Month: July 2022

London Eye: Rishi Sunak’s campaign could be too smart

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Rishi Sunak is running a smart campaign, and that’s a problem — it’s almost too smart. It carries a glitzy veneer of smart management. That’s a style far from the world of most Conservative Party voters. The greater risk is that this style is not just distant to them, it could be annoying.

The base of his campaign is a campaign website that is handled with all the slickness one could expect from Rishi Sunak and his campaign managers. It invites supporters, and invites them to enlist more, step by slick step. It’s not clear what this will do for the elderly couple in the countryside who are the typical Conservative voter.

Rishi has a smart product going for him. But in common with marketing weaknesses that are far from unusual, the messaging is not quite matched to the target audience.

In this, and this could be everything, Rishi Sunak has been wrong-footed from the start. The day after Boris Johnson announced his resignation as Prime Minister, Rishi Sunak hit social media with a video message charting his path from the family home in Southampton to promise of what he would do if moved into 10 Downing Street. But who was this message aimed at?

For a start, it would be 358 Conservative MPs set to short-list two candidates through five rounds of voting. As it turned out Rishi Sunak led through every one of them, and stepped up his lead with every round. But he fell well short of the half-way point. Contenders in earlier such elections had crossed that line comfortably.

Also Read: London Eye: Rishi Sunak sets out bravely uphill

This was an election among people he had all met and knew. It was a campaign that would necessarily be fought with personal conversations conducted directly, and furthered on his behalf by MPs loyal to him to win votes in every succeeding round that had gone to candidates who fell away. Rishi and his team did all that without doubt.

The final tally in the parliamentary round got Sunak 137 votes to Truss’s 113. Those 137 MPs were not won over by his video message on social media, nor did Truss appear hugely disadvantaged by a refusal to parallel Sunak’s style of campaigning. Her 24 fewer votes didn’t go down to the lack of a slick video message.

Party Members

At best the video message could have been a way to reach party members voting in the second run-off round, an estimated 160,000 of them (the Conservative Party has not announced how many members it has). But that broader aim is dubious too, and possibly counterproductive. His style sets him too far apart from the world of a substantial number of Conservative voters.

A substantial number of Conservative voters is above 65 years of age, and the majority above 50. A large number of the 65-plus and certainly the 50-plus are now Internet-savvy enough to get on to the web and certainly WhatsApp. But there is a preferred way, and a doable way — direct contact.

Over recent days Rishi Sunak has thankfully shifted to more and more of that, other than the official hustings under way through all of August. That has been Liz Truss’s way from the start, and she is way ahead.

Logistics

It is not hard to reach 160,00 members directly over the space of six weeks. The Conservative Party has their names, addresses and contact information, and both candidates have had access to that list. Truss and her team have taken the path of more direct contact with them from the start. And that time advantage could be critical.

Rishi Sunak’s great advantage is himself when he comes across personally and directly. He has a winning manner, and appears to have won many supporters through his direct meetings with them. He clearly debates better, and knows — and appears to know — far more on handling the economy. That is at the heart of the election issues, and is the core of his strength.

But voters make up their minds early, not many will wait until September 2 to figure which way the debate goes. The hustings come after this early period, and party members begin receiving their postal ballot papers from Monday August 1. He will have to campaign now in more the Truss way than the one that has been mostly his so far.

Also Read: London Eye: Split on economy behind Rishi Sunak exit

— London Eye is a weekly column by CNBC-TV18’s Sanjay Suri, which gives a peek at business-as-unusual from London and around.

Read his other columns here

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

5G Auction: Bidding to resume on Day 7

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The mega 5G auction will enter its seventh day on Monday with Round 38 starting at 10am.

Round 37 was the last round for Sunday, the sixth day of the 5G auction.

The bidding will continue in the 1800 MHz band in the UP-East circle. The total bid amount now stands at Rs 1,50,130 crore, with Sunday’s increment being at Rs 163 crore.

