Why we are obsessed with money

What a way to exist!

For most of us, practically the whole day all we are thinking is about money and more specifically how to have more money!

As if money was the only thing in life. Unfortunately for most of us, circumstances just do not permit any other thought!

We are running behind money most of the time which is almost akin to have become obsessed with money. Everything that we are doing in life is centred around money.

Unfortunately, this is because we need money for anything and everything that we do. There’s nothing wrong and what are you doing, however the problem is that over time, it becomes a compulsive habit to keep earning more.

That’s where the danger is. The problem is that there is a point where from we chase money as an addiction, we chase money because we like to do so. If we did not chase money we would not know what to chase now because we get out identity from money and the amount of money we have.

Another thing is that right from childhood we are always taught and our minds are conditioned that everything that we are doing is going to be for the sake of earning money.

There is no one who told you that money is just a means, and then there is something greater in life to achieve. Some examples are legacy; building something, charity; to giving something / helping someone, passion; pursuing something and living; simply to enjoy life and your money

We have got addicted to this and how!

There are three reasons for this:

First, we are what we do. It is the human behaviour. I know I should exercise and I don’t. I know I should eat healthy and I don’t. I know I should spend time with my kids and I don’t. I know that, yes, money isn’t going to make me happy and I still keep trying to make money.

We live by the laws of inertia, in a pattern which is hard to break. But we have to break it. For ourselves and for the sake of people and reasons for which we are chasing money.

Secondly, we need signals of progress. Money is a measure of how far you have progressed in life. The more the money you have the more you can make sure your progress. It’s simply the logic of evolution. People need validation of their success. Bigger house, bigger car, branded goods and list goes on.

Thirdly, it’s the easy way out. It’s only human to avoid difficult things. Important things are very difficult to measure.  Have I been a good father or husband? Have I groomed my child well?  Such things take years to measure and we still don’t have answers.

So, should we not be focused on creating money for ourselves?

I’m not saying that. Definitely create. Take care of yourself for sure!! Use it to the maximum to make yourself happy!!! You need a certain amount and beyond that is extra.

The definition of their certain amount is naturally different from one person to another. If that extra is going to happen easily, without stress and without your involvement, then its fine. Basically don’t kill yourself for that extra. Be Smart.

Kartik Jhaveri is an expert at planning money, life and aspirations. He is a certified financial planner, wealth manager and financial freedom coach.

How the RBI actually helps you

RBI

Most of us in Mumbai, see this huge structure called the Reserve Bank of India and wonder what it really does. It’s also a tourist attraction!! It has so many other offices and again one wonders why they need to have so many offices. I’m going to try and highlight a very interesting part of RBI’s work and how it helps us directly on a day-to-day basis.

The RBI does a review of the monetary policy of the country at frequent intervals during the year. So how does the monetary policy help us investors to take smart decisions?

Monetary policy is a tool by which the RBI decides to raise interest rates or reduce interest rates or keep them steady.

In our country, as we’re an oil importing nation, this decision is very closely linked to Oil. Oil to a large extent contributes to inflation. We all know what happens when inflation keeps rising. We in India unfortunately do not see too much of inflation falling and things becoming cheaper.

Oil is Not Well

So when oil prices rise i.e. we see a rise in crude oil prices almost instantly we can expect rising food prices. This is because there is going to be a rising cost pressure for manufacturing & services. This rise obviously gets passed onto the retail consumers.

When this happens RBI adopts a hawkish stance, tries to pull money out of the system by raising interest rates. Now when interest rates rise no one seems to be interested in borrowing. This immediately puts a brakes on money circulation.  Less money chasing goods decreases the demand for money. This way it controls inflation.

There is yet another tool that the RBI has and that is known as the CRR or the cash reserve ratio.  This ratio in simple words means the amount of cash that the bank must maintain with the RBI as the percentage of the total assets. So when this increases banks are forced to park more with the RBI and this is also a way to control inflation.

On the other hand when things look dull, when there is a recession of sorts, the RBI comes to the rescue and gets into action to kickstart growth in the country. It does this by lowering the interest rates. This we all will understand quite easily because we see a direct benefit of this happening. We see a fall of interest outgo in our EMI’s for the home loan that we are carrying. New loans become cheaper.

