Economy, Market News, Markets - May 4, 2020

Jio Platforms acquire investment from Silver Lake

Jio Platforms acquire investment from Silver Lake

After the announcement of Facebook-Jio deal worth $5.7 billion a few weeks ago, Silver Lake, a technology investment firm is to invest $750 million (Rs. 5,655.75 crores) in telecommunications giant Jio Platforms Ltd. The investment is for 1.15% stake of the company at an equity value of Rs.4.90 lakh crores.

The Deal:

As per the deal announced by Reliance Industries Limited and Jio Platforms Limited, Silver Lake will invest $750 million in Jio platforms. This investment represents an equity value of Rs 4.9 lakh crores of Jio platforms and takes Jio’s enterprise value to Rs. 5.15 lakh crores. It represents 12.5% premium to the valuation of the investment made by Facebook which bought 9.99% of Jio Platforms Ltd.

Reliance Industries’ wholly owned subsidiary, Jio Platforms mainly focuses on next generation technologies. Reliance Jio Infocomm is a wholly owned subsidiary of Jio Platforms Limited which offers voice over LTE on its 4G network. The regulatory and customary approvals for the transaction are yet to be received. The financial advisor of Reliance Industries was Morgan Stanley. The legal counsel were ASB & partners and Davis Polk and Wardwell.

Statements by the CEO:

Reliance Industries Chairman and MD, Mukesh Ambani said that Silver Lake is one of the best technology and Finance firm. RIL is delighted and encourages such global technology relationships which will help them to transform the Indian Digital Society.

The Co-CEO and Managing partner of Silver Lake, Egon Durban said that Jio Platforms has great potential and has the power to bring low-cost Digital services to their customers and also to the small businesses population.

How will this deal help the economy?

Jio platforms stated that the COVID-19 pandemic has caused several economic disruptions globally and in India. This partnership with one of the the best technology investors, Silver Lake will have a significant role in revitalization of the Indian economy. The investment by Silver Lake will further help Jio in developing the world class digital platform it has built, powered by Broadband connectivity, Smart Devices, IoT, Blockchain technologies, etc.

Silver Lake is a technology investment firm with over 43 billion combined AUM and committed capital. They have nearly 100 investment and operating professionals worldwide. On 30th April 2020 while announcing its quarterly and annual financial results Reliance Industries said that it will achieve zero net debt status. The company has received proposals from other strategic and financial investors for a similar sized investments. They will announce it the coming months.

India may cap stimulus package to protect credit rating

0 Comment

Economy, Market News, Markets - May 2, 2020

India may cap stimulus package to protect credit rating

What does Sovereign Credit Rating Interpret?

Sovereign Credit Rating refers to the evaluation of debt paying capacity of a country based on their previous credibility of how previous debt is settled off. Sovereign Credit Rating are published by credit rating agencies. They are estimated by credit rating agencies like Standard & Poor’s (S&P), Moody’s, Fitch Ratings.

Importance of sustaining decent Sovereign Credit Rating:

For all developing countries, it is vital to maintain a decent Sovereign Credit Rating for overall growth of the economy. Decent Sovereign Credit Rating will aid to attract Foreign Direct Investment in the country.

Sovereign Credit Rating of India:

In the preceding year, Sovereign Credit Rating of India by Moody’s was negative, but afterwards they revised it to stable. Previously, Fitch Ratings forecasted growth rate of India will slow down its pace to 4.6% in the end of FY20 as compared to growth rate of 6.8% in FY19.

Regulating Indian Sovereign Credit Rating:

The Indian Government has limited the comprehensive spending on the unexpected spread of COVID-19 to ₹4.5 lakh crore. Additionally, they mentioned its important to have a detailed check on Indian Sovereign Credit Rating for safeguarding the economy.

Credit rating agencies stared demotion in their rating have been started in many countries. Thus different Credit rating agencies warned India if government tries to spend excess funds to curb the spread of COVID-19 virus. It may degrade the fiscal outlook of the country. In mid-March, the government disbursed ₹1.7 lakh crore to fight against the pandemic.

Major concern of everyone, is the Indian economy is stable?

