This week in a nutshell (26th September- 30th September)

Technical talks

NIFTY opened the week on 26th September at 17,165 and closed on 30th September at 17,094 after declining to 16,750. The 50WMA of 17,100 may act as a key support level, while the recent weekly high of 18,320 may act as key resistance for the index.

Among the sectoral indices, Pharma (+2.9%) and IT (+1.5%) were the top gainers while Energy (-3.5%), Auto (-3%), and Realty (-3.0%) were the losers in the week.

Weekly highlights

  • On 30th September, in its ongoing attempts to control inflation in the economy, India’s Monetary Policy Committee increased the benchmark repo rate by 50 basis points to 5.9%, marking its fourth straight increase. The Monetary Policy Committee maintained its stance of focusing on removing accommodative measures in order to keep inflation within target while fostering growth in the upcoming years. At an unanticipated meeting in May, the committee raised rates for the first time by 40 basis points. Then, by 50 basis points in June and 50 basis points in August
  • The majority of the drop in India’s foreign exchange reserves is due to the shift in valuation as the dollar rose. India’s foreign exchange reserves stood at $537.5 billion, Das said in his monetary policy speech on Friday. About 67% of the decline in forex reserves in FY23 was due to valuation changes resulting from dollar appreciation, he said.
  • The year’s best market for car sales is still India. Sales have been consistent thus far in 2022, and with the festive season commencing at the end of September, we anticipate a higher fourth quarter, according to a note written by Moody’s Investor Service. India will beat its regional and international competitors thanks to a more improved macroeconomic climate, the reduction of semiconductor shortages, and dealer restocking, it added.
  • According to the Swedish news agency, a fourth leak on the Nord Stream pipeline has been discovered off the coast of southern Sweden. All four leaks that have been found are in international seas; two are close to Sweden and two to Denmark. Since Russian President Vladimir Putin invaded Ukraine seven months ago, Europe and, by extension, the rest of the world, have been dealing with an energy crisis.  The pipeline leaks have added to Europe’s existing economic woes.
  • Concerns about historically high inflation and future monetary tightening by central banks, particularly the Federal Reserve, would probably temper any sustained rally. BOE’s sudden intervention to buy an unlimited amount of long-dated bonds sparked record gains for gilts. Last Friday’s announcement of significant tax cuts by UK Chancellor of the Exchequer Kwasi Kwarteng led to a run on British assets due to worries about the government’s ability to pay for the change and its potential to further accelerate inflation.
  • US markets plummeted repeatedly by the Federal Reserve’s resolve to keep raising interest rates until inflation eases. Wall Street indices were volatile during the week with Nasdaq and S&P ending 1.7% and 1.5% lower respectively on Friday.
  • As concerns about restricted oil supplies were overshadowed by growing worries about a global recession and a rising dollar, oil is anticipated to post its first quarterly loss in more than two years. West Texas Intermediate prices, which have fallen by almost 24% this quarter, were trading close to $80 a barrel on Friday. The dollar’s recent record-high rise has rattled crude as aggressive central bank rate hikes cloud the outlook for global growth.
  • FII (Foreign Institutional Investors) turned net sellers this week, selling shares worth Rs 1,59,900 mn. DII (Domestic Institutional Investors) were net buyers, buying shares worth Rs 1,37,440 mn.

Things to watch out for next week

  • Auto companies are expected to release their September volumes of sales. The early festive season this year, which started on 26 September versus 7 October last year, is expected to brighten the outlook for the passenger vehicle (PV) segment. However, the two-wheeler (2W) segment is expected to be muted given the weak rural demand.
  • Quarterly updates by FMCG companies like Marico and banks are expected to drive the markets in the coming week.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

Common Characteristics of Successful Private Investors

Many successful investors around the world follow different strategies to generate meaningful returns from their investments. But there are few similarities in things that they do.

