Bitcoin’s 90% flash crash on Binance US, explained

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

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Bitcoin prices plunged nearly 90 percent on the United States trading platform Binance in a flash Thursday morning. Prices dropped to as low as $8,200 from around $65,000. The cryptocurrency exchange attributed the flash price crash to a “bug” in the trading algorithm of an institutional customer.

“We are continuing to look into the event, but understand from the trader that they have now fixed their bug and that the issue appears to have been resolved,” a spokesperson said.

This came a day after the cryptocurrency surged to a lifetime high of $67,000, six months after its previous high. This rally fuelled by the debut of ProShares Bitcoin Strategy ETF now seems to have taken a breather. The crypto was last trading 3 percent lower at $62,852.

Also Read | Bitcoin falls from an all-time high, as US ETF debut fails to support rally

What happened on Binance?

At around 7:34 am New York time, the price of Bitcoin crashed from $65,760 to as low as $8,200. Within fleeting seconds, it bounced back up to almost exactly the price earlier. Volume stood at 592.8 Bitcoin on the exchange during the crash, which is just short of $40 million at current prevailing prices.

The plunge occurred only on Binance but knocked the Bitcoin price on other exchanges as well. On Bitstamp, the price dropped 2.3 percent around the same time but did not go below $63,600. On Coinbase, Bitcoin lost around $1,000.

The crash on Binance also had an impact on the Ethereum price rally, which lost around $2,000 from its price of just over $4,000 per ether.

Reason for the crash

Binance blamed the Bitcoin flash crash on an institutional trader’s rogue algorithm. “One of our institutional traders indicated to us that they had a bug in their trading algorithm, which appears to have caused the sell-off,” Binance told Bloomberg. The company said the issue was resolved after the trader fixed the bug.

However, the flash crash came soon after Binance’s chief executive warned crypto traders of high volatility in the coming months. “Expect very high volatility in crypto over the next few months,” Binance CEO Changpeng Zhao tweeted a day before the crash.

Mistaken crashes like this happen in finance when traders mess up details of their intended trades. Or when they enter the wrong order size or price. If the size of the trade is colossal, it can overwhelm an entire exchange leading to a quick, massive decline. This is called a flash crash.

One such instance happened back in May 2010, when the entire Wall Street flash crashed. While US equities have stayed out of trouble since that instance, the same cannot be said for cryptos.

A string of trading woes

Binance flash price crash is the latest in a string of trading problems in crypto. Earlier this month, the new decentralised exchange Synthetify was forced to halt trading shortly after its debut because of bad data provided by the Pyth Network.

In September, a bug caused an error in the crypto data network Pyth’s platform, prompting it to show a nearly 90 percent drop in Bitcoin prices for a brief period.

Also Read | Cryptocurrency updates on Oct 22: Bitcoin takes a breather; clues on founder Satoshi Nakamoto’s whereabouts surface

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LIC Housing Finance drops 8% as Q2 earnings disappoint Street

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

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Shares of LIC Housing Finance dropped as much as eight percent on Friday after disappointing Q2 earnings dragged the stock lower. The stock had a gap down opening of about six percent. LIC Housing Finance is trading lower than 5, 20, 50, 100 and 200-day moving averages.

The housing financier’s consolidated net profit for Q2 FY22 tanked 68 percent on year to Rs 249.74 crore. Total revenue from operations fell to Rs 4,717.65 crore in Q2 from Rs 4,977.34 crore in the corresponding quarter last year. Meanwhile, net interest income was down five percent.

CLSA noted that LIC Housing Finance reported mixed numbers, and maintained its ‘buy’ rating and a target price of Rs 540.

Also Read | Reliance Industries shares rise ahead of Q2 earnings

“Loan growth in home loans improved to a multi-quarter high of 15 percent YoY, off a low base. After several disappointing quarters, asset quality surprised positively with a 170bps improvement in stage 2+3 loans. However, spreads shrunk 25bps QoQ, leading to an eight percent QoQ decline in net interest income (NII); Rs 9.5 bn operating profit was the lowest in six quarters,” CLSA said.