A recent survey conducted by Federation of Indian Chambers Of Commerce & Industry (FICCI) and Dhruva advisors shows that businesses in India may slack their position in the market in near future. FICCI stated that responses from the survey highlights that the government should immediately come up with revival plans especially in Industry sector.

All the small and large companies are on pay cut including the prime minister and the president. Many SME’s gave up their office space due to pilling of a huge amount of rent and to keep control on their expenditures.

0 Comment

Infosys to LTIMindtree: IT Stocks Climb on Fed Relief

Economy, Market News, Markets - May 2, 2020

SEBI demands info on unlisted bonds

SEBI demands info on unlisted bonds

The SEBI has asked the mutual fund industry to share information pertaining to the holdings in unlisted bonds. These are securities which cannot be traded in the Indian bond market. This is due to the corona virus outbreak which has froze the entire bond market, It has made the fund managers unable to sell or pledge their funds.

Data to be submitted to SEBI:

SEBI has asked the mutual fund industry to provide details regarding the assets under management of holding unlisted NCD schemes. Adding to it, the details of investments in unlisted bonds and the share in such bonds.

Extending the deadline:

SEBI has directed the mutual fund industry to decrease the investment in unlisted NCDs to 15% by the end of March and to 10% by the end of June 2020. Looking into the current scenario of the mutual fund industry, SEBI has increased the deadline by 6 months. In the month of October, the mutual fund industry was prohibited from investing in unlisted bonds by SEBI. This led to illiquidity of unlisted commercial papers and unlisted NCDs in securities.

Shut down of 6 debt funds by Franklin Templeton:

Recently, Franklin Templeton shut down 6 debt funds which comprised nearly 32% of the total value of unlisted papers. SEBI has asked the Association of Mutual Funds in India to give the details regarding the total portfolio’s investment breakup in such unlisted NCD schemes. It must include the residual maturity of listed and unlisted bonds and the details regarding other listed securities.

An industry person said to the media that some of the listed bonds are illiquid in the current market. SEBI will probably scrutinize the level of risk and stress the system if the redemption continues. These are particularly related to the mid sized companies with unlisted NCDs. It is because the terms and conditions are not easily available for such unlisted papers.

Friday’s deadline:

The deadline given by the SEBI to fund houses was Friday. A source said to the media that Friday was a bank holiday and the stock exchanges were closed. Hence, they didn’t expect an email from SEBI asking for the data. Many funds have been redeemed leading to an increase in the bond yields. Many mutual fund industries have asked banks to avail loans to increase the liquidity position. The fund industries would generally take an overdraft facility from banks to meet their cash flow needs.

Losses borne by AMCs when funds are borrowed:

A fund manager said that whenever the mutual fund schemes borrow, they have to pay interest to the extent of average portfolio yield. Mostly the borrowings are higher than portfolio yields and the difference is to be borne by the Asset Management Company. 20% of its AUM can be borrowed by the mutual fund schemes.

0 Comment

The biggest Downfall of Nvidia in the market history

Business, Market News, Markets - May 1, 2020

Volatility for Hindustan Unilever to continue

Volatility for Hindustan Unilever to continue

India’s largest fast-moving consumer goods company announced its Q4 results on April 30. The company witnessed a downfall in volume by 7% in this quarter. The performance has been affected by the effects of Covid-19 since the second half of March. As per the Q4 result, Profit Before Tax (PBT) decreased by 10.6% and Net Profit decreased by 1.2%. The revenue of the company decreased by 9.4% to Rs 9.011 crore. The EBIDTA margin decreased by 160 basis points and growth decreased by 7%.

Impact on performance due to COVID-19:

The spread of COVID-19 affected the company from mid-march. This decline is due to the lock-down all across the world to control the spread of the COVID-19 pandemic. This has impacted the demand and supply chain. Beauty and personal care contributes 42% of sales, which is down by 14%. Other categories like homecare and food & refreshments are both down by 4% and 7% respectively. Only a part of the health and refreshment is a client base which includes tea and coffee. Even the recently purchased diet portfolio of the firm, comprising of Horlicks and Boost, does not count as a market base.

