Good morning, folks! As gold price and covid infection numbers continue their upward spike, we keep our eyes peeled for the times when corona can be relegated to history books.
Electric vehicle market in India set to get super charged
Avendus Capital released a report with the projection that Electronic Vehicle or EV market in India could become a Rs. 50,000 Crore opportunity by as soon as 2025. Before you gawk at the number, know that this includes, cars, two-wheelers, e-rickshaws, buses, LCVs and literally everything under the umbrella term vehicles.
Why this number? In their report, Avendus put forth the thought that looking for cheaper and greener alternatives EV adoption is inevitable. More importantly, this number mostly hinges on institutional and fleet adoption of EVs with a forecast of 20% penetration in the e-auto space. Although, they still see some distance to be driven before four-wheelers pick up on the trend, estimating only a 2% penetration. On the commercial vehicle side, they believe buses can well see a 13% adoption to EVs by FY 25.
What’s the hitch? This news comes two days after the inauguration of India’s “first” public EV charging plaza in Delhi. Imagine the number of petrol pumps thronging the country and compare it to the path we are embarking on now. More importantly, electric vehicle battery manufacturing is dominated byyyy… you guessed it, China. Even with EVs, our dependence on our neighbour remains. However, there are some startups in the Indian eco-system earnestly trying to further this cause of EV adoption.
New disclosure norms for debt mutual funds
The debt market has had a bumpy road since almost September 2018 when the house of cards built by IL&FS came crashing down triggering a wave of other worries like DHFL. And then there was the Franklin India debt fund crisis where they saw fit to close six funds due to illiquidity of the riskier assets. If there is one thing that drives debt market, it is trust and transparency.
SEBI’s new move: Currently all funds have monthly portfolio disclosure sheets available for public viewing on their websites, be it in debt, equity or hybrid categories. Yesterday, SEBI brought in a new rule that debt mutual funds are to disclose their portfolio on a fortnightly basis with the rating grade for each asset. Not just that. Unlike the current practice of providing a yield to maturity for the entire portfolio, the new move also makes it mandatory for the funds to declare yield on each asset. While most investors may still not bother to go deeper into the product, for the more aware and cautious investors, this is certainly a good move towards the 2 Ts – Trust & Transparency.
Debt market also being worked upon for liquidity: To enhance liquidity also in the Indian debt market, SEBI has introduced two measures. SEBI will now allow secondary trading for “defaulted” debt, which should allow a faster escape route for mutual funds with time pressures on resolution. SEBI has also mandated mutual funds to conduct atleast 10% of their corporate bond transactions through the RFQ or Request for Quote platform of the stock exchange yet again increasing transactions and thereby liquidity.
Amateur and day trading boom across the world
Different parts of the world, same story. Considering the global economic inter-connectedness, we have often seen markets behave in a similar manner simultaneously, this time investor behaviour is being mirrored. Amateurs and day traders are ruling the roost.
Same day, same story: One of UK’s biggest trading platform IG group declared it’s annual result for the year ended March 2020. They saw a 34% increase or about 100,000 new users over the year and 1 million trades in March 2020 compared to 336,000 a year ago. Even more striking is the result for E-Trade in the US for it’s April to June quarter. While they added 327,000 new accounts, slightly less than last quarter, they reported a mind-boggling 1.01 million daily active revenue trades. Yes, more than a million trades a day that generated revenue for them, which was a 267% increase over last year!! This summary does not even include the poster child of amateur and day trading – US-based Robinhood app which now has 10 million users where it’s the first brokerage account for half the customer base, with an overall median age 31.
That niggling feeling: For anyone who has led the long-term classical investor or almost anyone who talks reason when it comes to investing, they can see the warning signs of this trend. In June end, Alex Kearn a young 20-year-old took his own life after mistakenly believing his Robin account display showing a $750,000 loss from an option trade whereas his account actually had a positive balance of about $16000. Then there is 31-year-old Richard Dobatse, yet another Robinhood customer, who turned $15,000 into $1 million, only to lose it all in a span of months. No wonder some of investing’s biggest names have more than just a few words of caution.
Spicejet flight, now boarding to the US: Spicejet became the first Indian budget airline to fly to the US, leading to a flight of 5% in it’s share price as well. Currently, apart from Air India, Spicejet will be India’s second airline to operate on India-US sector.
Spotlight on Indian kirana stores: While Jiomart is trying to tap into the demand side for kirana stores, Flipkart is set to target the supply side with Flipkart wholesale. This will be in direct competition to the intricate web of distributors most FMCGs employ across the country. The development of Flipkart Wholesale comes with Flipkart group acquiring Walmart India leading to consolidation for the American retailer.
Rossari Biotech bucks the trend: In times of such uncertainty, which are mostly frowned upon as launch time in the IPO market, speciality chemical firm Rossari Biotech went ahead and listed themselves. And what a jubilant reception they got with a listing price of Rs. 680 on NSE, 58% higher than their issue price of Rs. 425.
US weekly jobless claims inch up: Snapping out of a 15-week declining trend to increase for the first time since late March, the Labor Department reported weekly jobless claims of 1.416 million for the week ended July 18. Dow Jones index responded to the news by shedding 400 points.
Brexit trade deal hits rough waters: EU might have shown bonhomie towards each other during the stimulus package discussions, with Great Britain it seems to be another matter altogether. On Thursday, EU’s chief negotiator calculated a low probability of the two sides securing a trade and security deal by the end of the year, terming it “unlikely”. The main grouse? Great Britain demanding “near total exclusion” of European fishing boats from it’s waters.
The yellow metal continued it’s golden run with silver shadowing some of it’s glory by crossing the benchmark of Rs. 60,000 per Kg for the first time.
Another asset that made waves yesterday was equity… of Reliance Industries. The shares rose by nearly 4% to cross Rs. 2070 and give the company the laurel of the only Indian company with a market cap of Rs. 13 Trillion. Reason for today’s euphoria? Reports of possible interest from Amazon to buy an almost 10% stake in Reliance Industries.
If you really want to spread a message on the importance of wearing masks in this time, put your money where your mouth is. Or as Kashmiri Urdu newspaper Roshni did, put your mask where your ad space is. In it’s Tuesday edition, along with a message they went ahead and attached a sample disposable mask. For a newspaper selling for Rs. 2, it put a brilliant shining example of what can be done with the right will.