Here, we speak of such characteristics commonly seen among private investors that turn them into successful individuals. Following are these habits:

  • Future time perspective: We tend to see our experiences through a past, present, or future time perspective. Eg- People with a present-time perspective may want to earn a big salary now and spend it. Whereas, successful investors start investing early. They seek uncertain future gains from the compound interest on their capital. They take a calculated risk today for earning gains in the future. They inculcate the habit of viewing opportunities through a future time perspective.
  • Investing for Freedom: Most successful investors can show off their money if they want to. But they instead choose to live a not-so-flashy life. Many investors start small and they earn money the slow way. They patiently build wealth by spending less and investing it over a long duration. They know that having more money than they need will result in freedom. Having more money frees up their time to use it for activities that they want to do.
  • Avoid borrowing to invest: Using debt in volatile markets works until the market turns down. It may erase all the gains and the capital with it. One can lose more than one started if one uses borrowed money to invest. Successful investors invest their own money after conducting research and then wait patiently. They know that once invested; they should let the compound interest work for them. This is how they generate meaningful returns on their investments without borrowing money.
  • Not team players: Investing requires one to not be part of the herd. Most successful investors are not team players when it comes to investing. They may take help from other people for research or may work with a team for a few activities. But when it comes to taking an investment decision, they understand that it’s to be done individually. There are many variables within investing which differ from person to person. Investment goal, time horizon, sector preferences, etc. This makes it a job to be done on one’s own.
  • They enjoy investing: Successful investors can put the money in passive portfolios and use their time for doing something else. But they choose to be active in markets. Some do it because they believe that they can generate good returns using their skills. Some do it because they enjoy it. Many actively traded portfolio investors keep on working despite having more money than they will need.

Some of these characteristics are simply natural to an investor. But other characteristics can be learned over years. Even a novice investor with few months of experience in the market can read, observe and learn to benefit by inculcating these characteristics in oneself.

 

Source: https://monevator.com/habits-of-successful-private-investors/

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered investment advice or research recommendation. The users should rely on their research and analysis and should consult their investment advisors to determine the merit, risks, and suitability of the information provided.”

This week in a nutshell (19th September- 23rd September)

 

Technical talks

NIFTY opened the week on 19th September at 17,540 and closed on 23rd September at 17,327. The index lost 1.2% during the week. The index has managed to sustain above the 50DMA of 17,327 level, which is acting as a support. On the upside, the recent high of 18,114 might act as a resistance.

Among the sectoral indices, FMCG (+3.9%), PHARMA (+2.1%), and AUTO (+1.1%) were the top gainers while REALTY (-3.9%), PSU BANK (-3.1%), BANK (-3.0%) were the losers in the week.

Weekly highlights

  • Wall Street indices were volatile and reacted to because of the Fed’s interest rate decision on 21st September. Nasdaq and S&P ended 1.6% and 1.7% lower respectively.
  • Oil prices during the week reacted to supply concerns ahead of the European Union embargo on Russian oil which offset fears of a global recession that could dampen fuel demand, stalled Iran nuclear agreement, and Fed interest rate hike. Brent oil futures and WTI futures ended lower wherein the former settled at USD 85/ barrel and the latter 5% lower at USD 79/barrel. 
  • The Federal Reserve raised its key interest rate by 0.75% on Wednesday, bringing the target range to between 3% and 3.25%. According to the Fed’s forecasts, interest rates will reach 4.4% by FY23E.
  • On September 22nd, the Bank of England raised its key interest rate by 0.5% to 2.25% from 1.75%, which is its biggest rate hike in 27 years. 
  • According to a circular issued by the Ministry of Finance on September 16, the government of India reduced the windfall tax on locally produced crude oil to Rs 10,500 from Rs 13,000 per tonne, easing the burden on consumers.
  • The RBI is depleting its foreign exchange reserves at a faster rate than during the taper-tantrum period in 2013, in order to prevent the rupee from overshooting. The country’s foreign exchange reserves fell by USD 2.2 bn for the week ended September 9 to USD 550.8 bn due to a drop in foreign currency assets (FCAs), a major component of overall reserves. Between January and July 2022, the RBI sold a net of USD 38.8 bn from its forex reserves. In July alone, a net of USD 19 bn was sold, and intervention remained intense in August when the rupee fell below 80 against the dollar.
  • The Asian Development Bank cut its growth forecasts for Asia, which includes India and China, for 2022 and 2023 on September 21 due to mounting risks from increased monetary tightening, the fallout from Ukraine’s war, and Covid-19 lockdowns in China. The ADB forecasts a 4.9% growth in the region’s economy in 2023.
  • On September 20, Yes Bank announced that its board of directors had approved the sale of USD 6 bn (approximately Rs 480 bn) in stressed debt to private equity firm JC Flowers after the bank received no challenger bids to JC Flowers’ base bid for the Rs 48,000 crore NPA portfolio.
  • FII (Foreign Institutional Investors) turned net sellers this week, selling shares worth Rs 43,620 mn. DII (Domestic Institutional Investors) were net buyers, buying shares worth Rs 11,380 mn.