Also Read: From 1G to 5G, here’s how cellular networks have evolved

The mega 5G spectrum auction had begun on July 26 with Reliance Jio, Adani Group, Bharti Airtel and Vodafone Idea as participants in the race.

A total of 72 gigahertz (GHz) of 5G airwaves worth Rs 4.3 lakh crore were on offer with a validity period of 20 years in the country’s biggest-ever auction of spectrum.

The auction is being held in low (600 MHz, 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz), mid (3300 MHz), and high (26 GHz) frequency bands. Union Minister for Telecom Ashwini Vaishnaw said there was competition in the 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2500 MHz, 3300 MHz and 26GHz bands.

Also Read: Explained | The 700 MHz 5G band and why telcos are chasing it

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Income tax website glitches on the last day of filing returns

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The new income tax website incometaxindia.gov.in has been showing errors today, which is also the last date for citizens to file their income tax returns.

Several users are raising their complaints with the income tax department on social media regarding the glitches in the website. While some said the website was not moving forward, a few others said they were coming across multiple errors and some people also said that the mandatory categories were not showing dropdown options. Users also reported login issues.

A taxpayer reported that the validation was failing as the website was asking for the zip code. While filling in the details, the zip code is also showing up as a separate option from the pin code. However, it is not a field while entering the details in the online form.

Also Read: ITR filing: Penalties you may have to pay if you miss July 31 deadline

The preview is also showing the zip code and the pin code as the same field, however users are unable to move forward. The error is occurring in cases where users have capital gains from sale of property. The user later reported that the issue got fixed when he logged in again.

Income tax department’s response

While the income tax department has not officially put out a statement, it has been responding to individual complaints on Twitter asking the users to share their details and that their team would get in touch with the former. It is also asking users “to contact the e-filing Help Desk at 1800 103 0025 (or) 1800 419 0025.”

Past glitches

Last week too, users faced multiple glitches while they tried to file their income tax returns. While some raised concerns about the slow functioning of the portal, others said they were facing errors with the pre-filled data.

The income tax department launched the new website on June 7 last year. The portal functioning has been marred on several occasions since then which prompted the government to extend the due date of filing tax returns last year.

Infosys was in 2019 given the contract to develop the portal.

Also, the government is most likely not going to give an extension for the July 31 deadline for income tax filing this year.

Also Read: ITR filing: Key types of refund status you should know

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

CWG 2022: Indo-Pak women’s T20 match turns out to be a no contest as India pick up first win

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India brought their desired ‘killing attitude’ to the fore under pressure as they put up a ruthless performance to beat arch-rivals Pakistan by eight wickets and boost their chances of a semifinal berth at the Commonwealth Games in Edgabaston on Sunday.

Pakistan’s decision to bat first backfired as Indian bowlers put the choke on the batters to bowl them out for a meagre 99 all out in the 18 overs-a-side contest after rain delayed the start of play.

Spinners Sneh Rana and Radha Yadav stood out with two wickets each. The chase was clinical too with Smriti Mandhana (63 not out off 42 balls), arguably the most attractive batter in women’s cricket, flaunting her range of strokes on way to a fine unbeaten half-century. The result was India gunned down the target in just 11.4 overs.

Also Read: Mixed day for Indian boxing as Nikhat Zareen wins but Shiva Thapa crashes out

India showed an approach that they have been trying to play with for the last couple of months and it would have most definitely pleased captain Harmanpreet Kaur. Mandhana’s special effort comprised three sixes, including a step out hit off spinner Tuba Hassan for her half-century. A seemingly effortless loft over cover of pacer Diana Baig in the third over was also of the highest quality.

It was the second time this year that an Indo-Pak contest failed to produce a close game with India winning comfortably against their opponents even in the 50-over World Cup in New Zealand. However, the much-anticipated fixture of the Commonwealth Games lived up to the hype off the field with fans turning up in big numbers at Edgbaston.

Intermittent showers meant the match start was delayed by 45 minutes with the game reduced to 18 overs a side. Compared to the women’s cricket opener between India and Australia, fans flocked to the 25,000 capacity stadium though it did not seem like an absolute sell out.