Morgan Stanley has an ‘underweight’ call on the stock and said weak pre-provisioning operating profit which was driven by lower net interest income and higher expenses are key negatives.

At 10:45 am, shares of the financier were down 6.2 percent at Rs 412.80 apiece on the BSE.

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Rupee rises 8 paise to 74.79 against US dollar in early trade

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

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The Indian rupee appreciated 8 paise to 74.79 against the US dollar in opening trade on Friday, tracking a positive trend in domestic equities. At the interbank foreign exchange, the rupee opened at 74.82 against the dollar, then edged higher to 74.79, registering a rise of 8 paise over its previous close.

The rupee on Thursday ended on a flat note at 74.87 against the US dollar. On the domestic equity market front, BSE Sensex was trading 434.43 points or 0.71 per cent higher at 61,357.93, while the broader NSE Nifty advanced 105.95 points or 0.58 per cent to 18,284.05.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.05 per cent to 93.72. Foreign institutional investors were net sellers in the capital market on Thursday, as they offloaded shares worth Rs 2,818.90 crore, as per exchange data.

Global oil benchmark Brent crude futures fell 0.54 per cent to USD 84.15 per barrel.

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Nykaa to roll out its IPO on Oct 28, over 41 million shares up for grabs

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

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FSN E-Commerce Ventures Limited, which owns online cosmetic brand Nykaa, will launch its initial public offering (IPO) on October 28. According to media reports, an anchor placement of up to Rs 2,340 crore will open on October 27 and the IPO will close for subscription on November 1.

The company seeks a valuation of around $7.4 billion in the IPO and aims to raise as much as Rs 5,200 crore. The proceeds will be used by the company to repay debt and to market its products.

The IPO is likely to include a primary issue of stock worth Rs 630 crore. Going by the company’s draft red herring prospectus (DRHP) approved by SEBI on October 14, a total of 41.97 million shares would be available through offer-for-sale (OFS).

Also Read: Nykaa IPO: First-mover advantage to help company grow 25% over next 5 years, says Elara Securities

Currently, company founder Falguni Nayar and her family hold more than 53 percent stake in FSN. She is expected to continue being the largest shareholder even after the IPO.

Meanwhile, several other investors of the company are looking to offload their stakes in the upcoming IPO. These include — TPG, Light House India Fund, JM Financial, Yogesh Agencies, Sunil Kant Munjal, Harindarpal Singh Banga, Narotam Sekhsaria, and Mala Gaonkar. In addition, company promoter Sanjay Nayar Family Trust will also sell 4.8 million shares.

Also Read: STARTUP DIGEST: Sebi’s green signal to Nykaa’s IPO; Paytm earmarks Rs 100 cr for marketing campaigns

Kotak Mahindra Capital, Bofa Securities, Citi, JM Financial, Morgan Stanley, and ICICI Securities are the investment bankers working on the IPO.

Founded in 2012, Nykaa offers a diverse portfolio of beauty, personal care, and fashion products to its customers. The company recorded a net profit of Rs 61.96 crore in FY 2020-21 and its revenue grew 38 percent year-on-year to Rs 2,453 crore. As of March 2021, the online beauty store had cumulative downloads of 43.7 million across all mobile applications.

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Zee-Invesco tussle: Minority shareholders will now have their say at EGM, says expert

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

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There is a big boardroom tussle underway between Zee Entertainment and Invesco. Zee Entertainment Enterprises Limited (ZEEL) was on October 21 ordered by the Bombay High Court to hold an extraordinary general meeting (EGM) requisitioned by its shareholders Invesco Developing Markets Fund and OFI Global China. The EGM will be chaired by a retired judge and its resolution is to be kept in abeyance till the Bombay HC decides on the legality and validity of EGM requisition, the court ruled. It added that the EGM resolution will be subject to approval of the Ministry of Information and Broadcasting. In an interview with CNBC-TV18, HP Ranina, corporate lawyer, shed light on the legal aspects of the impending EGM.