Things to watch out for next week

  • Fed’s 75 basis point rate hike is expected to have a ripple effect which will weigh on MPC’s monetary agenda when it meets on 28th September. Investors will be looking forward to the comments from RBI regarding inflation and interest rate hikes.
  • Various economic data points are set to be released next week starting from Japan’s PMI and policy meet, China’s industrial profits and manufacturing PMI, US 2QFY22 GDP data, and jobless claims for the week.

 

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

How do we learn things? Through feedback loops

 

 

How do humans learn anything? Through feedback loops. Imagine you are riding your bike and getting late for the office – you don’t see any traffic cop at the red light… and you jump it. There was an incentive and an opportunity. A few hours later, you get a challan message. There was a camera that caught you. The next time you won’t dare to jump the red light as you already got feedback from your previous misadventure. Similarly, if you, as a good Samaritan, helped a blind man cross the road, you will instantly feel good for the deed.

Sportspersons make excellent use of feedback they receive when they make a right move or a wrong move. A tennis player who keeps hitting the net while playing a backhand topspin, instantly realizes that she has to practice it more while training.

Unfortunately, in investing, it is risky to rely on feedback.

You buy a stock and the next day the market falls and takes the stock down with it. Does it instantly become a bad investment? A long-term approach is critical for most investments to succeed.

There are a dozen reasons for markets to go up and many times the same reasons for them to fall. But feedbacks are most useful when the link between our actions and results is clear. A stupendous 25% GDP growth takes the market down just because the street was expecting an even higher number. In investing, the instant results of any action can be highly misleading. Over short time horizons, meaningless noise dominates outcomes.

Learning from short feedback loops only works if the impact of negative feedback is minor. You know that drinking poison will kill you. You don’t have to verify it by consuming it and facing its consequences. Similarly, we already know the risks involved in taking concentrated stock positions, borrowing money to invest in the stock market, and putting money in an unregulated instrument like crypto. The negative consequences of these won’t count as lessons after facing catastrophic losses.

Investors learn from their own experiences and the experience of others. Our sample size is simply too small. And hence, it is far too easy to learn the wrong lessons.

Here is a short, non-exhaustive list of things to remember:

  • Ignore near-term feedback as much as possible.
  • Decide what type of feedback is useful.
  • Learn the right things from the right people.
  • Weigh evidence correctly.
  • Focus on general principles rather than specific stories.

In investing, useful feedback is often received too late because meaningful results only emerge over time. Investing is an exercise in dealing with short-term noise, deep uncertainty and profound behavioural challenges. The best we can do is base our decisions on sound principles, always be willing to learn and understand that most short-term feedback can be ignored.

 

 

With excerpts from www.behaviouralinvestment.com

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered investment advice or research recommendation. The users should rely on their research and analysis and should consult their investment advisors to determine the merit, risks, and suitability of the information provided.”

 

Keep it Simple, Silly!!!

“Money saved is money earned.” As soon as we start earning, we think of saving and investing money to achieve our future goals like marriage, buying a house, or children’s education and retirement. To achieve the financial goals, we look into many options available in the market.

We all know about investments like FD, mutual funds, and stocks. Many of us aren’t aware of more investment options – hedge funds, futures and options, and alternative investment funds. In each of these categories, there exist many subcategories offering very detailed and complicated investment options. Some funds specialize in arbitrage investing, high-frequency trading, investment strategies that are top secrets, and so on.