Individuals are motivated to go out and make purchases, whether it is for a washing machine or a piece of real estate. Businesses are motivated to go out and borrow to buy more machinery, to expand capacity, to hire more staff and manpower and basically do everything that will add to the growth of business.

Economic growth results as a result of all this. It is also during this time that stock market rises, we see a rally in stock prices and mutual fund NAV’s jumping higher and higher each day. There is prosperity all around.

Critical Role

As you can see that the central bank of the country has a very very important role to play.  If it makes a mistake, things can go really wrong.  Imagine like the USA or Japan if our interest rates were very low; everyone would run to borrow, they would borrow more than they require because it would be cheap and easy to borrow. And that is very individuals would run into what is known as the debt trap, because someday you’ll have to pay back.

Each day the central bank attempts to make sure that everything in our country remains stable and financially there’s nothing that goes wrong dramatically.

Kartik Jhaveri is an expert at planning money, life and aspirations. He is a Certified Financial Planner, Wealth Manager & Financial Freedom Coach.

The year of the bond, once again!

We are not talking of James Bond, we are talking of investment bonds.

We are in a situation where the fixed deposit rates are at a general low and there is a lot of discontent among depositors of fixed deposits.

Whenever we see a situation like this, one way or the other, the bond markets come to the rescue. It comes to the rescue of smart depositors, who are agile to move their money from fixed deposits to bond funds.

Let’s understand what is happening and why.

What Exactly is Happening in the Bond Markets?

It is likely that in this year, investors of bond funds will make handsome gains. Bond prices may rise and there may be capital gains. Investors of bond funds not only earn the rate of interest, but also earn capital gains. So that way, they make more than the return they would make on fixed deposits. The returns could be a high single digit or sometimes as high as double digits.

Over three years, this will become practically tax free or the tax would be a very small amount. So, basically, I am thinking that a rally will happen in the bond market. There are three main reasons for this — reduction in government borrowing (which is favourable), recovery of trading losses (which is favourable) and no change in monetary policy (which is neutral).

A word of caution, however, that such bond market investments are also subject to bond-market volatility and should be considered ideally with the help of a financial expert.

Before proceeding further, let us, therefore, quickly explain a bond, bond fund and bond market. We need to do this because few people understand the bond markets and even fewer invest in the bond markets.

Bond is nothing, but a commercial transaction where the borrower is issuing a bond to the lender and the lender will earn a certain rate of interest. When interest rates fall, everyone becomes interested in owning that bond.

As a result, the demand for the bond increases, the price of the bond increases and the bondholder makes capital gains.

A bond fund is a fund where ordinary investors pool in their money and a fund manager buys them a portfolio of bonds.

Moving onto the Reasons For a Rally in Bond Funds…

Now, the fundamental reason for a rally is reduction in interest rates as it stimulates economy and growth.

Firstly, the government is a massive borrower of funds. So a reduction in government borrowing reduces the demand for money in the economy. As a result, prices of bonds rise and this contributes to capital gains for bond holders.

Secondly, the Reserve Bank of India (RBI) recently announced that the commercial banks and RBI, which are the largest lenders to the government, will have another year to offset losses they have incurred on account of buying government bonds in the past. This action will lead to a rise in the price of bonds and this contributes to capital gains for bond holders.

Lastly, on one side due to the rise in oil prices, there is more inflation and thus more money is needed for circulation in the economy. On the other side, many government bonds are maturing, which will provide money supply. So, it is likely that we see a neutralising effect and thus RBI will take no action. This inaction here will support capital gains as explained above. Hence, this year might be a year of good gains for the bond investors.

Kartik Jhaveri is an expert at planning money, life and aspirations. He is a Certified Financial Planner, Wealth Manager & Financial Freedom Coach.

Five new financial goals for you this summer

I am going to try and explain to you why the summer holidays of April and May are great months to get a lot of things started, financially speaking.

This time period in a way resets the financial clock. You also have the option to hit the reset button on everything you have done so far; financially speaking of course and hope to do better things better than you did last year.

Let’s look at some of the new and unusual things to do in April.

