Month: August 2021

Valuations getting stretched, need to be selective; financials look good, says market expert Punita Sinha

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

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Indian equities scaled new peaks, with the Nifty closing above 17,100 — this is the Nifty’s fastest 1,000 points gain. The BSE Sensex also surged to a lifetime high, above 57,500. The two indices gained over a percent each today, with August turning out to be the best month for the benchmarks in the last nine months.

The last time markets saw a 10 percent correction was in May 2020 and since then markets have risen nearly 80 percent without a meaningful correction.

CNBC-TV18 spoke with Punita Kumar Sinha, Managing Partner at Pacific Paradigm Advisors, to discuss more about the markets and the way ahead. She is also the Chairperson of INCRED.

Also Read: Barbeque Nation in focus, here’s why

Sinha is of the belief that it is the global liquidity that has really been very critical in driving the markets up because if one looked at the fundamentals, the economies were all seeing downgrades – on GDP, on earnings, there were supply-side issues, and demand was weak. So there were a lot of concerns, but global liquidity really did inflate a lot of asset classes and equity markets across the world rose.

According to her, the situation we are in now is that while the fundamentals are improving, growth has really improved and picked up, valuations are reaching quite stretched level in some select areas and liquidity while is strong, there may be some debate on whether it needs to be tapered.

She said, “we are at an inflection point.” “One, the Fed discussions are going to be very important because we do know that emerging markets do react to any kind of tapering, that might happen there. But at the moment, it doesn’t look like there will be a very strong tapering, but maybe some discussion starting to think about it. The reason India has rallied in August so much is partly because earlier this year, while India was going through a really bad COVID wave, China and some of the other Asian countries, also US and other markets were actually doing quite well.”

“Then China regulatory authorities came down quite strong on the tech sector and growth in China is showing to be a little bit of a concern. Also, the supply-side issues that are coming from China’s sort of shutting down in certain areas in terms of exports etc and trade is beginning to make investors a little bit more concerned about China. So, some of that liquidity that was going into China has benefited India,” she added.

“Two, we also had a lot of new IPOs coming in and while the China tech sector has been getting negative, press and negative regulatory overhang, the Indian technology IPOs, consumer internet IPOs that are coming up are gaining some interest amongst investors, because the regulatory environment here is relatively benign. So, that is also helped investors look at India,” said Sinha.

Also Read: Nifty50 makes its fastest 1,000-point run ever. Here’s how it has gained pace over years

She said, “Growth in India is looking better than some of the other countries. India growth looks like it will be picking up. Growth in some of the other countries – US growth has been very strong, employment has been very strong. But part of the reason has also been the stimulus package that had been given but now as the stimulus wanes, the question is what does that do to grow? Does growth remain as strong? Or does it slowly start to slow down? There is also increase in Delta variant infections going on there as well.”

“At the moment, we have different cycles, India’s in more of an upcycle and some of the other countries have already had their strong days. So, relatively that is why I think one of the reasons India has seen liquidity come in,” she explained.

Also Read: BSE-listed companies’ market value tops Rs 250 lakh crore for first time

On valuations, she said the rally has led to some valuations getting stretched. So one needs to be selective. Regardless of what happens in India, global liquidity and any reduction of global growth or any reduction in global liquidity will also impact India in some fashion.

When asked whether in the financial space valuations looked reasonable or stretched and would she bet on this space, she said, financials are looking relatively less stretched as compared to other sectors. So financials, are still looking better than some of the other sector in terms of valuations.

For the entire show, watch the accompanying video

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

Explained: How employees’ mental health is top priority for companies; what steps are they taking

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

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The COVID-19 pandemic has shifted workplace dynamics all over the world — from a move towards work-from-home models to increased support measures for employees. For companies, now one of the major areas of focus is the mental well-being of employees.

Organisations are increasingly recognising the importance of their workers’ mental health. Poor mental health not only affects productivity but also the morale of employees. Recent studies have shown that poor mental health can lead to a productivity dip of 35 percent and higher attrition rates.