The greed for getting maximum returns out of our investments makes us investigate and try all the options available. But the reality is that a huge chunk of these complicated investments simply fails to outperform simpler investments. Even the ones that do perform very well – choosing the right one itself is a very complicated task, which most normal investors cannot afford to do. Most individual investors work full-time at their job or business. Very complicated investments require constant time and attention –that simply isn’t available.

If it is complicated if it needs to be explained by someone sitting at a lunch table if it’s proprietary if it’s only available from certain companies and if it makes claims about your future financial health, don’t buy it.

Instead, go to the periphery of the market where all the least processed, least complicated, least expensive financial products can be found, fresh every day.

Like any industry, investing has its language. And one term people often use “investment portfolio,” which refers to all your invested assets.

Building an investment portfolio might seem intimidating, but there are steps you can take to make the process painless. One of the most important things to consider when creating a portfolio is your risk tolerance. Your risk tolerance is your ability to accept investment losses in exchange for the possibility of earning higher investment returns. Your risk tolerance is tied not only to how much time you have before your financial goal such as retirement but also to how you mentally handle watching the market rise and fall. If your goal is many years away, you have more time to ride out those highs and lows, which will let you take advantage of the market’s general upward progression.

Steps for building a portfolio

  • Decide the amount to be invested
  • Choose your investments based on your risk tolerance
  • Determine the best asset allocation for you based on the risk-taking capacity
  • Rebalance your investment portfolio as needed
  • Keep reviewing and update

Happy Investing!!!

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered investment advice or research recommendation. The users should rely on their research and analysis and should consult their investment advisors to determine the merit, risks, and suitability of the information provided.”

 

This week in a nutshell (12th – 16th September)

Technical talks

NIFTY opened the week on 12th September at 17,891 and ended in the red at 17,531 on 16th September, after high volatility during the week. The index lost 2% during the week. The next support and resistance levels for the index would be 17,497 and 17,636 respectively. It broke its 20 DMA levels and closed below that.

Among the sectoral indices, METAL (+1.9%), PRIVATE BANK (+1.3%), and BANK (+0.9%) were the gainers during the week while IT (-7%), REALTY (-3.3%) and OIL & GAS (-3.2%) led the losers.

Weekly highlights

  • US major indices witnessed huge volatility during the week and closed the week in the red, inflation data and the federal reserve’s announcement in the next week regarding interest rate dragged down the investors’ sentiments the S&P 500, Nasdaq, and Dow Jones closed the week with heavy loss of 5%, 6%, and 4% respectively.
  • Oil prices fell for a third straight week, the Brent crude and WTI crude closed with a loss of 1% and 1.3% respectively during the week.
  • India’s retail inflation based on Consumer Price Index (CPI) surged to 7% in Aug-22 and burst the downward trend of the last 3 months. The surge was mainly led by higher food prices, as it accounts for nearly half of the CPI basket. The inflation remains above the RBI’s tolerance level of 6% for the last 8 months in a row. Along with CPI India’s Wholsale Price Index (WPI) data was also released. India’s WPI inflation stood at 12.4% in Aug-22, a decline from 13.9% in Jul-22, drop in fuel prices dragged down the WPI inflation below the previous month.
  • US CPI data was released during the week ahead of the Federal Open Market Committee (FOMC) meeting in next week, US CPI inflation stood above the expectation at 8.3% for Aug-22. The decline in gasoline prices helped to cool down the rate compared to the previous two months’ rate but the cost of food, housing, and autos remains elevated.
  • Mining conglomerate Vedanta and Taiwanese electronic manufacturer Foxconn announced an investment of Rs 1,540 Bn for India’s first semiconductor plant in Gujrat through a 60:40 joint venture. The plant is expected to start production in two years. Local manufacturing of chips is expected to bring affordability to manufacturing electronic devices and it will reduce the dependency on other countries.
  • Union health and family welfare ministry of India released the National List of Essential Medicines 2022 (NLEM 2022) on Tuesday. The NLEM 2022 consists of 384 drugs vs 376 drugs in 2015. New 34 drugs were added and dropped 26 drugs in the new list. The National Pharmaceuticals Pricing Authority (NPPA) fixes the prices for these drugs. The government said several important medicines will become more affordable and reduce patients’ out-of-the-pocket expenditure.
  • On Thursday, IMF spokesperson stated that the global economic outlook continues to be dominated by downside risk and in CY23 some countries are expected to fall into recessions, but it is too early to say if there will be a widespread global recession. IMF revised down the CY22 and CY23 global growth to 3.2% and 2.9% respectively in Jul-22.
  • Data released by the commerce ministry of India shows India’s merchandise export stood at USD 33.9 bn and trade deficit stood at USD 27.9 bn for the month of Aug-22. Electronic goods, rice, oil meals, tea, coffee, and chemicals witnessed positive growth.
  • Foreign investors invested ~ Rs 56 bn into the domestic equity markets in September so far in the anticipation of growth in consumer spending on account of the upcoming festive season and stronger macro fundamentals than other emerging markets.
  • The foreign institutional investors (FIIs) and Domestic institutional investors (DIIs)  both were the net sellers during the week. FIIs sold equities worth Rs 19,216mn and DIIs sold equities worth Rs 29,368mn.