  • Make a learning budget

Learn something about money or anything you like. The best way to make money is to learn something about money. Just like if you wanted to learn cooking you will get into the cooking class. If you wanted to learn swimming you would enrol in the swimming class. If you find learning about money is too daunting task than learn something which is close at to your heart or related to your work. If you learn something new, there’s a possibility that you will use your new ideas to generate new income and in turn that will generate new wealth for you.  So make a budget, enrol somewhere and spend that budget. How about a % of your annual income? Spend it for sure!

  • Plan a unique holiday 

When you’re by yourself and without your mobile phone you will have the opportunity to think! When you have time to think, suddenly good ideas will come to your mind.  You may think this is silly but you can be sure that you will be amazed if your drivers experiment just once. So it might be a good idea to go for a holiday just by yourself. If you find that too intimidating, join a group of strangers. You can combine that with the adventures experience if you like.  Be extra careful if you’re going with your special buddies. Do this only if they are going to be in a position to help you discuss your idea and make it bigger. They must play the role of complimenting your thoughts. So make a schedule to do this holiday and obviously make a budget to make it happen. Think & create new ways of making wealth.

  • Make a prediction and make it happen

Be brave. Let’s aim to grow and multiply net worth by 50% by the time you come to the end of this financial year. This is not a joke and it is easier than you can imagine.  I’m speaking about NETWORTH and I’m not talking about return on investment. If your networth is Rs. 100 today, all I’m saying is that let’s aim to make this a 150 by the end of this year. This networth comprises of all your savings till date. This can be achieved by simply saving aggressively every month for the next twelve months. Just put this into a recurring deposit or liquid fund so you don’t spend it.  We just have to prove to ourselves that this is possible. Where and how we will invest this money will think about that later.

  • Eliminate a negative belief 

I want to give you an exercise here. Write down all your negative beliefs you have about money and wealth. Most people are not able to achieve the desired level of wealth because they think about wealth negatively. So even if you are earning a good amount of income you will never see yourself becoming wealthy. Examples are money causes problems, money causes a fight, managing money is complicated etc. Then for each negative thought, you have written down the positives i.e. the opposite for a few months. Soon negatively biased feelings will evaporate.

  • Make a new investment; something you have not done before

Again here you do not have to be a financial expert. The idea is to learn something new. There are hundreds of investment options. Our objective here is to learn something new. Talk to your advisor and seek his or her guidance. Just a word of caution here; don’t do anything which is speculative or is something that you just can’t understand. Do what do find easy you understand and do that then.

Kartik Jhaveri is an expert at planning money, life and aspirations. He is a Certified Financial Planner, Wealth Manager & Financial Freedom Coach.

Seeking financial freedom? The time is NOW!

John Lewis famously remarked, “If not now, then when? If not us, then who?” This is so appropriate in the current financial world that we live in.

That statement will leave to rest every other argument that is conservative and against the idea of wealth creation. We are often faced with the situation where there is no option but to create wealth. Read on to know why!

Interest rates are painfully low. For all those diehard fans of guaranteed investment returns, there’s hardly any place to go to. Thinking of fixed deposits? Feeling happy with 7%? And fully taxable? That period is over. Period.

That doctrine of investing into pure fixed deposits and similar instruments is unfortunately standing challenged. There is no option but to sprinkle it with a combination of a little something that will add to the returns earned from fixed income type of securities. In fact this category of investors are in a way, best placed in terms of the current tax laws.

They can earn about 9-10% with minimal or near zero tax over about five years and more. Starting to generate rate of return above the inflation level of 7% is starting to create wealth. So there it is; there is no option but to move in the direction of creating wealth.

For more evolved investors, who invest in equities and who and still sitting on the sidelines tend to run out of patience every now and then. They are sometimes waiting for the right time, sometimes waiting for correction, sometimes waiting for valuation and sometimes waiting for just nothing. Sometimes, just too busy to take action!

I totally understand not wanting to lose hard-earned money. But if the money does not move it will stagnate. That’s the problem with money.

Hit the Ground Running

Inaction and inactivity kills it. Makes it costly to hold. Makes us lose opportunities, sometimes small and sometimes significant. I know of many people including my dad, who just kept investing into equities and holding forever. No doubt they were hugely (big HUGELY) better off then the people in the same time zone. I think they could have done far better with some smart lessons on asset allocation. This is because if they compare the growth rate of their holding over a period of 20 or maybe 30 years the compounded rate of return earned is often not impressive.