The city is home to a large Indian and Pakistan diaspora but the former had a bigger presence in the stands with the Indian flags visible from all parts of the ground. Dance numbers from Punjabi star Diljit Dosanjh added to the atmosphere and it felt the game was taking place in Mohali and not in Birmingham.

Normally, one would have to pay a fortune for an Indo-Pak cricket game but the Sunday morning fixture provided a much cheaper alternative. “I paid 20 pounds for the ticket. For a men’s game I might not even get it for 200 pounds. It feels lucky to be here,” said Rajeev Chauhan, who is a resident of Coventry. The Indian fans certainly got their money’s worth in the first half of the game. Renuka Singh, who bowled a dream spell in a losing cause against Australia, started with a rare maiden in the T20 format. Three balls later, Pakistan were one down with no runs on the board as pacer Meghna Singh induced an outside edge off opener Iram Javed’s bat with a ball that shaped away.

Skipper Harmanpreet Kaur went for the extra all-rounder in the playing eleven, bringing in Sneh Rana at the expense of spinner Rajeshwari Gayakwad. Batter S Meghana, who joined the team late here after recovering from COVID, was included in place of Harleen Deol. Rana made instant impact by removing a well set Muneeba Ali (32) and Pakistan skipper Bismah Maroof (17). Muneeba played some bold strokes in her 30-ball effort, including a six with a slog sweep off Meghna. Maroof perished while trying to sweep while Muneeba got beaten by the flight and offered a catch back to Rana.

Renuka made it 64 for four in the 12th over by getting rid of Ayesha Nadeem. Even India opener Shafali Verma rolled her arm over and got a wicket of a sharp return catch. Pakistan tried but were not able to break free from the shackles and ended up with a below par total.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

CWG 2022: Mixed day for Indian boxing as Nikhat Zareen wins but Shiva Thapa crashes out

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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World champion Nikhat Zareen sailed into the women’s 50kg quarterfinals but it was curtains for Shiva Thapa as he crashed out of the men’s 63.5kg round of  16 boxing competition at the Commonwealth Games in Birmingham on Sunday.

While Zareen knocked out Helena Ismael Bagao of Mozambique to storm into the last eight round of the women’s lightweight category won by RSC (Refree stopping the contest), Thapa lost 1-4 to the world championship bronze medallist Scotland’s Reese Lynch to make a disappointing exit from the Games. The first Indian pugilist to take the ring on the day, Zareen was no match for her young opponent as she dominated the bout from start to finish.

Also Read: Ultimate goal is to create history in Paris Olympics, says Nikhat Zareen

The Indian used her rich experience to unsettle Bagao from the onset. She came out attacking and used her combinations of left and right punches to overpower her opponent. Zareen landed clean punches on her opponent’s face in the final round to completely shock her, forcing the referee to call off the tie with 48 seconds remaining.

Zareen will next face reigning Commonwealth Games bronze medallist Troy Garton of New Zealand in the quarterfinals, where a win will secure her podium finish. Zareen said she won’t settle for anything less than a gold from the event.

“I am feeling happy that I won my first bout and I am looking forward to performing well in the next rounds. I am just one fight away from a medal but I am looking to win gold from here,” she said after her bout. Thapa started on a bright note, clearly outclassing his opponent in the opening round. But overconfidence and lack of focus cost Thapa dearly in the next two rounds as the Scot used his height and long reach to land clear punches.

Going into the third and final round, Thapa was still in the contest but Lynch took his opponent by surprise with his aggressive approach as Thapa had no option but to defend. Eventually, the result deservingly turned in favour of Lynch as he was the far better boxer in the contest.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

National Mountain Climbing Day: Indians who scaled Mount Everest

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Whenever a task is too challenging, people compare it with climbing Mount Everest. They say “it’s like climbing Everest” and rightly so, because this peak is the Earth’s highest mountain above sea level. Its elevation of 8,848.86 m was most recently established in 2020 by the Chinese and Nepalese authorities.