Things to watch out for next week

  • Next week will be very crucial for the global financial markets as the investors will closely watch the Federal reserve’s FOMC interest rate decision on Wednesday and the Bank of England MPC meeting on Thursday as well as initial jobless claims in the US.
  • The investors might ride a rollercoaster in the next as volatility will likely persist in the next week amidst central banks’ stance on interest rates, heated inflation, and raw material and supply chain uncertainties on account of geopolitical tensions and elevated commodity prices.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

This Week in a Nutshell (5th – 9th September)

Technical talks

NIFTY opened the week on 5th September at 17,546 and closed at 17,833 on 9th September.  The index made a weekly gain of 1.7% during the week. On the upside, the upper Bollinger band level of 18,199 might act as a resistance. On the downside, it can take support at the 50-week moving average near 17,137. Even though the RSI of 60 does suggest some caution, in the recent past NIFTY has comfortably traded at a 60+ RSI level.

Among the sectoral indices, PSU BANK (+4.3%), IT (3.5%), and MEDIA (3.2%) led the gainers during the week. AUTO was the only sector that ended marginally in the red.

Weekly highlights

  • The US indices snapped a three-week losing streak despite remarks from the Federal Reserve officials on rising treasury yields. Geopolitical tensions and the US central bank’s aggressive tightening may tip the US economy into recessions were on investors’ minds during the volatile week. The US markets had a truncated week due to Labor Day weekend with the tech stocks and blue chips leading the rally. NASDAQ closed up 4.1%, S&P 500 up ~3.7%, and Dow Jones Industrial Average up ~2.7%.
  • Crude oil prices also remained volatile during the week with the OPEC+ meeting on Monday 5th. To support oil prices, which have fallen due to concerns about an economic downturn, OPEC and its partners, led by Russia, decided on a modest reduction in production. For October, the oil producers will reduce their output by 100,000 barrels per day (bpd), or just 0.1% of the world’s demand. They also concurred that Saudi Arabia, the organization’s dominant member, could call an emergency meeting at any time if volatility continues. Price hikes due to the output reduction would worsen India’s current account deficit.
  • The volatility in crude prices continued after reports that the Biden administration might stop releasing barrels from the US Strategic Petroleum Reserve on the market after October, in an attempt to keep energy prices down that have led to unprecedented inflation. Brent Oil ended the week at USD 92.4/barrel (-0.7%) while Crude Oil WTI (West Texas Intermediate) ended the week down 2.4% at USD 86.1/barrel.
  • After Russia announced that one of its key gas supply pipelines to Europe will remain closed indefinitely, gas prices in Europe increased by 30% on Monday. A leak in the Nord Stream 1 pipeline, according to Russia, will cause it to remain closed beyond the three days of scheduled repair last week.
  • In India, FADA released the data for retail sales of automobiles for August-22. The sales grew 8.3% YoY driven by an increase in vehicle registrations across all major segments. Two-wheeler retail sales grew 8.5% YoY while passenger vehicle sales grew ~6.5% YoY.
  • The National Company Law Tribunal (NCLT) Mumbai panel directed Zee Entertainment to call a shareholders’ meeting on October 14 to approve the merger with Culver Max Entertainment on Wednesday (formerly Sony Pictures Network).
  • To increase domestic supply in response to a decline in the area under the paddy crop in the current Kharif season, the Indian Government implemented a 20 percent export levy on all non-Basmati rice, with the exception of parboiled rice.
  • The Foreign Institutional Investors (FII) purchased equities worth Rs 61,367mn. Domestic Institutional Investors (DII) sold shares worth Rs 3,521 mn.

