="254" src="https://blogger.googleusercontent.com/img/a/AVvXsEimOrzG_hrWfKjm-EM_MjJNrGf9f8h1Ok9GnoSnYNtd8CJQYGDz129He_wWeSFW1dPPPqjI_wqxqgthvXA8QicndW3mj9Xsq8mdm_F1yfSHpqP-ISEqrBKaT0-4QCBvRmNRgSI1fJ71UKZMzp40kDFlUig9DXOVcXW9C0OsHf3x_xzaKKFJiERaZCyNlQ=w640-h254" width="640" /></span></a></div><span style="font-size: medium;"><br /></span><p></p><p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: justify;"><span style="font-size: medium;"><span lang="EN-US" style="font-family: "Times New Roman", serif;">The above data clearly throws light on the
transformation and strength of the DIIs and the maturity of the inflows. </span><span style="font-family: "Times New Roman", serif;">This is the
major part we missed while doing the market outlook and mistake in calculating
that the market will fall to 13000 to 14000 levels. Another segment we
missed out on while calculating the market direction is that currently we have
a significant number of new Demat account holders who are first-time investors
and they risk takers and investing with a long-term vision in the market.</span></span></p><p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span style="font-size: medium;"><span lang="EN-US" style="font-family: "Times New Roman", serif;">Indian market is moving significantly from the
traditional mode of investments in physical assets to financial assets. Total
Household Assets as of date is Rs.802 lakh cr and Equity in total Household
assets is Rs 39lakhs cr which is just 4.8%. We dig deep we find that 4.8%
comes to 2.52 lakhs cr in the Equity market and out of that current annual SIP
book size of India is Rs.1.44 lakhs cr. Hence a long scope of investment in the
equity market is yet to be explored which supports the DII’s market compared to
FII’s market. This scope also reduces our dependency on FIIs and more on DIIs.</span><span style="font-family: "Times New Roman", serif;"><o:p></o:p></span></span></p><p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span lang="EN-US" style="font-family: "Times New Roman", serif; font-size: medium;">Coming to the macro front we find that India has
only a crude problem and that too has been resolved through a strategic tie-up
with Russia and other countries for crude supply. Further, as the International
crude prices fall we will be getting more lower prices from Russia and other
countries which helps India in every term. </span></p><p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span style="font-size: medium;"><span lang="EN-US" style="font-family: "Times New Roman", serif;">This will be a hidden significant
boost for the Indian markets. Monsoon, Festive season, Rural demand, and
all triggers are present every time, every year in the market, what we need to
know is how the next 5 years the market will change over in its earnings,
demand, and opportunity for the market. The corporate profit-to-GDP ratio
attains an 11-year high of 4.3% in FY22 and this is going to increase in the
coming years as the Indian business ecosystem takes a significant turnaround.
The recent example of the 5G and EV market is just a small step towards a
revolution across ancillary sectors.</span><span style="font-family: "Times New Roman", serif;"><o:p></o:p></span></span></p><p class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;"><span style="font-size: medium;"><span lang="EN-US" style="font-family: "Times New Roman", serif;">Coming to U.S Recession well every slowdown shifts
inflows to emerging economies once the optimum level of the slowdown is faced.
Further interest rate falls down begins once the optimum level is reached.
Hence in both ways, the Indian market will get inflows. If we look at the
interest rate cycles and their impact analysis on the market well I am sorry to
disappoint you that in every case investing in equities was the best option and
decision taken by investors historically.</span><span style="font-family: "Times New Roman", serif;"><o:p></o:p></span></span></p><p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: justify;"><span style="font-size: medium;"><span style="font-family: "Times New Roman", serif;"> </span><a href="https://blogger.googleusercontent.com/img/a/AVvXsEhbztGNpMxCu3N2ZMqHOdUP73ujb5_nErGfXNcHKKMry47Yol75jhgEA7I1DdBxL8GxBWGwrm4BYGh6vRQDDwveqYb-FqgWZuZdLPGVCO-ipAT6v2__7QdM47zRHAPSp0ZjZC2a1NClVvRP7aAymMIwGhQgvfqrXpHS3ZSy4MLGodWozOOYWmwowOGJcw" style="font-family: "Times New Roman", serif; margin-left: 1em; margin-right: 1em; text-align: center;"><img alt="" data-original-height="505" data-original-width="1179" height="274" src="https://blogger.googleusercontent.com/img/a/AVvXsEhbztGNpMxCu3N2ZMqHOdUP73ujb5_nErGfXNcHKKMry47Yol75jhgEA7I1DdBxL8GxBWGwrm4BYGh6vRQDDwveqYb-FqgWZuZdLPGVCO-ipAT6v2__7QdM47zRHAPSp0ZjZC2a1NClVvRP7aAymMIwGhQgvfqrXpHS3ZSy4MLGodWozOOYWmwowOGJcw" width="640" /></a><span style="font-family: "Times New Roman", serif;"><br /></span><span style="font-family: "Times New Roman", serif;">Hence from the above charts, it is well clear that even if interest rates go
hike Indian equity market will not be giving negative returns. More importantly
within these 18 years' time frame, you have witnessed many wars and many global
events not favoring the market, etc but still, the market gave a return to the
investors. This proves that the concept of market timing is a big myth
& the notional loss of not investing is huge. </span></span></p><p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: justify;"><span style="font-family: "Times New Roman", serif; font-size: medium;">The current macro speaks
strongly that the Indian market is far different from the global market and
this is the place where we are having problems in building trust in Indian
equities to reach new highs when the developed economy is struggling. The
change in supply chain and change in demand has transformed the market for
India. Hence stop daydreaming for Nifty to 13000 levels and invest
in equities with a long-term vision.</span></p></div><p></p>INDRANEEL SENGUPTAhttp://www.blogger.com/profile/16737884422257285340noreply@blogger.com0