It is just marginally better or a few percentage points above the fixed deposit rate. Hence the need for asset allocation, which simply put is not to have all eggs in one basket at any given point in time. These sections of investors anyways create wealth, and, asset allocation is the tool that ensures that the process of wealth creation continues uninterrupted. So again there it is; even for this section there is not option but to start enhancing their wealth creation activities, else returns will continue to remain forever mediocre.

Then there are skeptics and there is nothing much for skeptics of everything, except that they need a serious dose of financial education. Perhaps what if needed is a proof of concept and for that, which better country to live in other than India where financial transparency in investments is so high that I sometimes feel, it comes from another planet.

 Your Money Needs Action

Today, there is a whole lot of variety to choose from and we have never been more spoilt for choice. But the most important thing in all this is to understand that your money needs action. It needs activity and for that the time is now!

And furthermore, if you asked me this question 10 years ago; I would have said that, the Time is NOW. If you ask this question 10 years hence, I will still say the Time is NOW. Any time is the right time to start the process of creating wealth. All that is important is that you take your first step; then continue it all the way with zeal and determination… till you have the level of wealth that you desire. And if you accumulate more than you need, still do it and share it with the world.

If you want your financial freedom; then the Time is NOW!

Kartik Jhaveri is an expert at planning money, life and aspirations. He is a Certified Financial Planner, Wealth Manager and Financial Freedom Coach.

Young Turks: Here’s the success story of venture fund Aspada

Venture fund Aspada was co-founded by Kartik Srivatsa and Thomas Hyland in 2012 and has made 17 investments so far across Fin-tech, agriculture, health and edu-tech startups.

Young Turks takes a look at their investment thesis, their differentiated VC model and meet three of their portfolio companies – Capital Float that underwrites unsecured loans to startups and SMEs; Dunzo, a hyper local concierge and delivery player that is also Google’s first direct startup investment in India; WayCool, a Chennai-based agriculture-tech startup.

After New Zealand, England calls off Pakistan cricket tour

England’s cricketers were withdrawn from a trip to Pakistan to play limited-overs matches next month, sparking an angry reaction from the spurned host nation on Monday.

The decision taken by the England and Wales Cricket Board came three days after New Zealand Cricket abandoned its men’s teams limited-overs tour of Pakistan following a government alert that warned of a possible attack outside Rawalpindi Stadium.

We know there are increasing concerns about travelling to the region, the ECB said, and believe that going ahead will add further pressure to a playing group who have already coped with a long period of operating in restricted COVID environments.

Pakistan Cricket Board chairman Ramiz Raja said he was “disappointed with England,” adding on Twitter that the English were pulling out of their commitment & failing a member of their Cricket fraternity when it needed it most.

England men’s and women’s teams were scheduled to play Twenty20 matches in Rawalpindi next month.

Also Read: Cricket: India coach Ravi Shastri confirms exit after T20 World Cup

England’s men have not played an international in Pakistan since 2005 while the women were to visit for the first time. They were due to play three ODIs as well as two T20s.

Pakistan was a no-go zone for international cricket teams for a decade after terrorists attacked the Sri Lanka team bus in Lahore in 2009. The ambush killed seven people and injured several Sri Lankan cricketers.

International teams resumed touring Pakistan in 2019.

The ECB came to a decision after a board meeting over the weekend. Its statement didn’t directly detail any specific security issues.

Also Read: Virat Kohli to step down as Royal Challengers Bangalore skipper after IPL 2021

The mental and physical wellbeing of our players and support staff remains our highest priority and this is even more critical given the times we are living in,” the ECB said.

Another complexity, the ECB said, was the harm a trip to Pakistan could do to the men’s team’s preparations for the T20 World Cup which begins later in October.

We understand that this decision will be a significant disappointment to the PCB, who have worked tirelessly to host the return of international cricket in their country,” the statement said.

“Their support of English and Welsh cricket over the last two summers has been a huge demonstration of friendship. We are sincerely sorry for the impact this will have on cricket in Pakistan and emphasize an ongoing commitment to our main touring plans there for 2022.