 Things to watch out for next week

  • Global markets will watch out for the US inflation numbers expected to be released on Tuesday 13th, ahead of the Federal Reserve policy meeting on September 20-21.
  • Indian investors’ attention would be on the consumer price index (CPI) inflation numbers for August, before the monetary policy meeting scheduled to be held towards the end of September. The industrial production data for July and wholesale price index (WPI) inflation for August is also expected to be released in week starting 12th. 

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

This Week in a nutshell (Aug 29th to Sep 2nd)

Technical talks

NIFTY opened the week on 29th August at 17,189 and closed on 2nd Sep at 17,540. During the week, NIFTY was up 2.0%. Index has breached 50-week moving average on the weekly chart with RSI at 58. Immediate support for the index stands at 17,137 and resistance at 17,559.

Among the sectoral indices, Realty (+3.0%), Auto (+2.2%), and FMCG (+2.1%) were the top gainers during the week.  IT (-3.4%), Pharma (-0.7%) and Metal (-0.3%) were the top losers in during the week.

Weekly highlights

  • Wall Street was bleeding this week. The downfall started as investors were worried about the Federal Reserve’s determination to aggressively hike interest rates to fight inflation even as the economy slows.
  • Fed Chair Jerome Powell told the Jackson Hole central banking conference in Wyoming the Fed would raise rates as high as needed to restrict growth and keep them there “for some time” to lower inflation running at more than three times the Fed’s 2 percent goal.
  • The Fed’s stance worsened concerns about an economic slowdown and caused a significant selloff in the US market with the spillover roiling markets around the world.
  • The downwards rally continued as a rise in job openings fuelled fears the U.S. Federal Reserve has another reason to maintain its aggressive path of interest rate hikes to combat inflation.
  • On Thursday, US investor focus turned to a key report on the labor market. The weekly jobless claims fell more than expected to a two-month low last week and layoffs dropped in Aug-22, giving the Fed a cushion to continue raising rates to slow the labor market.
  • The S&P 500 ended the week with a loss of 3.3%. The index fell 1.1% on Friday after early gains from a U.S. jobs report as worries about the European gas crisis began.
  • The global markets continued to be in red as weak Chinese data and new Covid-19 lockdowns in China weighed on sentiments and on deepening worries about aggressive rate hikes and record-high inflation in the Euro region.
  • Japan’s jobless rate was steady at 2.6 percent in July, while the availability of jobs grew for the seventh straight month to a more than two-year high, government data showed on Tuesday.
  • Back home, the Indian market remained volatile during the week. It had a gap up opening and recovered quickly due to weak global cues, spooked by the aggressive stance taken by the US Fed to tame inflation that triggered fresh worries about interest rate hikes. This also increased the concerns over the possible withdrawal of foreign funds from Indian markets.
  • Auto stock gave positive returns this week amid reporting of Aug-22 sales volumes by auto companies. New product launches and shortage of semiconductors easing helped companies to step up production ahead of the festive season that kicked in with Ganesh Chaturthi on Wednesday. In domestic retail, Passenger Vehicles sales were up ~7% MoM and 2W sales rose ~3% MoM. On commercial side, 3W sales grew ~11% MoM with CV sales flat MoM.
  • India’s GDP growth rate was 13.5 percent in April-June as compared to 4.1 percent the previous quarter, data released on 31st Aug-22 by the Ministry of Statistics and Programme Implementation showed. The growth was pulled down by the poor show of the manufacturing sector, which reported a paltry 4.8 percent expansion in 1QFY23, negating the robust show by the services sector.
  • Oil prices tumbled below USD 100 per barrel on fears over slower economic growth due to renewed restrictions to curb COVID-19 in China and tighter monetary policy in US. West Texas Intermediate futures dropped 6.7% for the week and settled at USD 88 per barrel and Brent crude was at USD 93.95 a barrel.
  • Reliance Industries Ltd (RIL) held its 45th annual general meeting where it announced the plans to invest Rs 2 tn to set up a 5G network across India and has ear marked Rs 750 bn to expand its petrochemical capacity.
  • The foreign institutional investors (FIIs) were net buyers for the week as they purchased equities worth Rs 13,062 mn. Domestic institutional investors (DIIs) were net sellers as they offloaded equities worth of Rs 2,307 mn during the week gone by.