Ranina is of the view that what the Bombay High Court has said is only to reiterate the rights of the shareholders, to call an extraordinary general meeting (EGM) as permitted under the new Companies Act.

“Therefore, Zee has now buckled-in in a sense and gone ahead, and they are now holding the EGM under the direction of the Bombay High Court. This means that the minority shareholders will now obviously have a right to have their say, and if they can muster enough voting support, then they may be able to move their resolutions, whether it’s for removing Punit Goenka or for bringing in Reliance or whatever,” he explained.

“So, the minority shareholders will now have an opportunity and Invesco will be able to muster the strength which it has to get support from other smaller retail investors. We will have to see how it pans out at the EGM which is going to be held now,” he added.

He further said, “Now the real battle will start. The strength of all the parties involved will be ascertained, who has the controlling interest, whether Zee group has a controlling interest or the other investors, whether institutional investors coupled with retail investors have enough strength, all this will now come out in the EGM. This is why I think Zee made a mistake in trying to drag on this issue of not calling for an EGM. They should have, once a requisition was obtained under the Companies Act and now they will have to go through it and face the consequences.”

Also Read: Pains me to see relationship with Invesco going sour; want better tomorrow for Zee: Punit Goenka

When asked if the shareholders’ vote will count, Ranina said, “The vote will count because any Court or any authority will take into account the views of the shareholders. The views of the shareholders can never be ignored. So, while there may be other issues like whether they can have a controlling interest or not, without the approval of the other authority, the shareholders’ view will ultimately prevail.”

Also Read: No discussion yet on Zee-Sony deal, says LIC sources

“The Bombay High Court cannot ignore that view or any other authority cannot ignore the view in case the majority of the shareholders decide to remove Punit Goenka and now they can do that because it’s a shareholder democracy and if the majority of the shareholders vote in favour of a particular resolution, that resolution will be carried. So certainly, it will have a lot of weight and no authority can ignore the voice of the shareholders,” explained Ranina.

For the full conversation, watch the video

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PM Modi says economy getting boost from rising vaccinations; here are key takeaways from today’s speech

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

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Prime Minister Narendra Modi on Friday said that economic growth was getting a boost from rising vaccinations across the country and urged citizens to purchase locally manufactured products over the upcoming festive season. Modi called for vigilance against COVID-19 and recommended wearing masks during festivals.

PM Modi said so while addressing the nation today after the country achieved the 100 crore COVID-19 vaccination mark. The milestone was achieved in 278 days as the countrywide vaccination drive was launched on January 16. According to Co-WIN portal data, over 71 crore vaccine doses were administered as the first dose and over 29 crore as the second dose.

India’s immunisation campaign hit a milestone of 1 billion vaccinations on Thursday. The country has covered three-quarters of its 944 million adults with at least one dose but only 31% with two.

Here are key takeaways from PM Modi’s speech today:

• PM Modi appealed people to celebrate festivals with utmost caution. “I request all to celebrate the upcoming festivals with utmost caution. I appeal to all those who have not taken the first dose of the Covid-19 vaccine yet should given utmost priority to getting vaccinated. Those who are vaccinated should encourage others,” said PM Modi while addressing the nation ahead of upcoming festivals amid coronavirus pandemic.
• While addressing the nation today, Prime Minister Narendra Modi said, “For other nations, vaccine research and development is nothing new. India usually imported vaccines from other nations. Initially, it was questioned if India will be able to survive this pandemic. Will there be vaccination? Are there enough funds? But this 100 crore mark has answered all questions. Now India will be considered safer place.”
• PM Modi asked people not to be complacent and follow COVID-appropriate behaviour even during the festive season.
• PM Modi called for ‘Vocal for Local’. He appealed to the people to buy products that are ‘Made in India’.
• He further said that the vaccine century is the result of “sabka saath, sabka vikas, sabka vishwas, sabka prayas”.
• PM added that 100 crore vaccination mark is not just a number. “It’s a new chapter in history, a testament that India can achieve a tough aim successfully. It shows that country works hard for the fulfilment of its goals,” he said.