What companies are ‘stressing’ on

One of the ways that companies are trying to improve their employees’ sense of well-being is by reducing the chances of burning out. Burnout is essentially workplace stress that is not successfully resolved and can lead to loss of motivation and deteriorating mental health. Workplace stress can lead to other compounding health ailments, like cardiac arrest.

The recent story of an HSBC Holdings Manager suffering a heart attack due to overwork had gone viral. The World Health Organization (WHO) had estimated that working more than 55 hours increases the chances of cardiac arrest or stroke leading to death. In India, employees on average work nine hours a day for six days a week or 54 hours a week. In reality, employees often work longer hours and the commute times can also add to the stress,

Companies are combating this by giving employees more time off from work.

Actions and not words 

Nike made headlines by giving the employees in its corporate offices one week of paid leave. The week-long leave comes just ahead of Nike opening up its corporate offices for employees. Most of the workforce had been working from home, but will now need to come to the office at least three times a week. The company has not pushed back its plans to call back employees to office despite the resurgence of COVID-19 cases due to the Delta variant.

“Enjoy additional time off to rest and recover,” Nike said in a statement.

Closer home, Indian companies have also been slowly becoming more cognisant of mental health and its effects on the workplace. While older companies have mostly stuck to their traditional ways, startups have been offering employees some much-needed respite from the daily work stress.

This was especially highlighted during the devastating second wave of COVID-19 when many individuals were either suffering from COVID-19 or knew someone who had been gripped by the disease.

Also read: MakeMyTrip introduces mandatory paid time off for employees to beat COVID blues

More recently, companies like Meesho have been in the limelight for keeping the mental well-being of their employees as a priority. The social commerce startup announced that all of its employees would be offered a 10-day leave immediately after the festive season.

“Meesho is going on a company-wide break from November 4-14th. Yes, you read that right. We are going to completely unplug from work — right after our busy and frenetic festive sale season, so that we are back to doing what we love — relaxed and rejuvenated,” the company said in a Twitter post.

“Between 2020-2021, we know how hard the pandemic has been on our mental health & productivity. Meesho being a people-centric workplace understands this. We will always put our employees’ well-being as top priority and the Reset and Recharge policy is one step towards that,” it added.

Also read: As burnout complaints rise, companies try to boost employee morale amid COVID-19 pandemic

Similarly, Jaipur-based firm called Verve Logic called an impromptu holiday for September 3, even naming it a ‘Netflix and Chill’ holiday for all of its employees.

“We have taken this initiative not just to save an attack on our emails with false leaves, see mass bunks and numbers being switched off but because we know sometimes ‘Moments of Chill be the Best Pills for Energy at Work’,” Abhishek Jain, CEO of Verve Logic said in a message

“So grab the popcorn, and be prepared to wave a final bye to our most loved professor and the entire caste. With this, Verve logic would like to thank all its members who have shown an amazing spirit during work from home and helped us come out from hard times beautifully. We know after all, ‘Ek Break to Banta Hai’,” he added.

Also read: VIEW: Helping employees deal with emotional health woes in COVID-19

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

Top news of Aug 31: GDP bounces back, Nifty hits 17k, India holds talks with Taliban and more

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

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Amid the coronavirus pandemic, India’s gross domestic product (GDP) grew at 20.1 percent in the April-June quarter of the fiscal year 2021-22. While Sensex scaled 57,000, Nifty50 hit 17,000 for the first time ever on Tuesday even as global markets continued to trade mixed. India’s Ambassador to Qatar held talks with a top Taliban leader on Tuesday, the first formal engagement since the hardline Islamist group took over Afghanistan. For all these stories and everything in between, here are some top news of the day.

ECONOMY

India’s April-June quarter GDP expands 20.1% YoY on low base

Amid the coronavirus pandemic, India’s gross domestic product (GDP) grew at 20.1 percent in the April-June quarter of the fiscal year 2021-22. A CNBC-TV18 Poll also estimated the GDP to 19.8 percent due to the low base effect. Continue reading

Vijaya Diagnostic Centre IPO: Key things to know before 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

Q1 GDP growth of 20.1% reaffirms imminent V-shaped recovery forecast, says CEA

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

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As the Indian economy grew by 20.1 percent on a low base in the first quarter of the financial year 2021-22, Chief Economic Advisor Krishnamurthy Subramanian on Tuesday said the figures are indicative of economic recovery.