Freshworks raises US IPO price range, targets nearly $10 billion valuation

Freshworks Inc on Monday raised its target price range for a US initial public offering, which could bring up the valuation of the business and customer engagement software company to nearly USD 9.6 billion.

The San Mateo, California-based company expects to raise USD 969 million at the top end of its new price range of USD 32 to USD 34 per share, up from USD 28 to USD 32 per share earlier.

Reuters reported in April that Freshworks, which competes with Salesforce.com Inc, could be valued at around USD 10 billion in a stock market debut.

Freshworks’ technology is used by more than 50,000 companies in 120 countries, including high-profile names such as Delivery Hero SE, Vice Media and Swedish payments firm Klarna.

Also Read: STARTUP DIGEST: Gaurav Gupta bids adieu to Zomato, Freshworks to raise up to $912M from IPO, Uber hit by Dutch ruling and more

Morgan Stanley, JP Morgan and Bofa Securities are the lead underwriters for the Freshworks offering.

Freshworks, which was launched from the South Indian city of Chennai, will list on the Nasdaq under the symbol “FRSH”, a regulatory filing showed.

Amazon to investigate whistleblower claims on bribery charges

Amazon has launched a probe after a whistleblower claimed bribes were paid to government officials in India. This is according to a report by Morning Context.

In response, Amazon said it has zero-tolerance for corruption and will investigate them fully. But, Amazon did not comment on the specific allegations. Retailers association in India – CAIT, has written to the commerce minister seeking a CBI investigation.

Also Read: How e-commerce platforms are betting big on festive season

CNBC-TV18 has learnt that the whistleblower has sighted certain names of internal and external legal counsels of Amazon and has claimed that certain legal fees paid by the company were being used to bribe the government officials.

Also Read: Why RBI raised concerns over growing influence of Amazon, Google in financial services

Watch the video for more.

Advent International to acquire controlling stake in Eureka Forbes

Advent International will acquire a controlling stake in Eureka Forbes for approximately Rs 4,400 crore. This will be Advent’s 5th consumer buyout in India.

Under the sale process, Eureka Forbes will be demerged into a standalone company and will be listed on BSE.

Advent will buy up to 72.56 percent of the company’s then outstanding stock on a fully diluted basis from Shapoorji Pallonji Group.

After the acquisition of the stake, Advent would make an open offer for the remaining stake. The sale process began in November 2019.

It is expected to help Shapoorji Pallonji group pair the debt pile.

Eureka Forbes is a subsidiary of Shapoorji Pallonji Group company – Forbes & Company.

Advent’s consumer portfolio in India includes DFM foods, Dixcy Textiles & Crompton Greaves Consumer Electricals.

(Watch the video for more)

Top News of Sep 20: India to resume COVID-19 vaccine export, Gold prices fall to 1-month low and more

India will resume the export of surplus COVID-19 vaccines next month under the ‘Vaccine Maitri’ programme and to meet its commitment to the COVAX global pool. Gold prices hit a more than five-week low on Monday as the dollar firmed with markets closely watching a US Federal Reserve meeting for clues on when the bank will start tapering its crisis-era stimulus measures. For all these stories and everything in between, here are some top news of the day

Govt receiving max FDI proposals in 3 depts from nations sharing land border with India 

India has received maximum foreign direct investment proposals in three departments — industry and internal trade, electronics and IT, and heavy industries — from countries sharing land borders with India, an official said. Continue reading

Experts say there are evident signs of revival in CAPEX in India post-COVID 2.0 
Economists and analysts suggest there are evident signs of revival in capital expenditure in India, though a full-fledged return to normalcy is still over a year away. Here’s what they said.