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

Except automobiles, all other businesses doing well; volumes higher than pre-COVID levels: Gateway Distriparks

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

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Gateway Distriparks posted its Q2FY22 results on Thursday. Prem Kishan Gupta, Chairman and Managing Director at Gateway Distriparks, discussing the company’s performance, on Friday said this year volumes have bounced back much more than the pre-COVID levels.

Also Read: Asian Paints slips 3% as brokerage commentary sombre; Morgan Stanley, Jefferies cut rating

“We are seeing the growth in volumes going forward also. All the businesses are running well, except for automobile,” he said.

He said the company has captured the market share in the NCR region.

“EBITDA per TEU in the rail business is about Rs 9,000 now and our effort has been to go up to Rs 10,000. We started the year with Rs 8,000 per TEU and we have been able to tweak the tariff because of the fuel price. So our target is Rs 10,000 for rail business.”

Also Read: Mphasis says industry in early stages of tech investment super cycle

On CONCOR divestment, he said, “It has been deferred to next year. So we are not looking at it right now. We are expanding on our own to new locations.”

For the full interview, watch the accompanying video.

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

India’s COVID-19 vaccine century result of ‘sabka saath, sabka prayas’, says PM Narendra Modi

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

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Prime Minister Narendra Modi on Friday said the vaccine century is the result of “sabka saath, sabka vikas, sabka vishwas, sabka prayas”. The government that there was no VIP culture to overpower the vaccination program, Modi said.

Modi was addressing the nation a day after the cumulative COVID-19 vaccine doses crossed the 100 crore mark in India. He congratulated the nation on achieving the milestone, saying the drive began with the message “sabko vaccine, muft vaccine” (vaccine for all, vaccine for free).

Modi said that 100 crore vaccination mark is not just a number. “It’s a new chapter in history, a testament that India can achieve a tough aim successfully. It shows that country works hard for the fulfilment of its goals.”

Also read | India hits 100-crore vaccination mark: Key facts and timeline

India achieved the milestone in 278 days as the countrywide vaccination drive was launched on January 16. According to Co-WIN portal data, over 71 crore vaccine doses were administered as the first dose and over 29 crore as the second dose.

More than 75 percent of India’s adult population has received at least one dose of COVID-19 vaccine, with nine states and union territories administering the first dose to all eligible people. Over 31 percent of the country’s around 93 crore adults have been administered both doses, according to Health Ministry officials.

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

Morgan Stanley raises target price on BoB, SBI, Canara Bank; here’s why

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

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The PSU banking space has been seeing some momentum. Morgan Stanley has raised the target price on some of the PSU stocks.

According to the firm, Bank of Baroda (BoB) and State Bank of India (SBI) are better placed in the pack.

Morgan Stanley has raised the target price to Rs 135 on BoB; on SBI, it has raised the target price to Rs 640 and on Canara Bank, the target price has been raised to to Rs 215.

According to the firm, the PSU banks’ improved balance sheets are likely to end book value per share decline in cycle. There is a risk of upside to the earnings going forward. The entire PSU basket should do well.

Watch the accompanying video of CNBC-TV18’s Nimesh Shah for more details.

To watch other videos in this series, click on the Standout Brokerage Report tab below.

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

Asian Paints slips 3% as brokerage commentary sombre; Morgan Stanley, Jefferies cut rating

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

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Shares of Asian Paints slipped as much as three percent on Friday as sombre commentary by brokerages weighed on the stock. Some foreign brokerages even downgraded their rating on the stock.