“Q1 GDP reaffirms the government’s prediction of an imminent V-shaped recovery,” Subramanian said, adding that India’s economic fundamentals are much better now and it is expected that the economy will be in a very good position to withstand taper tantrum.

He, however, said, last years’ growth decline has nothing to do with the economic fundamentals. Due to the national lockdown last year, GDP had contracted by nearly 24 percent.

His remarks came as the National Statistical Office (NSO) released the GDP print for the first quarter of FY22, which is in line with expectations.

According to the NSO data, gross value added (GVA) growth in the manufacturing sector accelerated to 49.6 percent in the first quarter of 2021-22, compared to a contraction of 36 percent a year ago. Farm sector GVA growth was up at 4.5 percent, compared to 3.5 percent earlier.

Construction sector GVA grew by 68.3 percent compared to 49.5 percent contraction earlier. The mining sector grew by 18.6 percent, as against a contraction of 17.2 percent a year ago. Electricity, gas, water supply and other utility services segment grew by 14.3 percent against a 9.9 percent contraction a year ago.

Also Read: April-July fiscal deficit stands at Rs 3.21 lakh crore

Similarly, trade, hotel, transport, communication, and services related to broadcasting grew by 34.3 percent compared to 48.1 percent contraction earlier. Financial, real estate, and professional services grew by 3.7 percent in Q1 FY22 compared to a contraction of 5 percent.

While there were partial lockdowns across states due to the second coronavirus wave, the CEA said its economic impact was not as large. It did impact services but not the industry that much, he said.

Subramanian said high-frequency indicators have gone up very sharply and added that gross sales grew the highest and the net profit recorded in the quarter is the highest in over 30 years.

Also Read: Moody’s keeps India’s GDP forecast unchanged at 9.6% for CY21, 7% for CY22

Commenting on banking, he said the sector has developed a cushion to weather bad loans as macro fundamentals are much stronger now. “India will be able to weather tapering of liquidity that is expected,” he said.

Moreover, he claimed that growth this year is expected to be higher than the pre-COVID levels. He also reiterated that India may reach the 11 percent GDP growth target in FY22 as projected in the Economic Survey 2020-21. Subramanian also commented on the impact that the third COVID-19 wave may have on the economy, saying “with the combination of sero prevalence and vaccination the 3rd wave may not be that intense.”

Here are all the highlights of Q1FY22 GDP data 

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

Private airport operators expected to spend Rs 42,000 crore on capacity expansion: Crisil

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

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Private airport operators are expected to spend around Rs 42,000 crore on capacity expansion over the five years through fiscal 2026 as they are confident of air traffic growth in the long term, Crisil Ratings said on Tuesday. The amount will be more than double the capital expenditure (capex) they incurred in the previous five financial years, it said.

According to Crisil, the confidence on capex stems from the strong long-term fundamentals and regulated tariff structure, which allows pass-through of capex costs and thereby keeping the risks low.

Prior to the pandemic hitting the country in early 2020, private airports were bursting at their seams, operating at over 115 percent of their design capacity. It was around 175 million passengers on a design capacity of about 150 million passengers, as per the ratings agency.

Also read: World’s best airports in 2021: Singapore’s Changi Airport drops to No 3; find out which city takes top spot

The high operating rate was due to strong annual growth of over 8 per cent in air traffic between fiscals 2016 and 2020, Crisil said, adding the operating rates took a massive hit in fiscal 2021 as the pandemic and the subsequent economic slowdown led to traffic nose-diving by around 65 percent.

Though the current fiscal also started with a more virulent second COVID wave, prospects of economic recovery look brighter with the infection rate easing, vaccinations gathering pace, and the government continuing its thrust on infrastructure development, it said.

In its note, the rating agency also said the economic growth outlook remains strong and GDP is expected to grow at around 7.4 per cent CAGR over the next four years — fiscal 2022 to fiscal 2025 — in real terms. “Economic growth will boost air traffic volumes given the impact on the increase in per capita consumption and shift in preference towards an efficient mode of commute.