Things to watch out for next week

  • For the energy sector, a crucial OPEC+ meeting at the start of the week could decide the near-term fate of oil prices, while the global gas industry gathers in Milan to weigh the enormous pressures caused by Russia’s invasion of Ukraine and soaring fuel costs.
  • India’s bank deposit growth and foreign exchange reserves would be the key data points to track. IPOs and The European Central Bank policymakers meet to take a call on interest rates would set the mood for the market.​

 

Have you heard about the Metaverse?

Have you heard that Facebook has changed its name to Meta and that Mark Zukerberg is betting the future of his company on a vision that will have us spend more time in the virtual world?

Well really, the metaverse uses different sets of technologies such as virtual reality (VR) and augmented reality (AR) to allow people to have real-time interactions and immersive experiences across distances. It’s expected to be a space wherein our digital world and the physical world converge.  The provider companies will be looking forward to providing experiences to users such as virtual concerts, theme parks, casinos, sports arenas, shopping centers, etc. There are several games such as Decentral, Roblox, Minecraft, etc. that have their own metaverse worlds equipped with their own avatars, interactions, and currency. The gaming industry allows users to pay real currency for virtual currency which can buy you lands, farms, and businesses to progress faster in the game.

The ‘metaverse’ has essentially amplified this concept wherein you can build, trade, and make money using NFTs via cryptocurrency. Virtual goods can be turned into NFTs and stored on metaverse platforms as assets. Metaverse users can then trade these NFTs for cryptocurrency or choose to cash out.  Now, you would be wondering what are these NFTs. NFT is a nonfungible token associated with a digital or physical asset and stored on blockchain technologies such as cryptocurrencies such as bitcoin, or Ethereum. These can be sold or traded.

For example, ‘Decentraland’ is a 3D virtual world browser-based platform where users buy virtual plots of land as NFTs via the MANA cryptocurrency, which uses the Ethereum blockchain.

These platforms are targeted toward the tech-savvy younger audience (15-30-year-olds) wherein the audiences are expected to be present in a Meta world for businesses such as work meets or for fun activities such as concerts. The experience would be similar to consumers visiting physical stores to purchase goods. Metaverse could facilitate hybrid work meetings or training programs spanning multiple locations.  Several brands are beginning to experiment with the metaverse. Nike is looking to connect with younger generations through a gaming and virtual reality experience and has launched Nikeland, a virtual world made in partnership with Roblox. By early 2022, nearly seven million people had visited Nikeland.

What are the big tech companies such as Meta (earlier Facebook), Google, and Microsoft doing with metaverse?

Meta, in December 2021 announced that it plans to invest USD 10 bn into metaverse platforms and that money will be going towards connecting people via this new digital experience.

Microsoft announced in January 2022, that it would be acquiring Activision Blizzard, an enormous video game developer, and publisher for USD 68.7 bn. Google has invested about USD 39.5 mn in a private equity fund for all metaverse projects for utilizing augmented reality and making services like Maps and YouTube into the virtual landscape.

Tech Mahindra announced the launch of the first-of-its-kind ‘Meta Village’, a digital twin of Paragon in Maharashtra to gamify learning on the Roblox platform. Strengthening its commitment to the ‘Make in India’ initiative, Tech Mahindra initiated its launch of the Meta Village to drive innovation in the education sector at the grassroots level. The Meta Village will ensure that the students play on Roblox to learn the basics of computers and coding in Bharat Markup Language (BHAML), a platform built by Markers lab that enables anyone to code in their native language.

