Do it yourself

In past couple of months a number of research reports have expressed concerns over the rural demand in the wake intense second wave of pandemic and subsequent lockdown of economic activities. Some consumer facing corporates have also expressed similar sentiment in their interaction with analysts and investors. The popular views seems to be that unlike last summer, when the rural demand remained resilient despite a wider and stringent lockdown, this year the demand may not show similar resilience. Wider and deeper spread of infection this time is one of the primary reasons behind these concerns. Rising stress in household and unorganized sector is also expected the discretionary spending in check. In this context, there are few points that need to be noted by investors before forming a negative view on consumption theme. Record production in crop year 2020-2021 Firstly, as per the third advance estimates for the 2020-2021 crop year, the agriculture ministry has expected record foo...

In July 2007, investment bank Bear Stern announced that couple of its hedge funds have gone bust. These funds were primarily investing in derivative securities with home mortgages as their underlying. It was later unfolded that the underlying for these derivatives were actually a web of complex financially engineered instruments where actual underlying security was of very poor credit quality. This was the first time when “sub-prime” entered the popular market jargon; which essentially meant that though a derivative financial instrument is rated of investment grade, the actual security underlying that derivative is of sub-standard quality. The market briefly took note of this event correcting sharply. However, the event was soon forgotten as a standalone instance that could not have impacted the overall markets. Subsequent months witnessed one of the sharpest global markets rallies. In January of 2008 it was realized that Bear Stern was just a tip of the iceberg. The malaise of sub...

In past few weeks we have seen some very interesting debates over the prospects of inflation forcing central bankers to change the course of ultra-loose monetary policy and thus derailing the global recovery. There have been strong arguments on both the sides. However, the debate seems to be still inconclusive. There are many reasons for strong disagreements. For one, the debate suffers from historical prejudices and does not completely factors in the fast changing demographic and technological factors. It may also not be fully accounting for the fast evolving sustainability concerns and consequent changes in the global trade and commerce. Nonetheless, I still find it pertinent to take note of divergent views on the expected trajectory of inflation. Recently, two reputable experts Martin Wolf (Financial Times) and David Rosenberg (Rosenberg Research) published their views on inflation expectations. Both the experts are widely recognized for their biases, and these mutually divergent ...

 The strong rally in global metal prices, and consequently metal producers, appear to be faltering. Chinese authorities have taken a number of measures to calm down the steel and iron ore market. Iron futures have fallen sharply in past couple of weeks. Besides, steel and base metals like copper and aluminium have also corrected sharply from their recent high levels. A few brokerages who were extremely bullish on metals from midterm viewpoint have also turned little cautious. For example, in a recent research note JM Financial stated that “ The recent spike in the headline inflation in several countries, including in the US, has been led by steep rise in global commodity prices, including metals, soft commodities and crude oil prices….”. “For us the rally over the past 12 months was fairly predictable. But things are not as clear looking forward. We believe that market indicators have run far ahead given the context of the underlying strength of the economic recovery that is...

The present trends indicate that the Second wave of Covid19 pandemic in India may have peaked in most of the states. In the rest of the country, it is expected to peak in next 4-6 weeks. This should ease the pressure on healthcare ecosystem and bring some relief to the panicked citizens. The government sources have indicated that India will have enough supply of Covid19 vaccines by end of 2021, and most of the population will be inoculated by the end of FY22. Various scientists have cautioned that we may see another wave of pandemic. However, the global experience so far is that any further spurts in the intensity of the pandemic may not be as devastating as the second wave due to better immunity and preparation of citizens against the virus; and improved healthcare ecosystem. This immunity could develop due to vaccination, infection in earlier waves and/or life style improvements induced by pandemic itself. The greater awareness amongst citizens and healthcare professionals may also...

A recent report published by The Indian Private Equity and Venture Capital Association (IVCA) and Ernst & Young (EV) gives a fairly detailed view of Indian Ecommerce and Consumer Internet Sector in India. The report highlights how rapidly this sector has been growing in India in past few years. It also indicates towards the future of business and direction of growth. Obviously, the trend in India are part of a larger global trend and is greatly influenced by the global patterns. The key highlights of the report could be noted as follows: ·          In 2020, E-commerce and Consumer Internet companies raised over US$8 billion in PE / VC capital spread over 400 deals, giving rise to 9 new unicorns. Edtech and hyperlocal segments led the investment activity, together accounting for over 40% of 2020 investments and witnessing 5x and 2x growth in funding value respectively over 2019. Fintech and social commerce continued to witness traction by i...

May 2021 Bulletin of the Reserve Bank of India , carries some useful insights about the performance of NBFCs during the pandemic. Being a critical source of consumer and MSME finance, performance of NBFCs is usually a broad indicator of the consumption demand, and consumer and business sentiments. The key highlights of the NBFCs performance, especially during 2H2020, are noted as follows: ·          Pandemic has hit NBFCs hard. “The impact of the pandemic can be seen on both asset quality and liquidity, although the latter was addressed to a considerable extent through timely policy measures.” ·          An unfavourable mix of COVID-19, sell-offs in financial markets and the abrupt winding-up of specific schemes by a mutual fund contributed to NBFCs facing record spike in yields on their debt in Q1: 2020-21. The sharp market differentiation continued between the highly rated and other NBFCs, notwithsta...

Self-Reliance (Atamnirbharta) has been one of the key policy objective of Indian government, especially during the second term of the incumbent prime minister. It is clarified that self-reliance does not connotes self-centred systems; rather it encompasses a concern for the whole world’s happiness, cooperation and peace. The stated aim is to make the country and its citizens independent and self-reliant in all senses. The five primary focus area identified to achieve the objective of self-reliance are — Economy — Quantum jumps in various growth parameters, not just incremental changes. Infrastructure — Building infrastructure that represents modern India. Systems — Making systems technology driven. Demography — Making the population vibrant. Demand — Realizing full potential of the power of demand. A number of programs, schemes and incentives have been announced in past one year under the umbrella of Self-Reliant India, encompassing support to a variety of sectors like ag...