Located in the Mahalangur Himal sub-range of the Himalayas, this peak was first scaled by Sir Edmund Percival Hillary, a New Zealand-based mountaineer, and Tibetan mountaineer Tenzing Norgay on May 29, 1953. Till then, it was considered to be an impossible task as many mountaineers had died trying to scale the peak. However, several brave Indians, over the course of the last six decades, have achieved this feat.

On the occasion of National Mountain Climbing Day in US, here’s a list of some of those who created a record with their summit

Avtaar Singh Cheema: He was the first Indian and 16th person in the world to climb Mount Everest. Cheema achieved the feat in 1965 after two failed attempts by Indian Army teams. He was Captain in the Parachute regiment at the time when he made the climb. Later, he was promoted to the Colonel rank.

Sonam Gyatso and Sonam Wangyal: They were the first Indian siblings to climb Mount Everest. They achieved the feat just two days after Avtaar Singh Cheema.

Bachendri Pal: In 1984, Pal became the first Indian woman to reach the top of Mount Everest. She was chosen to be part of India’s first mixed-gender trip to Mount Everest.

Santosh Yadav: She became the first woman to climb Mount Everest twice on May 10, 1993.

Tashi and Nungshi Malik: On May 19, 2013, they became the first twins to scale Mount Everest.

Arunima Sinha: On May 21, 2013, Sinha became the world’s first woman amputee to achieve this feat.

Malavath Purna: She became the youngest girl to summit Mount Everest on May 25, 2014. She was 13 years and 11 months old when she reached the summit.

Anshu Jamsenpa: Anshu scaled the world’s highest peak twice in one season between May 16 and 21, 2017.

Ajeet Bajaj and Dia Susanna Bajaj: On May 16, 2018, they became the first father-daughter duo to conquer Everest together.

Vikas Shambhu Prasad Dimri: He was the first full-time banker from India to climb Everest. He achieved the feat on May 18, 2018.

Love Raj Singh Dharmshaktu: He became the first Indian to climb Everest seven times on May 20, 2018.

Sangeeta Sindhi Bahl: At the age of 53, she became the oldest woman to climb Everest in 2018.

Ravindra Kumar: On May 23, 2019, he became the first Indian Administrative Service officer to climb Everest.

Also Read: Planning next vacation? Check out these travel deals before making bookings

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Planning next vacation? Check out these travel deals before making bookings

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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As travel has started to pick up after almost a two-year hiatus due to the COVID-19 pandemic, travel companies and websites have come up with a slew of deals to encourage customers to book for their next travel destinations.

Buy Now Pay Later

Many companies including SOTC, Thomas Cook, and Goibibo.com among others offer customers the option to book their travel now and pay for it later. Amazon Pay Later too offers users the option to book flights and pay for them later via EMIs.

“While booking travel (flight or hotels) on Goibibo, aspiring travellers who opt to travel without making any payment at the time of booking are provided with short-term credit by partner NBFCs and banks via an underwriting platform that evaluates customers’ creditworthiness in a few seconds using data science models,” said Vipul Prakash, Chief Operating Officer at Goibibo.

Thomas Cook India also offers a ‘travel now pay when you return’ service with a zero processing fee, among other offers, said Rajeev Kale, president and & country head, Holidays, MICE, Visa-Thomas Cook (India) Limited.

“Travel Now Pay Later has received a strong response of 1.5x compared to pre-COVID levels, thus reiterating the holiday demand,” said Daniel D’Souza, the president and country head-holidays, SOTC Travel.

Buy one get one free

As the upcoming festive season nears, it’s running travel offers. SOTC has special offers lined up as well. “Indians are quintessential value seekers and our recently launched monsoon campaign and Durga Pujo Holidays feature special offers like Buy One Get One Free,” D’Sousa said, adding that these special offers would be extended for the upcoming festive holidays as well.