India to resume export of surplus COVID-19 vaccines next month: Mandaviya 
India will resume the exports of surplus COVID-19 vaccines next month to meet its commitment to the COVAX global pool, Health Minister Mansukh Mandaviya said on Monday. However, he added, vaccinating Indian citizens remains the topmost priority of the government. Read more


MARKETS

Gold prices fall to 1-month low as stronger dollar dents appeal

Gold prices hit a more than five-week low on Monday as the dollar firmed with markets closely watching a US Federal Reserve meeting for clues on when the bank will start tapering its crisis-era stimulus measures. Should you take positions? Find out

Fear gauge hits the highest level in 3months; market anxious ahead of Fed policy outcome

The fear index touched its highest level of 16.64 points in three months on Monday as investors turned jittery ahead of the US Federal Reserve’s policy outcome. Continue reading

Vodafone Idea’s three-pronged approach to put biz back on track

Vodafone idea is looking at strategizing a new plan for a three-pronged approach for bringing its business back on track. One, improved management skillsets. Second. sharpening competitive edge because there is fierce competition in the sector and relief is only from the government dues and not from the telecom competition. The third one is upgrading its network from 2G to 4G. Continue reading


WORLD

China Evergrande shares plummet on default risks

Shares of Evergrande plunged over 15 percent on Monday, extending losses as investors take a dim view of its business prospects with a fast-approaching deadline for payment obligations this week. Continue Reading

Emmy 2021: The Crown, Ted Lasso, among big winners; check full list

The 2021 Emmy Awards, the 73rd edition of the Television Academy’s top honours concluded with largely expected results as popular shows like “The Crown,” “Ted Lasso”, “The Mandalorian” and “Mare of Easttown” won awards in multiple categories. These shows had secured the highest number of nominations as well. See full list

Shooting in Russian university leaves 8 dead, more wounded

A gunman opened fire in the Perm State University in the Perm city of Russia on Monday, leaving five people dead and six wounded, according to Russia’s Investigative Committee. Continue Reading

INDIA

SC seeks Centre’s response on door-to-door Covid vaccination for differently-abled

The Supreme Court on Monday sought the Centre’s response on door-to-door Covid vaccinations for persons suffering with disability within two weeks. Issuing notice to the Centre, a bench of Justices D Y Chandrachud and B V Nagarathna also sought the assistance of Solicitor General Tushar Mehta about steps taken so far to vaccinate the differently-abled and the government’s proposals on the matter. Continue Reading

India to resume export of surplus COVID-19 vaccines next month: Mandaviya

India will resume export of surplus COVID-19 vaccines next month under the ‘Vaccine Maitri’ programme and to meet its commitment to the COVAX global pool, but vaccinating its own citizens remains the topmost priority of the government, Health Minister Mansukh Mandaviya said on Monday. Continue Reading

Meet Charanjit Singh Channi, Punjab’s first Dalit CM

Charanjit Singh Channi, the first leader to become Punjab Chief Minister, took oath on Monday. This comes a day after Captain Amarinder Singh stepped down following dissent from over 50 MLAs. Continue Reading 


YOU & I

Amazon India to launch voice shopping in Hindi soon

Amazon India on Monday said it will expand its regional language offering further with the launch of voice shopping experience in Hindi in the coming weeks. Click here for more

Here’s what you can buy with the current value of 1 Bitcoin 

In Indian rupees, one bitcoin is worth Rs 34 lakhs and in USD it is worth $46,000. Even as its price has dropped from the all-time highs of $65,000, the value of 1 Bitcoin can still buy you a lot of things. Check out this list

Explained: Fed tapering and why market is worried about it

Federal reserve, taper tantrum, bond buying program, asset purhcases

US Federal Reserve Chair Jerome Powell will talk about the tapering of the central bank’s bond purchases after the Federal Open Market Committee (FOMC) meet on Wednesday.

Global markets extended losses on Monday as investors are worried that the a reduction in bond purchases by the Federal Reserve will reduce liqquity in world markets. In the last two meetings, Powell had said the easy monetary policy will continue for as long as needed. But at the same time, he had said, Fed can begin tapering bond purchases this year.

The Fed has been buying bonds worth $120 billion every month since March 2020.

The minutes of the July FOMC meeting showed most committee members believe it is time to reduce asset purchases. Global financial markets hadn’t taken the news in stride — bond yields had hardened and stock markets had corrected. But why is the market worried? To understand this, we need to go back to basics.

What is bond buying?