Also read: Scindia seeks personal intervention of CMs of 5 states in expediting airports’ development

“Given that air traffic in India tends to grow faster than the GDP growth and the government’s push to connect lower-tier cities with metros under its regional connectivity scheme, we expect a robust 8.5 percent annual air traffic growth at Indian airports till fiscal 2026 (compared to fiscal 2020 levels),” Ankit Hakhu, Director at Crisil Ratings, said.

This would mean an additional around 190 million passengers will fly pan India by fiscal 2026 over the pre-pandemic base of fiscal 2020 of 340 million passengers, taking the overall traffic to around 530 million passengers by fiscal 2026, as per the note.

Out of the total, 70 percent or around 375 million passengers are expected to be handled by private airports in fiscal 2026, up from around 50 percent in fiscal 2020.

Also read: Explained: Naming of airports in India and other Asian countries

This expected demand growth is driving private airport operators to enhance the design capacity to 340 million passengers per annum from the pre-pandemic level of around 150 million, Crisil said. Despite this significant capacity expansion, strong increase in demand could keep utilisation rates of these airports around 100 percent by fiscal 2026.

“While the high utilisation rate justifies the large capex, credit profiles of these airports will also be supported by their regulatory business model. Tariffs for these airports are based on a fixed regulated return (weighted average of around 16 per cent on the equity investment and the market cost of debt) on capex in the next five years, which provides certainty regarding cash-flow return on the capex,” Varun Marwaha, Associate Director at Crisil Ratings, said.

Stating that airports also earn from non-aero activities, Crisil said by fiscal 2024, an increase in passenger traffic and economic revival should help this revenue stream rebound by 50 percent (in absolute terms over fiscal 2020) and contribute over 40 percent to the overall revenue of private airports.

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

RBI to conduct fine-tuning operations to manage unanticipated liquidity flows: Shaktikanta Das

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

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The Reserve Bank of India (RBI) will conduct fine-tuning operations to manage unanticipated and one-off liquidity flows, Governor Shaktikanta Das said on Tuesday.

As the market settles down to regular operations, the RBI will conduct fine-tuning operations from time to time, as needed, to manage unanticipated and one-off liquidity flows so that liquid conditions in the system evolves in a balanced and evenly distributed manner, Das said. He was speaking at a conference organised by Fixed Income Money Market and Derivatives Association of India (FIMMDA) and Primary Dealers’ Association of India (PDAI).

The governor said government securities are distinct asset class, and it is important to appreciate the role of the g-sec market in the overall macro interest rate environment of the economy.

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

Trust, convenience, and security – the holy trinity of customer experience in banking

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

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As the financial industry shifts to “digital first” banking, the most crucial aspect of business revolves around customer satisfaction. Striking a balance between customer trust, convenience, and enhanced digital security are the three-pronged challenges that financial institutions face.

According to the RBI, banks and other financial institutions reported cyber frauds worth Rs 1.38 trillion in 2020-21. In fact, according to the latest ACI Worldwide and YouGov survey conducted in May 2021, 71 percent of consumers said that they are more concerned about scams and fraud because of Covid-19, up from 47 percent at the onset of the pandemic.

The biggest concern for customers today when they make a digital transaction (UPI/eWallets) is the risk of payment fraud (42 percent), followed by privacy of data (36 percent), the survey revealed. These numbers are telling. Every month we read about digital payment volumes scaling new heights – while this is an indicator of customers adapting to the convenience, it also is an indicator of the trust that they are bestowing on the banks.

Now, more than ever before, there is a need for customer experience to climb higher in the list of priorities for fraud detection and prevention strategies in the banking and financial services sector. Fraud detection and prevention are not only about stopping unauthorised financial transactions, but they’re also crucial to create contextual, empathetic moments – non-financial transactions – that are an opportunity to touch customers in a service capacity rather than a sales one.