Also Read: A Rs 1.5 lakh eurotrip now costs over Rs 2 lakh — here’s how exchange rates have singed travel budgets

Thomas Cook too offers ‘buy one get one free’ and early bird offers, among others, said Kale. The company has also tied up with HDFC Bank and Mastercard to offer exclusive cash discounts on credit/debit card payments for select South East Asia holidays.

Business travel

Makemytrip’s MyBiz platform is offering organisations access to a live inventory of hotels, flights and cabs, all at special corporate prices, which come with added benefits including, airport transfers, meals, etc. According to the company’s website, the platform is used by over 14,000 organisations and more than 2.5 lakh business travellers. It also offers itinerary modifications, easy cancellations at minimum costs with 24×7 customer support, the website stated.

Price Lock, Youth Program and other offers

Goibibo has introduced the ‘price lock’ feature that allows travellers to reserve their seats without paying for the actual price of the ticket upfront. “Price Lock further secures flyers against any price hike by allowing them to purchase the ticket at the same locked-in price later. It’s a useful way to get more time and save money as one can lock a favourable airfare for up to seven days while they firm up their travel plans,” said Prakash.

The company also offers customers bargains such as ‘Daily Steal Deal’ in which the customers can choose from over 2,000 deals that are refreshed daily and avail benefits of up to 50 percent discounts on top-rated hotels as well as last-minute flight bookings, he said, adding, “Since its launch earlier this year, this offering has attracted over 7 lakh users.”

Goibibo also offers a ‘Youth Program’ that caters to the needs of young travellers. As many as 2.3 lakh youths are members of the same, Prakash said adding that the programme offers travel benefits and co-branded offers to the members.

Also Read: As medical tourism revives post-COVID, find out why foreign patients prefer India

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

D-Street Week Ahead: RBI rate decision, auto sales and earnings likely to influence market

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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A key rate decision by the RBI, a slew of blue-chip corporate earnings and auto sales data will be at the centre stage on Dalal Street in the week starting August 1. State Bank of India (SBI), ITC, Mahindra & Mahindra, Titan GAIL, IndiGo, Britannia and Godrej Properties will report their quarterly numbers during the course of the week.

Movement in the forex market will remain on investors’ radar after the rupee clocked its biggest gain in a year to settle at 79.25 on Friday.

The week that was

Indian equity benchmarks Sensex and Nifty jumped nearly three percent last week — a second straight weekly gain. Globally, a rate hike along expected lines in the US and dovish commentary from the Fed sent positive signals to equity markets.

IT, financial and metal shares were the biggest boosts for headline indices.

A total of 38 stocks in the Nifty50 basket saw weekly gains.

Bajaj Finance, Bajaj Finserv, SBI Life, IndusInd and Asian Paints were also among the top gainers.

Broader markets also strengthened for the week.

The road ahead

Analysts see the next target for the Nifty50 at 17,400, after the bulls took it past 16,800 decisively.

“All the sectors are contributing to the move. We believe the focus should still be on the top performers instead of expecting a turnaround in the beaten-down names. We reiterate our preference for auto, FMCG, banking and financials and remain selective in other sectors,” said Ajit Mishra, VP-Research at Religare Broking.

Participants can look for buying opportunities on dips, he said.

Here are the key factors and events that are likely to influence Dalal Street in the week beginning Aug 1:

DOMESTIC CUES

Corporate earnings

Auto sales

Automakers will start to release monthly sales numbers on Monday.

MPC meeting

The RBI’s Monetary Policy Committee will conclude a three-day review on Friday, when the central bank will reveal its bi-monthly statement.

The central bank has already raised the COVID-era interest rates by 90 bps since May.

FII activity

The flow of institutional investors’ money will remain in focus on Dalal Street.

GLOBAL CUES

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

CWG 2022: Jeremy Lalrinnunga rewrites two Games record to win India’s second gold in Birmingham Games

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Young weightlifter Jeremy Lalrinnunga smashed two Games records on his way to a sensational gold medal win at the Birmingham Commonwealth Games as he added a second yellow metal to India’s tally on Sunday. The 2018 Youth Olympic champion dominated the men’s 67kg competition with a total lift of 300kg (140kg+160kg), finishing ahead of Samoa’s Vaipava Nevo Ioane, who managed a total of 293kg (127kg +166kg).