At 9:38 am, shares of the paint manufacturer were down 1.9 percent at Rs 2,945.70 on the BSE. The stock has been losing for the last seven days and has fallen  over 11 percent during the period.

The stock had plunged on Thursday after the company reported lower-than-expected Q2 FY22 results.

Macquarie has cut EPS estimates for the company by 12 percent for FY22 to factor in Q2 miss and near-term gross margin pressure.

The brokerage has cut EPS estimates for FY23 and FY24 by two percent as it believes cost pressure is transient and has also trimmed its target price by two percent to Rs 3,900.

Further, Morgan Stanley has downgraded its rating on the stock to ‘underweight’ from ‘equal-weight’ taking into account that the unprecedented input cost inflation and slow price hikes may continue to weigh on margins and earnings in FY22.

Jefferies too downgraded its rating on the paint-maker’s stock to ‘underperform’ from ‘hold’. It said lack of visibility deserves a de-rating.

Margin pressures due to steep raw material inflation and incommensurate price hikes have cornered HDFC Securities into toning down its FY23 and FY24 EPS estimates by seven percent each. The brokerage retained its ‘sell’ rating.

Also Read |  Asian Paints Q2 Results: Net profit falls 29% to Rs 605 crore, misses Street estimates

Motilal Oswal Financial Services also pointed out that, even as Asian Paints’ focus on topline growth and ensuing market share gains would lead to healthy earnings over the medium-to-long term, earnings for the next few quarters would be affected by intense margin pressure.

The brokerage has maintained its ‘neutral’ rating on the stock.

Meanwhile, HSBC that has a ‘buy’ call on the stock, has estimated that the current stock price of Asian Paints builds in long-term earnings growth expectations of around 15 percent which looks undemanding given its portfolio, strategy and execution.

Although Q2 results were disappointing, the management commentary has lent some comfort, as per some brokerages.

UBS noted that Asian Paints intends to take price hikes that are more aggressive, and as a market leader, the company needs to graduate price increases. This, according to UBS, is key to intermediary and consumer confidence, especially in this fragile environment.

Like UBS has a ‘buy’ call on the scrip, PhillipCapital too has maintained its ‘buy’ recommendation.

Asian Paints has solid moats like strong brand equity, an extensive distribution network, and a well-diversified product portfolio and its ability to quickly ramp up business within adjacent categories (waterproofing, construction chemicals, putty) makes it a “Must-own” company within one’s portfolio, PhillipCapital said.

“In the last three quarters, including we have seen plenty of strategic aggression from Asian Paints, which is gladdening our hearts leading us to buy even more of the stock,” said Saurabh Mukherjea, Founder, Marcellus Investment Managers.

He said, basis the results published yesterday, it is relatively clear, they are hammering the competition. The volume and value growth were both pretty similar suggesting that they haven’t really taken meaningful price hikes as yet.

“This company is way more profitable than the competition, it is three times as large as its nearest competitor. So by preventing price hikes from coming through so far, Asian Paints is hammering the financial strength of its competitors. So, barring Berger Paints, one really worries about the rest of the companies and their ability to deal with this sort of pricing pressure from Asian Paints. This is a historical trait you will see this across sectors,” Mukherjea said.

In India consistent compounders –market-leading franchises suffocate the competition. When input prices go up, they deliberately hold back on price hikes, and the competition’s margins get torched, he added.

Second about growth in the dealerships, already before COVID, Asian Paints had twice the dealership network that its closest rival did and as they said in their earnings that they have grown the dealership network by more than half. So at the peak they have around 80,000 dealerships and now they have through COVID added 40,000 more. So growing your dealership network by 50 percent through COVID is mind boggling, Mukherjea pointed out.

So Asian Paints is getting stronger, they are suffocating the competition, he said.

Catch LIVE stock market updates 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