Other elements affecting stock prices are currency and crude oil price fluctuations. According to Sanjiv Metha, Chairman and Managing Director stated the human influence of the pandemic is unclear and they are completely committed to collaborating with the government to ensure that we solve the crisis. Instability in input expenses and currency will increment, with liquidity constrains prone to keep on developing. As indicated by HUL, it is hard to guess the market growth. The organization is currently running at around 70% of the normative standard and is planning to increase this in the coming days.

Strategies to improve efficiency:

Strategies to increase productivity are reduction in non-essential spending, Capex optimization, inventory management, credit allocation, emphasis on receivables, investment stability, etc. HUL has increased production in main categories such as sanitizers and handwashes. They are now working with shorter preparation cycles, improving the supply chain and increasing efficiency.

About the stock:

HUL has a Market cap of Rs.5,15,708 crore. The stock’s last traded price was Rs.2,195 and was 1.65% low. HUL’s 52 weeks low is 1656 and 52 weeks high is 2,614. The stock is likely to be corrected due to its overvaluation and extension of lockdown in the highly affected areas. This is disturbing for financial specialists, proposing that market request can not bounce back long after the lockout has finished.

0 Comment

Currency, Markets - May 1, 2020

Drawbacks of Cryptocurrency Exchanges

Drawbacks of Cryptocurrency Exchanges

What is a Cryptocurrency?

The word Cryptocurrency is originated from two distinct words i.e. Crypto which refers to Data encryption and Currency which refers to Medium of exchange. Cryptocurrency exists only in digital form and it is intangible. Cryptocurrency can be termed as an alternative to hard cash and plastic money, which we use in daily life for making payments.

Does Indian Government support the legality of Cryptocurrency?

In 2018, Reserve Bank of India (RBI) notified a complete ban on purchase and sale of Cryptocurrency in India. Subsequently, petitions have been filled by various Association in Supreme Court of India staring at the legality of Cryptocurrency. In early March 2020, Supreme Court of India lifted the ban on Cryptocurrency in India. Thus, Cryptocurrency is NOT legal in India, only trading is legal. However, Indian government clearly stated that Cryptocurrency cannot be termed as legal tender.

Mechanism of how the Cryptocurrency is traded:

The entire trading of Cryptocurrency is done virtually on various online platforms. People can buy and sell Cryptocurrency virtually by using centralized or decentralized exchanges.

Centralized Vs Decentralized Exchanges:

Centralized Exchanges refers to the exchanges which is operated by a recognized exchange. They are similar to well organized Financial market. All the transactions of the Cryptocurrency are carried by the recognized exchange with no hassle borne by traders. All the private data /keys are in the custody of the exchanges. Centralized Exchanges provide users with decent UI and an extra two step authentication safety feature ensuring the maximum security of their account. The major disadvantage of these exchanges are if they get hacked, traders will slack all the money invested in Cryptocurrency.

List of some well-known Centralized Exchanges:

Binance

Bittrex

Bitfinex

Coinbase

Kraken

Decentralized Exchanges doesn’t control the private keys. Users have the complete authority and control on their trades, funds and private keys. Everything is managed by the users itself, giving them the maximum transparency and flexibility. Although, Decentralized Exchanges have their own disadvantages like poor UI, low liquidity and doesn’t deal with huge amount of transaction. Trading on Decentralized exchanges is a tedious task with many steps to perform before the trade executes. In Decentralized exchanges every transaction has to be signed by you.

List of some well-known Decentralized Exchanges:

WavesDex

Bancor Protocol

Kyber Network

EtherDelta

AirSwap

Drawbacks of Cryptocurrency Exchanges:

As the complete trading of Cryptocurrency is carried digitally, cybersecurity issues are the major concerns while trading the Cryptocurrency. Exchanges have all your private data like email-id, personal details, details about all the transactions and IP address. There is high risk of the website getting hacked and losing the invested money. Such incidents occurred in 2019 when personal data was stolen and huge amount of funds were demanded by hackers.

World’s well-know centralized exchange, Binance was robbed by 7,000 Bitcoins from their online platform. Binance is famous for its security and innovative products. Beside all this, hackers committed the offense. Later, the loss suffered by the customers were borne by the company but this shows how risky it is to deal with Cryptocurrency.