Also Read: CWG 2022 – Medal rush from Indian weightlifters continue as Bindyarani Devi clinches silver

Nigeria’s Edidiong Joseph Umoafia took bronze with an effort of 290kg (130kg+160kg). The 19-year-old from Aizwal wrote the Games snatch (140kg) and overall lift (300kg) record in his name but not before an injury scare as twice he grimaced in pain during the clean and jerk attempts. Jeremy opened up a huge 10kg gap with the nearest rival Edidiong Joseph Umoafia when he lifted 140kg in a successful second attempt. He had begun with 136kg. Jeremy further targetted 143kg in his final attempt, but did not succeed. In Clean and Jerk, the 2021 Commonwealth Championship winner began with 154kg and followed that up with 160kg, but could not complete the 165kg attempt.

This was India’s fifth medal from the weightlifting arena with Mirabai Chanu (gold), Sanket Sargar (silver), Bidyarani Devi (silver) and Gururaj Poojary (bronze) earning podium finishes on Saturday. Son of a national-level boxer Lalneihtluanga, Lalrinnunga also aspired to don the gloves but shifted to weightlifting as it involved just power to excel, something he found fascinating.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bottomline: A slowing US economy isn’t good for equities

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

After the dip in US GDP last week, the other important data release that has a significant bearing on how the US Federal Reserve moves on rates is the Personal Consumption Expenditure Index (PCE). Fed Chair Jerome Powell recently told reporters that the central bank considers PCE a better gauge of inflation than the Consumer Price Index (CPI). The latest reading of the PCE of 6.8 percent, the highest 12-month gain in 40 years, and a several-decade high 1 percent gain month-on-month is thus not comforting.

But what’s also concerning, is that a slowing US economy and the energy crisis in Europe aren’t the most favourable backdrop to have if you are expecting the market to rally. In order to get a better sense of how significantly several commonly cited factors driving the markets truly influence moves, we ran some numbers. Here’s what we have.

PCE doesn’t drive stocks

Does a high PCE really lead to a big impact on equities? No. Quite to the contrary, monthly data since 2000 reveals that the correlation between the PCE and the S&P-500 index is just about 0.07 percent. That’s as good as nothing.

US GDP and equities tango 

What should worry bulls is that US GDP and the S&P-500 index have a strong correlation of 0.85. So, if the US economy is heading for a long patch of de-growth or anaemic growth, going by empirical evidence, stocks may find it difficult to maintain an upward trajectory.

Hence the recent two negative prints on US GDP growth, that have cheered the markets in the short-term (on the hope that it would stay or temper the Fed’s hand on further rate hikes), may become a worry down the line. Add to this the European economies under stress over energy supplies, and we could have a not so promising cocktail of surprises down the road.

US bond yields may matter

The widely tracked US 10-year bond yield is a parameter that may have some relevance in an inverse way with equities. The benchmark yield and S&P-500 index have a moderate negative correlation of 0.65. So, if yields rise, there’s a good chance the S&P-500 might sulk, and similarly the other way around. In the recent equity run-up, we have seen that the US 10-year yield has cooled off significantly from over 3 percent.

Stocks don’t chime to USD 

The US $ index is a widely tracked number, and relevant in many ways for the economy, but it has little or no bearing on market swings in the US. The US $ index and S&P-500 have a correlation reading of just 0.17.

Takeaways for Indian equities 

So, what does all this spell for Indian equities. We all know that US equities and Indian benchmark indices are closely correlated. So, if the US economy wobbles for a long period, equities too may follow a similar trend. This does not necessarily mean the magnitude of change would be similar, i.e, Indian equities could underperform or outperform but the direction is likely to be similar.

Will history repeat itself? That remains the big question. The answer to which will unfold in time.

Happy investing.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow