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Evaluation of Investor Awareness

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learning sharks

The Indian stock exchange is one of the world’s largest. As of February 2018, it has 16,993,616 active demat account investors who traded shares. An equity investment entitles the investor to a portion of the company’s capital. The value of the investment increases as the company grows; initially, it begins with the Initial Public Offering (IPO) that the companies will allocate. This will be listed on the stock exchange as a secondary market item. Depending on the percentage of returns, the investor determines whether to retain the stock for a longer or shorter amount of time. The majority of research investigations indicated that the Indian stock market is highly volatile, sensitive, and reacting to news and unexpected shocks.

This has an immediate influence on market trend activity, but it is resilient and rebounds quickly. The investor seeks large returns on investing while taking a considerable risk. Fear of investing in the stock market arises from the market’s unpredictable trajectory and a lack of awareness about the success criteria. In practice, risk and return are directly proportional. However, the investor’s risk-return perceptions may differ. Before investing, the goal of this study is to assess the investor’s level of familiarity with stock trading and technical knowledge in order to overcome risk factors while trading in the live market.

 

1) Primary market –

Purchase of shares through IPO (Initial Public Offering) allotted by corporations that issue public offers of shares.

 

2) Secondary market –

Stock trading is done through exchanges where buyers are willing to buy from primary shareholders after listing on exchanges and reselling in the secondary market. Stock trading refers to a person or corporation who trades equity securities on a stock market using a Demat Account. The investor can trade stocks with the assistance of a stock broker/sub-broker, or an agent registered with SEBI, the stock market regulator (12). Agents receive a commission from traders who trade on behalf of investors for each trade of stock or equity.

learning sharks

A stock market (sometimes known as a share or equity market) is a collection of investors who purchase and sell stocks (buyers and sellers). A broker and trader can purchase and sell a stock, bonds, and other assets at agreed-upon prices listed on a public stock market. A mutual fund (SIP), commodities, equity shares, options, futures, initial public offering (IPO), foreign exchange, gold ETF, bonds, post office savings schemes, company fixed deposits, insurance plans, retirement plans, PPF, and other investment modes are available to investors. Retail investment and institutional investment are two different ways for traders to invest; traders must do technical or fundamental analysis to maximixe returns while minimising risk.

 

Exchanges serve as the central point for each transaction, collecting and delivering shares and guaranteeing payment to the seller of a security. Individual traders are no longer exposed to the risk that the counterparty will renege on the transaction. There are numerous exchanges, with the BSE (Bombay Stock Exchange) and NSE (National Stock Exchange) accounting for the majority of trading shares in India. Stock market trading types include:

 

Equity trading (no expiry), purchasing shares, and profiting within a day, week, month, or year according to the percentage of returns desired by the investor. Derivatives (expiry on the last Thursday of the month), Derivative trading is a place where the trader can keep or trade the shares by providing a margin amount till a specific period. The lot holdings will expire on the last Thursday of that particular month. It is up to the trader to select the right month of the lot for trading and the amount of investment to hold. If the trader does not close the position by the expiry date, it will be squared off. The trading will be done in lots, which may vary in number depending on the weightage of the equities. The margin will be worth 10% of the total shares and can be held until the end of the month.

 

Monthly Trade with Futures Delivery – The trader purchases the lot and sells after enjoying the expected profit. Futures Square Off – If the trader fails to cancel the position, the lot is automatically wound up based on the live stock price before the market closes at 3:00 PM. The OPTION function is a decision to predict the value of a stock in a week or month. An investor chooses the stock by analysing the market trend as it increases or decreases in the price of a specific stock. If the forecast comes true, the investor benefits; otherwise, the investor loses.

 

CALL OPTION and PUT OPTION are the two trading options offered to traders. The premise of a call option is to buy a stock and sell it at a certain price based on the market flow. Put options are a theory that allows you to sell a stock at a specified price and then buy it back at a lower price; this type of trading is most common in a bear market. Weekly choice: Bank This feature is exclusive to the Nifty index (every Thursday of the week it gets expires of that particular holding ) Commodity markets facilitate the trading of commodities such as silver, gold, crude oil, live cattle, rice, wheat, soybean, coffee, cotton, and sugar, etc. which belong into four categories: metal, energy, livestock and meat, and agricultural products.