Overcoming Centralized & Decentralized Exchanges Drawbacks:

Alternative for Centralized & Decentralized Exchanges can be the platforms where instant Cryptocurrencies are exchanged without any compulsion of registration and submission of all your personal details.

In the market, ChangeNow is a platform which provides the similar service as mentioned above. ChangeNOW is a non-custodial crypto swap which does not demand any kind of government proof ID, address proof, contact number or email ID. In this platform, users do not need to verify themselves. In simple words, ChangeNow is just a swapping tool. All the major Cryptocurrency is available for trade in this trading platform. This tool can be used by anyone in the world. The platform claims they use an automated risk management system to check all transactions. This can help to gain the trust of traders.

Nonetheless, this cannot be picked as an ideal platform to trade Cryptocurrency. Even this platform has its own set of drawbacks. The major drawback is this platform is a bit high-priced as compared to other. In a nutshell, the trader should keep all the advantages and disadvantages of all the trading platforms available and choose wisely, whichever fits all their needs flawlessly.

0 Comment

Safe Havens in 2025: Gold, Yen and Alternatives in a Volatile Year

Commodities, Economy, Market News, Markets - May 1, 2020

Gold set for best month in 4 years

Gold set for best month in 4 years

On 30th April, the gold prices had a surge, en routing to its best month in the last 4 years. This is because of the increase in expectations about the monetary ease provided by the central banks and the continuous stress over the global recession which increased the demand. Spot gold showed a surge of 0.2% at $1,713.75 per ounce by. The US gold futures showed an increase of 1.1% to $1,732.10 per ounce.

How the gold prices surged?

Eugen Weinberg, the Commerzbank analyst stated the immense monetary support received at the movement is helping gold. Regardless of the increasing risk appetite, the gold prices stayed above $1700 ounce even though it has faced pressure from the equity markets. Carlo Alberto De Casa, Kashif analyst of Activtrades said to the media that the investors will remain confident about quick solutions for the coronavirus. The central banks will be forced to print a large amount of money leading to hyperinflation in such economic turmoil.

Interest rates:

United States Federal Reserve preserved the interest rates and it should be left unchanged for sometime. The unexpected monetary influence provided by both the European Central Bank and the Federal Reserve will probably increase the demand for gold in the future.

Over the last six weeks, the European Central Bank left the interest rates unchanged after revealing various stimulus measures including a plan to buy 1.1 trillion euros worth of debt this year. The Federal Reserve kept the interest rates near zero on April 29. They also promised to extend the emergency series of measures needed to help the battered and bruised economy.

In the first quarter, the US economy contracted at its shortest pace since the Great Recession. In the second quarter, it is likely to show a more sharper contraction. The Bullion showed an increase of more than 9% in the last month. It is boosted by several stimulus measures from the central banks to handle damage caused from the corona virus outbreak. The unchanged lower interest rates will reduce the alternative cost of holding non yielding gold. It is always considered as a risk against inflation and canker currency.

Amazon Pay Later introduced in India

0 Comment

Decentro Secures ₹30 Crore to Power Fintech Innovation

Business, Market News, Markets - May 1, 2020

Amazon Pay Later introduced in India

Amazon Pay Later introduced in India

In the era of digitalization, consumers prefer to use the finest services provided by various e-commerce platforms. In this chase, all major e-commerce platforms try to offer preeminent services to their customers, which helps them to establish their brand name in this competitive market. On 26th March 2020, Amazon launched their new service “Amazon Pay Later” with some remarkable features. It will ease the buying pattern of customers.

What is “Amazon Pay Later”?

Amazon Pay Later is a credit providing mechanism, which ensures that customers can buy the products now and pay the price in future within a stipulated time period. Purpose of launching this service is to provide the customer a hassle free mode to get instant credit without submitting countless documents which an usual credit giver demands.

Products can be purchased using Amazon Pay Later?

Customers can purchase daily essentials, home appliances, electronic gadgets, groceries and many more. Besides that, they can pay all the bills, recharge and top up their Dth and other services too. Amazon Pay Later prohibits some items which includes jewelry, bullion i.e. Gold and silver and Amazon pay gift card. Customers can only purchase the products provided by Amazon in their country. Products by overseas merchants are prohibited.