Serve, don’t sell

To do this, a modern payments risk management strategy must also clearly educate and inform consumers. Banks need to be able to accurately segment customers and assess risk on the fly, in real time. This can be achieved by enabling fraud and risk experts to develop bespoke behavioural profiles, leveraging adaptive machine learning models that can be applied at a tactical level. It is a myth that one size fits all when it comes to taking a mass approach to fraud. As banking becomes increasingly personalized, so too must the fraud prevention mechanisms with respect to customer profiling.

By truly getting to know customers, banks and financial institutions can tailor their level of protection based on what risk looks like, for the customer as an individual. And they can do the same for the way they communicate with those customers around fraud, as and when the need arises. To do this, banks should be leveraging the data they hold to study genuine activity just as much as the fraudulent. And, based on advanced segmentation, they create unique experiences for each customer that both reduce their risks of being a victim of fraud and ensure that, if the worst does happen, the bank has their back.

Achieving this will also allow banks to use their highly skilled human resources better, by automating processes that reduce operational overheads and free up fraud prevention staff to focus on the highest priority work; servicing customers by protecting them.

Not all friction is bad

Some degree of friction is unavoidable to detect and prevent payments fraud, but not all friction is bad. Indeed, if your authorisation requests to the customer are seamlessly tailored, then they can have a service feel to them that is more likely to delight than disappoint.

Going back to the recent ACI Worldwide survey findings, 60 percent of respondents said they choose their bank to be their first point of contact in case of payment fraud. 70 percent also felt that their bank is doing a good job of educating them and the wider public about the potential dangers (i.e. fraud) of digital payments and how to keep personal data safe. This shows that there is room to not only educate customers, but also enhance their trust in the banking system. Payments risk management in the era of digital transformation is about more than being good at fraud detection. It is about being masterful at customer interactions. Because there are real people behind every detection rate KPI or false positive, and each one has unique expectations of their bank.

Addressing the holy trinity of trust, convenience, and security

Providing customers with genuine comfort and security without negatively impacting their journey is the vanguard of convenience and trust. Financial institutions should maintain a customer journey-focused approach to ensure security measures are noticed by the consumers. In addition to this, it is also important to keep in mind that fighting fraud alone rarely pays off. That is why, despite their traditionally competitive nature, there is a need for closer cooperation between banks when it comes to fraud data and intelligence sharing. Through improved collaboration, banks can create a community where real-time information on emerging risks is freely shared between members, including central infrastructure (CI) owners.

A new model of customer interaction has emerged; one that necessitates a shift in how legacy institutions have historically done business. The migration toward digital relationships is so vital for banks today that it has become a competitive differentiator where customer-centricity is the main driver for change in a post-Covid-19 environment. It is important to get it right.

The author, Damon Madden, is Principal Fraud Consultant— Fraud & Risk Management at ACI Worldwide. The views expressed are personal

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

Realme hikes prices of smartphones by up to Rs 1500; check how much they cost now

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

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China-based smartphone manufacturer Realme has increased prices of select models, citing an increase in component cost. Two of their popular models, the Realme 8 and Realme C11 (2021), are part of the list.

The Realme 8 4GB+128G model is now priced at Rs 15,999 from the earlier Rs 14,499 making it costlier by Rs 1,500. The Realme 8 6GB + 128GB costs Rs 16,999 compared to Rs 15,499 earlier while the Realme 8 4GB + 128GB model is now at Rs 15,999, up from Rs 14,999.

The Realme C11 (2021) 4 GB + 64GB is now priced at Rs 8,799 compared to Rs 8,499. Even sub-Rs 7,000 smartphones have seen a price hike. Realme C11 (2021) 2 GB+32GB, which was earlier priced at Rs 6,999, will now cost Rs 7,299.

Other models that saw a revision in prices are the Realme C25s, Realme C21, and Realme 8 5G.

The Realme C25s saw a bump of Rs 500 and it is now being sold for Rs 10,999 instead of Rs 10,499 for their base model. The Realme C21 also saw a hike of Rs 500. Its latest price is Rs 8,999. Realme 8 5G now costs Rs 15,499, up from Rs 13,999.

The price hike is applicable across all platforms, including online players like Flipkart and Realme.com.

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