Central banks buy government securities (also called bonds) and infuse money into the economy via open market operations (OMO). Currently, the Federal Reserve — the central bank of the United States and the most influential economic institution of the world — buys securities worth $120 billion. While in March 2020, Fed had assets worth nearly $5 trillion, the number as of April 2021 was approximately $8 trillion.


Also Read | Explained: How rising bond yields impact stock markets


Why is the Fed buying bonds?

To keep interest rates low and encourage individuals and businesses to borrow.  Through the bond purchases, what the Fed is essentially doing is handing cash to banks and increasing the money supply in the system. When money is freely available, the cost of money–measured by the interest rate–falls.

What does tapering mean?

Tapering means a gradual slowdown of the Fed’s large-scale asset purchases. The central bank wants to reduce the supply of money from the economy as inflation has now risen to multi-year highs. When inflation is high, one of the immediate steps any central bank takes is to reduce the money flow in the system.  Fed wants to slowly remove the monetary stimulus it extended when the economy slumped after the outbreak of coronavirus and resulting lockdowns.

Has tapering happened before?

The first time Federal Reserve had decided to taper its bond purchases was after the impacts of 2007’s global financial crisis subsided.

The US economy had recovered by 2010 and the Fed had begun considering hardening the monetary policy by the end of 2013. However, at the time, global investors had no idea of the Fed’s decision.

The then Fed Chief Ben Bernanke had suddenly said, “we could in the next few meetings … take a set down in our pace of purchases.”

Caught off-guard, the indices on Wall Street had collapsed immediately, bond yields had surged, and the currency market went haywire — the notorious taper tantrum of 2013.

Why are global markets worried?

The interest rate in the US is critical for global markets due to the asset-buying frenzy fuelled by near-zero interest rates. Almost half of the global funds moved to the US markets to take advantage of ultra-low rates. These investors had borrowed money in dollars to invest in assets globally. Now they will have to sell back these assets to pay their loans. This de-leveraging can disturb the markets.

This will also affect India’s foreign portfolio inflows. Earlier when the Fed had announced tapering in 2013, FPI inflows to India had shrunk from between 2015-18. In fact, experts say the inflows worth Rs 1,70 crores in 2020 were due to interest rates in the US being near zero.

How can taper impact Indian markets?

During the taper tantrum of 2013, India suffered a double whammy. Equity prices collapsed as foreign institutional investors pulled out money from stocks and this also caused the rupee to depreciate sharply.  At that time, domestic inflows were not strong enough to be able to cushion the impact of selling by foreign institutional investors. Today, the Indian market is on a much better footing, thanks to strong inflows from retail investors–through direct investment in stocks as well as through mutual funds.

Still, if the mood in global markets changes for the worse, Indian markets will feel the heat in the short term.


Also Read | $1.9 trillion stimulus bill and its impact on economy, explained


CCI approves Adani Ports and Special Economic Zone’s 10% stake-buy in Gangavaram Port

Explained: What is Container Imbalance? qExplained: What is Container Imbalance?

Fair trade regulator CCI on Monday approved acquisition of over 10 percent stake in Gangavaram Port Ltd by Adani Ports and Special Economic Zone Ltd. The 10.4 percent equity shareholding would be acquired from the government of Andhra Pradesh, according to a combination notice filed with the regulator.

Adani Ports and Special Economic Zone is present across 11 domestic ports in six maritime states — Gujarat, Goa, Kerala, Andhra Pradesh, Tamil Nadu and Odisha. Gangavaram Port is engaged to own, develop and operate the deep-water port at Gangavaram, Andhra Pradesh, pursuant to a concession agreement on build-own-operate-transfer basis with the state government, the notice added. “Commission approves proposed acquisition of 10.40 percent equity shareholding of Gangavaram Port by Adani Ports and Special Economic Zones Ltd,” as per a tweet by the regulator.

Pidilite aims to grow 3x of GDP, says MD Bharat Puri

After two waves of the COVID-19 outbreak and 18 months after the first nationwide lockdown was announced, the Indian economy is on the road to recovery. The easing of lockdowns and an increase in GST collections have provided a boost.

In August, GST collections remained above Rs 1 lakh crore mark and were 30 percent higher compared to the same period in 2020.

The Reserve Bank of India (RBI) is predicting GDP growth by the end of FY22 at 9.5 percent. While credit ratings agencies have revised their earlier growth estimates lower, the consensus remains above the 9 percent mark for FY22.