How to register?

The registration process is an easy-going task which hardly takes 2 minutes. They provid two options to the customers. They can go with existing KYC or OTP (One-Time Password) based e-KYC. In both the methods customer just need to follow the steps and registration will be completed within minutes.

Features of Amazon Pay Later:

If a customer buys a product and chooses a tenure of 1 month, the product price range should be in between ₹1 – ₹10,000. They can buy the product and pay the price in the succeeding month. If a customer purchases a product and chooses a tenure of 3 months, the product price range should be in between ₹3,000 – ₹30,000, They can also choose a tenure of 6 months. For this, the product price range should be in between ₹6,000 – ₹60,000. They can buy the product and pay the EMI in succeeding 3 and 6 months, respectively.

If a customer wishes to choose a tenure of 9 and 12 months, the minimum and maximum amount should be ₹9,000. They can buy the product and pay the EMI in succeeding 9 & 12 months. The rate of interest is very nominal ranging from 1.5% to 2% in all scenarios excluding the tenure of 1 month which is absolutely free.

Reliability and loopholes:

Amazon has tied up with reputed NBFC, CapFloat Financial Services Private Limited (Capital float) for ensuring smooth conduct of business. Although with all these amazing features, Amazon Pay Later has some drawbacks. As per the RBI norms, credit up to ₹60,000 p.a can be granted to any individual with eKYC. The major drawback is, if a customer purchased any product and later cancelled or returned it, the amount of the product will be considered while calculating the limit i.e. ₹60,000 irrespective of procurement of the product by customer.

Microsoft completes 5 year deal with Coca-Cola

0 Comment

Business, Market News, Markets - May 1, 2020

Microsoft completes 5 year deal with Coca-Cola

Microsoft completes 5 year deal with Coca-Cola

The Washington based tech giant, Microsoft Corporation cracks a five year deal with Atlanta based beverage giant Coca-Cola Company. Microsoft Corp will supply business software to the former company. Apart from this, Microsoft Corporation will also provide tools for customer service agents and its Teams chat app to Coca-Cola Co. Describing their agreement as a strategic partnership, the size of the deal is kept unknown by the companies. But the said deal shall be inclusive of the suit of Microsoft Tools which is Dynamics 365. To enhance your knowledge, Microsoft’s Dynamics 365 is the tool which directly competes with the Salesforce.com Incorporation.

Microsoft’s technology:

Business operations of Coca-Cola Co. will be conducted on cloud platform of Microsoft. The name of the cloud platform that Microsoft will extend to Coca Cola Co. is “Azure”. In the past, Coca-Cola Company has availed Amazon and Salesforce’s cloud technology and business software. Now they are building a new relation with Microsoft for the similar services. As the lock-down prevails and majority of Coke’s workforce is working from home, they are using Microsoft 365 Live Events for large-scale video presentations.

Microsoft has a solid grip in general-purpose business software. General purpose business software includes E-mails and word processing applications. These are widely used by the employees working in Customer service and Sales. The VP of Microsoft’s business applications group, James Phillips gave an interview. He informed Reuters that they shall be providing Coca-Cola Company with Microsoft’s technology. It will enable their smooth working. Their technology shall empower Coca-Cola Company to get answers to their unanswered queries. By use of Artificial intelligence (AI), Coca-Cola Company will be able to fetch relevant data for the same.

How Microsoft will help Coca-Cola?

During the first half of his interview, Phillips mentions that Coke is willing to have a systematic internal programme in place for the employees. A programme that will enable the employees of their company to get one stop quick answers at a glance. Coke wants to eliminate the time consuming process that employees undergo every time they want to get answers to repetitive questions. For example, to know how and where to go to apply for vacation time, where they should go to have a look at their last payroll slip, which educational programme they can pursue to enhance their skills and many such questions.