How will it affect companies?

Metaverse is an immersive experience that holds potential for innovation in branding, marketing, and commerce. Metaverse creates opportunities for companies to reach out to consumers in a more engaging manner. Brands would have to create their presence in the metaverse with 3D representations of their products, for example, a ‘try on virtual clothing’ option for a clothing brand.

What do these new developments mean for investors like us?

Investors can invest in businesses involved in immersive hardware, semiconductors, interactive platforms, connectivity, and other potential layers that comprise the metaverse universe. Patience is essential to realize meaningful returns on metaverse investments, which may take a decade or more to develop.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

This week in a nutshell (16th August- 19th August)

 

Technical talks

NIFTY opened the week on 16th August at 17,797; with a holiday on Monday, the four-day work week ended with NIFTY closing at 17,758 (-0.2%). The index is trading above all the moving averages on a daily as well as weekly timeframe. On the upside, the upper Bollinger band level of 18,123 might act as a resistance. On the downside, it can take support at the 50-week moving average near 17,134. Even though the RSI of 61 does suggest some caution, in the recent past NIFTY has comfortably traded at a 60+ RSI level.

Among the sectoral indices, REALTY (+1.6%), INFRASTRUCTURE (+1.5%), and FMCG (+1.2%) led the gainers, whereas PSU BANK (-1.1%), PHARMA (-0.5%), and BANK (-0.1%) were the losers this week.

Weekly highlights

  • September 1, 2022, has been fixed as the Demerger Record Date for the purpose of confirming the names of shareholders of the company who would be entitled to receive equity shares of Piramal Pharma (PPL). A shareholder with 1 share of Piramal Enterprises (PEL) is entitled to get 4 shares of PPL.
  • Auto manufacturer Mahindra & Mahindra announced that it would introduce five new electric Sports Utility Vehicles (SUVs) for both domestic and foreign markets. The first four of these vehicles are scheduled to go on sale between CY24 and CY26.
  • For the first time, large quantities of petroleum coke are being imported by Indian businesses from Venezuela. India’s increasing demand for Venezuela’s petcoke, an oil refining byproduct and coal substitute, is being driven by a race for low-cost fuel to power factories as the price of coal has skyrocketed globally. Petcoke is mainly used as a fuel source in power plants.
  • As vegetables, milk, and fuel became less expensive, India’s wholesale inflation decreased sequentially in July to 13.93%, but it stayed above 10% for the 16th consecutive month. The WPI inflation moderated as a result of a decrease in the inflation for food goods, core-WPI, crude oil and natural gas, and major non-food items.
  • The government on Thursday increased the windfall profit tax on diesel export to Rs 7 per litre from Rs 5 per litre earlier. The government again imposed Rs 2 per litre tax on the export of aviation turbine fuel after scrapping it earlier this month. While introducing the new levies, the government had said that it will review exports and imports of these items every fortnight to amend its decision.
  • Gold dropped to a 3-week low on last Friday due to fears of the US dollar strengthening, and an interest rate hike.
  • US stocks closed lower on Friday, with indexes volatile after minutes from the Federal Reserve’s meeting in July suggested policymakers may be less aggressive than previously thought when they raise interest rates in September. The S&P 500 was down 1.2%, Nasdaq 100 was down 2.3%, and Dow Jones was down by 0.1% respectively.
  • FII (Foreign Institutional Investors) were net buyers of shares worth Rs 31,290 mn and DII (Domestic Institutional Investors) were net buyers of shares worth Rs 18,089 mn this week.

Things to watch out for next week

  • The corporate results season for the April-June quarter of FY23 has come to an end. Market movements are likely to be company specific. As the result season ends, investors’ attention will now be on management comments at the AGM (Annual General Meeting).
  • Federal Reserve Chair Jerome Powell will address the annual global central banking conference in Jackson Hole, Wyoming, on 26th It’s a highly anticipated speech that could signal how interest rate hikes will pan out and how long they will need to stay there to bring down soaring inflation.

 

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”