Do it yourself

 After topping ~18600 in October 2021, the benchmark Nifty is now back to ~17000, the level where it was 12 weeks ago. In general statistical sense, it could be said that market has not yielded any return since August 2021. However, during this 3200 odd point up and down journey of Nifty, the actual outcome might be very different for various investors, depending upon their portfolio positioning and activity during this period. The portfolio of a monthly SIP investor may not have changed much in this period; whereas someone who got greedy at the peak and invested larger amount in mid and small companies may have lost 10-25% of his latest installment of investments. Of course, 12 weeks is an extremely short, and mostly irrelevant, period to account for the return on investment in equities. However, it could be a useful timeframe to assess if the market is changing its course. Having quickly recovered all the losses from panic reaction to the pandemic, and moving about ~50% highe...

 Historically, at some point in time copper, gold and/or silver coins had been legal tender in India; and in many other economies as well. Traditionally in Indian society, these metals have enjoyed acceptance as ‘sacred metals’ having religious, medicinal and economic importance. With the rise in its industrial usage, copper may have lost its ‘precious’ status, but gold and silver still continue to enjoy ‘precious’ status, even though these are no longer legal tenders in India; and most other jurisdictions. With advancement of technology and globalization of Indian socio-economic milieu, the ‘sacred metal’ aspect of gold and silver is also diminishing gradually. In past few years, the government of India has made significant efforts to encourage people to own gold in non-physical form, through sovereign gold bonds (SGB). These bonds offer interest income at the rate of 2.5 percent annually, beside capital gains benefits to the holders. In recent years, the digital gold has also...

In January 2021, the 22 nd biannual Financial Stability Report (FSR) of RBI had raised many red flags over the Indian financial markets. The report, inter alia , highlighted the uneven economic recovery, accentuated credit risk of firms and households, and divergence between economic activity and asset prices. Commenting on the findings of FSR, the RBI governor had then cautioned investors and financial institutions that “The disconnect between certain segments of financial markets and the real economy has been accentuating in recent times, both globally and in India” and “ Stretched valuations of financial assets pose risks to financial stability. Banks and financial intermediaries need to be cognisant of these risks and spillovers in an interconnected financial system. ” Incidentally, the benchmark Nifty has gained ~24% and total market capitalization of NSE has increased ~38% since release of last FSR in January 2021. The economics team of RBI, in the latest monthly bulletin of R...

  The “Young India” may soon begin to age. As the era of demographic dividend wanes, many new business and investment opportunities may arise. It may be the right time for investors to anticipate these opportunities and begin taking positions. Presently, India is home to the largest number of youth. With close to half of her 1.4bn people below 24yrs of age, India is like a vast reservoir of youthful energy. However, this distinction might not last for long. India is expected to become a middle aged country in next 15years and an old country by 2050 - since with the faster economic development over past three decades, India has managed a consistent decline in crude birth rate (CBR), total fertility rate (TFR) & infant mortality rate (IMR); and improved healthcare facilities, better access & improved affordability have also resulted in a consistent rise in life expectancy of an average Indian to about 70yrs. As per a 2019 report of the Technical Group on Population Projec...

One of the economic positives of Covid-19 pandemic is material rise in digital payments and e-commerce. The steep rise in adoption of digital payments by household consumers and merchants in past one year should have arguably led to lower currency in circulation. However, the recent data released by RBI indicates that the cash in circulation is highest in 6 decades relative to GDP. In absolute terms also, the cash is materially higher than the pre demonetization levels. It may be argued that holding more cash during the times of distress (e.g., Pandemic) is natural instinct; and this trend has been seen globally. Nonetheless, in the Indian context, the issue needs deeper examination by the policy makers. Digital payments rising exponentially The initial public offer (IPO) by One 97 Communication Limited, the owner of India’s largest payment brand PayTM, celebrates the exponential growth in digital payment in past few years. As per NASSCOM, digital payments in India have grown ~10x ...

Recently, the President of US, Joe Biden, laid out a framework for nearly US$1.75trn in social sector funding. The plan, inter alia, proposes a spending of $400 billion to help provide subsidized childcare for more than 6 million children and tuition-free preschool for 3- and 4-year-olds, along with $555 billion for clean energy initiatives, including $320 billion in tax credits, to help Americans pay for environment friendly home improvements and corporation’s transition to clean-energy manufacturing, over the next 10 years. The President has proposed to fund this spending through a 15% corporate minimum tax on large corporations, tax on stock buybacks and a surcharge on the top 0.02% of high earners. However, the proposal to tax the superrich (700 odd billionaires) on their unrealized gains on assets could not be pushed for lack of necessary support. Nonetheless, the proposal has reignited an intense debate, as the opinions are vertically divided on the legality and morality of ...

Household now largest borrowers As per the latest data released by the Reserve Bank of India, the share of personal loans in total outstanding bank credit in India has grown to 27%. For the first time, the share of personal credit in the total bank credit is higher than the credit to the industry.  In past 12 months, the share of personal credit has increased by 2%, from 25% in September 2020 to 27% in September 2021; whereas the share of industrial credit has declined by 1% from 27% to 26% over the same period. The share of credit to agriculture sector has remained mostly stagnant at around 12%. The trend could be explained, inter alia , through the following three key factors: (a)    Rising institutionalization of the personal credit due to accelerating financial inclusion and digitalization of financial transactions. (b)    Decline in share of NBFCs in the personal credit, due to a variety of reasons. (c)     Deleveraging of balance she...