In a statement, Senior VP of Coca-Cola Mr. Barry Simpson said that Microsoft Corporation will help Coke to get rid of some of its redundant and fragmented Systems. Lastly, Microsoft’s Phillips added, Coke plans its customer service department to be equipped with a system in hand which will aid them in providing quick solutions to the questions raised at the customer end. Its beverage maker’s customers majorly include grocers and big retailers. It is expected of Microsoft to have an increase in its post revenue of $33.9 billion for the quarter, from $30.6 billion last year, and its earnings per share (EPS) climbing up to 1.28 from 1.14 which was a year back.

Mutual fund industry in crisis due to pandemic

0 Comment

India's Insurance Sector Booms Amid Rising Demand

Economy, Market News, Markets - April 30, 2020

Mutual fund industry in crisis due to pandemic

Mutual fund industry in crisis due to pandemic

The COVID-19 pandemic has hit nearly all sectors of businesses, people, economy, trade and the financial system worldwide. Mutual fund industry has been adversely affected due to corona virus. All mutual fund investors have incurred huge losses in NAVs, specially those investing into categories of equity related mutual fund schemes.

Nearly 20 categories of mutual funds viz. energy funds, International funds, banking funds, large cap funds, mid cap funds, dividend yield funds, PSU funds, infrastructure funds, etc. are some of the mutual fund schemes that have faced losses tremendously in the last month. The energy sector saw a downfall of 20.08% in the last month. It was followed by the International funds category which dipped to 20.07%. The banking sector funds also had a downfall not only because of the corona virus threat but also because of the non performing assets crisis. The gold funds category is the only sector which has given positive returns in the last month.

Winding of 6 mutual fund schemes by Franklin Templeton:

Franklin Templeton, the leading global investment management company announced the winding up of 6 mutual fund schemes on 23rd April, 2020.

Fear of Investors:

All these issues have led to fear in the minds of investors making them pull out Rs. 9,000 crores out of the credit risk mutual fund schemes. As per the data collected by Pulse Labs, the asset under management of these mutual funds have dropped by 19%.

A lot of tension can be seen in the credit risk fund category because of the redemption and unavailability of liquid underlying assets. The HDFC credit risk fund has the highest loss in comparison with other credit risk funds. The asset under management of the credit risk funds show the tremendous depth in comparison to the last month.

Lakshmi Iyer, chief investment officer of debt, Kotak Mutual Funds said to the media that without even considering the quality of the portfolio, investors have started redeeming the money from the funds. One of the ICICI Prudential spokesperson said to the media that the company assures the portfolio is well differentiated on the asset side and liability side.

RBI’s help:

RBI has recently announced rupees 50,000 crore special liquidity funds for Mutual Funds. This was announced after the winding up of 6 mutual fund schemes by Franklin Templeton. It is a measure taken by RBI to calm down the investors and reduce their panic by providing a guarantee of having adequate liquidity to meet the redemption. These funds can be borrowed by the companies from banks at a repo rate of 4.4% for 90 days. The Targeted Long Term Repo Operations is to help several financial services companies to manage their cash flow problems amid COVID-19 outbreak.

Industry bodies urge government to create funds for startups

0 Comment

Visteon Invests $10M in India's Camera Manufacturing!

Equities, Market News, Markets - April 30, 2020

Just dial announces buyback of shares

Just dial announces buyback of shares

In the meeting held on 30th April 2020, the Board of Directors of Just dial Ltd. company approved the plan of buying back 31,42,857 equity shares (i.e. 4.84% of the paid up equity capital) at the market value per share of Rs. 700. The total amount of buyback of shares aggregates to Rs 220 crores which is nearly 24% of the total paid up equity capital including the reserves and surplus.

Buyback is a process of repurchasing the shares of the company. It is done by paying the market value of shares to the shareholders and reacquiring the shares of the company.

Just dial, incorporated in 1993 provides digital platform to search for different types of services under one single platform.

Share price movement of Just Dial Ltd:

The share price of Just Dial on NSE today was closed around Rs. 404.90 with the surge of 3.82%. While on BSE, it is Rs 406.00, up 4.16% at 16:15pm (IST) at market close.

Just Dial’s financial performance:

In the financial year 2020-21, Just Dial Limited had a total income of Rs 984.46 crores. It reported a Profit After Tax of Rs. 206.8 crores and had an annualized earnings per share of Rs. 31.93.

RBI introduces Operation Twist

0 Comment