Not just that. Supply chains have also been recovering as is evident from the Purchasing Managers’ data.

A composite reading from IHS Markit showed PMI at 55.4 in August, which shows healthy expansion versus a contraction in July.

With the festive season approaching, the economy is expected to get a further lift. The pace of vaccination though remains key in controlling the spread of the virus. So far, over 45 percent of the population has received at least one dose of the vaccine and 15.4 percent people are fully vaccinated.

In an interview with Shereen Bhan, Bharat Puri, Managing Director of Pidilite, said the Indian economy is recovering and they are seeing certain amount of pent-up demand as well.

Also Read: FMCG index hits record high: Key triggers behind the move

“There is no doubt about the fact that the economy is on a recovery. What we need to see is, how does this play out in the second half of the year? Having said that, there is a certain amount of pent-up demand as well.”

He said the home improvement space is seeing a lot of activity and was hopeful of a turnaround in the real estate sector.

“We are also benefiting from the trend of people reinvesting in the homes. The home improvement space is seeing a lot of activity. I also think slowly real estate will also see the turnaround which we have been hoping for, for some point of time. So, from a demand perspective it augurs well if the sentiment is strong. Let us hope it continues.”

Also Read: Asian Paints at all-time high; here’s why Credit Suisse maintained ‘outperform’

He expects the company to grow 2-3 times of the GDP.

“A brand like Pidilite should definitely grow 2-4 times GDP. As long as there is economic growth happening in the country, our target as a growth brand would be to grow at least 2-3 times of GDP.

Watch video for more.

 

Startup Street: Cars24 raises $450 mn; Mylab acquires Sanskritech

E-commerce platform for pre-owned vehicles Cars24 raised $450 million. This included a $340-million Series F equity round along with $110 million in debt from diversified financial institutions

The Series F equity round was led by DST Global, Falcon Edge and Softbank Vision Fund 2 along with participation from a whole host of other investors. The company’s valuation nearly doubled to $1.84 billion post this fundraise

To talk about the fundraise and the road ahead at Cars24, Startup Street spoke to its Co-Founder and Chief Operating Officer Mehul Agrawal.

While it has been glitzy in the startup world over the past year, with record numbers of unicorns and funding, it is important to also look at the challenges in starting up, and the fact that many startups fail.

Insurtech platform BimaPe is shutting down, Founder Rahul Mathur tweeted last week, wherein he cited the mistakes made, and added that the company is pivoting to another product called Verak Insurance. To talk about the learnings from the journey, Rahul Mathur, spoke to Startup Street.

Read Here: Startups that tried to make it big but perished in last one year

Diagnostics company Mylab has acquired a majority stake in point-of-care startup Sankritech. Mylab’s investment in Sankritech will be used to develop affordable point-of-care labs with more than 70 tests. CNBC-TV18’s Nisha Poddar spoke to MD and Co-founder of Mylab Hasmukh Rawal about this acquisition and the company’s spends.

Watch accompanying video for more.

Also Read: FUNDING RUNDOWN: Delhivery raises $76.4 mn; Cars24 gets $259 mn

 

COVID-19: Aaditya Thackeray seeks QR code to identify buildings with fully vaccinated people

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Maharashtra Tourism Minister Aaditya Thackeray on Monday called for designing a quick response or QR code to identify buildings in Mumbai where all eligible residents have been fully vaccinated against coronavirus. Thackeray was speaking at a review meeting called to seek inputs for drawing up a strategy to tackle COVID-19, increase vaccination and control vector-borne diseases in Mumbai.

A statement issued by the minister’s office said Thackeray requested the Brihanamumbai Municipal Corporation (BMC) to create a special logo with a QR code that could be displayed at the entry gates of residential and commercial buildings. The QR code would help in verifying that residents of housing societies and occupants of buildings and offices are fully vaccinated against COVID-19, it said.

During the meeting, the issue of providing second dose due to university students and increasing coverage of the second COVID-19 vaccination shot among the working population was also discussed. Last week, an only for women vaccination drive resulted in 1.27 lakh women in Mumbai getting inoculated in a single day.