 

Trading can take place in either a Spot or a Derivatives market. Commodities are bought and sold for immediate delivery in the Spot market, whilst financial instruments based on commodities are traded in the Derivatives market. Mutual Funds: Mutual funds are sophisticated controlled devices that exchange a lot of money from many people to invest in stocks, bonds, and other securities. An investor obtains mutual fund ‘units’ by investing in a specific scheme. The current net asset value (NAV) of the fund serves as the value of the unit to be purchased by the investor. NAVs fluctuate based on the fund’s holdings of the specific mutual fund product. As a result, each investor chooses to invest based on the proportionate gain or loss of the fund.

 

Capital market investors can invest in a variety of instruments. Before investing or trading on a certain platform, the trader or investor must thoroughly research the strategies, trends, and tactics available in each instrument. Investors may incur substantial risk even for little profits due to a lack of information.

 

The majority of research investigations indicated that the Indian stock market is highly volatile, sensitive, and reacting to news and unexpected shocks. The investor seeks large returns on investment and is willing to take a high risk to accomplish it. The market’s path is unexpected, and a lack of awareness about the success elements causes investors to be fearful of participating in the stock market. The study’s goal is to use a survey to investigate investors’ knowledge of trading (technics) technologies prior to investing in the stock market.

Why do people buy stocks?

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Most people acknowledge that the stock market may be a very profitable investment. In fact, most investment strategies include some type of stock component. Stocks have proven their ability to generate massive wealth and returns for their owners over centuries of investment.

However, the reasons why someone purchases a stock are not always obvious. Sure, “making money” is frequently at the top of the list of motivations for stock purchases, but this is not always the case. More specifically, there are numerous ways to profit from a stock purchase, as well as various tactics for selecting equities that meet a person’s financial objectives.

As a result, let’s take a closer look at why someone buys a stock.

Capital Appreciation

The primary purpose for purchasing stock is to profit from a share price rise.

At its most basic, this means that someone buys a stock with the hope that its value will rise over time. That share will be sold at a later period, allowing the initial investor to benefit handsomely.

People that buy stocks for capital appreciation are looking for a few different types of equities:

Value stocks: Some believe that value stocks are trading at prices lower than their intrinsic value. This indicates that the price may be suppressed for a variety of reasons, potentially giving investors a “deal.” Investors feel that value stocks are likely to rise in value over time. As a result, investors can purchase these equities and benefit afterward.

Growth Stocks: These are companies that are not yet profitable but appear to be on the verge of becoming so. Generally, they are growing top-line sales at a quick pace. As a result, investing in them represents the potential to diversify one’s portfolio while earning a high return on investment. These are frequently technology or medical stocks with a hot new product that has the potential to take their industry by storm.

Blue chip stocks: Because these are older, more mature enterprises, they are more prudent investments. They are unlikely to grow rapidly, but they should gain over time. They will also most likely provide dividends.

Distinct financial methods can have a different impact on the stocks that are acquired. For example, a younger person who can afford losses may try to invest in growth enterprises. These stocks may be riskier, but a younger person will likely have more time to recover any losses.

In contrast, someone who is older may not have as much time to lose a significant portion of their nest egg. As a result, they may invest in more conservative assets, such as blue-chip equities. An older individual is also more likely to invest in stocks for income, which may be easier to achieve by investing in specific dividend equities.

 

 

 

learning sharks

Dividend payment

Some stocks pay out dividends. These are periodical payments, typically made quarterly, that return a percentage of profits to shareholders.

Divide the amount given to shareholders by the share price to calculate the dividend offered. The dividend yield is 5% if the share price is $20 and the dividend payment is $1.

The dividend is often set at a fixed level, with management aiming to maintain or raise it over time.

Dividends can offer investors a consistent stream of income. To be clear, it is not a legal obligation for stock to pay a dividend. Dividends are subject to reduction or elimination at any time. Many investors, however, invest in dividend-paying companies in order to generate consistent income.

Dividend-paying equities are often preferred by more mature or income-seeking investors. As a result, reducing or removing a dividend is regarded as a sign that a company is experiencing financial difficulties. As a result, management is extremely hesitant to lower or cancel dividends.

Voting Rights

Stock ownership can be about more than just making money. In some circumstances, an individual or company may buy shares in order to obtain more influence over a company.

Stockholders have various voting rights under the law. The more shares a person holds, the more votes they have. These votes have the potential to influence the company’s destiny and strategic direction.

Some stakeholders may purchase stock in order to carry out a hostile takeover. Companies will frequently buy huge amounts of stock and then utilise their voting rights to carry out a corporate takeover of that organisation.

Votes do not have to be cast in person; instead, proxies are typically distributed to shareholders prior to any vote.

ESG vs SIN Stocks Philosophy

Sometimes business decisions are made based on what is good or bad for society as a whole and for the earth. This is exemplified by two categories of stocks: ESG and Sin Stocks.

ESG is an acronym that stands for Environmental, Social, and Governance. ESG stocks are those that conform to particular moral norms in terms of the company’s impact on the environment and society at large. They have strong and “moral” leadership as well.

Sin stocks, on the other hand, include companies that produce a product or service that is often regarded as ethically problematic, such as selling cigarettes and alcohol or facilitating gambling.

Selling calls for income

The call option seller is a final type of shareholder. These are investors that own company stock not just for capital appreciation and dividends but also to generate money by selling call options against the stock.

Some corporations provide huge call premiums that are appealing to shareholders. When implied volatility of options is significant, it is feasible to obtain up to 10% of the value of a company in call premium before an earnings announcement.

Covered call sellers can achieve significant profits and income streams by repeating this approach. It’s not simply a technique for volatile share prices; the same strategy can be applied to extremely stable, mature corporations as well, but with smaller percentage returns.

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Federal Bank and Kotak Bank

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Federal Bank and Kotak Bank are in preliminary merger negotiations.

learning sharks
learning sharks

According to the sources, the top management of both banks has probably met to discuss a prospective transaction.

 

Kotak Bank has declined to comment on the story in any way.

 

After the news broke, shares of the Federal Bank saw a strong increase; they increased by almost 7% to trade at Rs 127.45 per share.

 

Pre-login and post-login e-Pay Tax services are now available on the e-Filing website through two additional recognised banks, Kotak Mahindra Bank and Federal Bank. Both Over the Counter and Net Banking tax payments are now accepted by these two banks.

According to a press statement from the bank, people can now pay their taxes instantly using any of the various payment options, including as cash, NEFT/RTGS, net banking, debit/credit cards, UPI, and so forth. Any tax-paying citizen of India, including NRIs and domestic customers, may present a tax challan and pay it at any of the bank’s locations.

learning sharks

If growth is robust, the bank will raise capital because it is now properly capitalised (CAR of 14.57 percent).According to reports cited by CNBC Awaaz on September 5, Federal Bank and Kotak Bank are in the preliminary stages of talks regarding a merger.

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In October 2021, Kotak Bank became the first Scheduled Private Sector Bank to be approved as a partner in tax collection, according to a bank press statement.


Below are the authorized banks according to the Tax Information Network (TIN) website:

 

Allahabad Bank
Andhra Bank
Axis Bank
Bank of Baroda
Bank of India
Bank of Maharashtra

 

Dividend

by
learning sharks

What Is a Dividend?

A sum of money is paid as a dividend by a firm to its shareholders.

 

The most typical frequency of payment is quarterly, although a business can also opt to make payments monthly, semi-annually, or annually.

 

Although dividends are frequently given on a schedule, they can sometimes be “special,” which means that they are a one-time payment that won’t happen again (or won’t happen at the same amount).

 

What Is a Dividend in Finance?

Dividend payments are funded entirely by a company’s earnings.

 

There are a variety of reasons why a business would decide to distribute this cash to investors rather than use it elsewhere.

 

Dividends are typically issued when a business is making a sizable profit and has no practical use for the money that remains after paying other obligations.

 

This event is uncommon in smaller companies or companies investing in quick expansion, but it frequently happens in massive firms with significant cash flow, like Walmart.

 

Walmart uses some of its extra funds to reward its numerous investors with dividend payments because it has nowhere else to open new stores and its production rate exceeds demand.

 

Some businesses, known as dividend aristocrats, have increased their dividend payments for more than 25 years.

 

For investors, the sustainability of a company’s dividend is crucial.

 

A company’s ability to maintain or raise its dividend payments is called dividend sustainability.

 

The dividend yield and dividend payout ratio are the two indicators that are utilized to determine this.

 

The portion of the share price that is returned as a dividend is referred to as dividend yield.

 

The dividend yield, for instance, would be 2% if shares were sold for $10 each and paid a $0.20 yearly dividend.

 

The percentage of a company’s earnings utilized to pay dividends to investors is known as the dividend payout ratio.

 

The payout ratio is 20%, for instance, if a corporation expects to earn $1 per share and pays out $0.20 per share.

The likelihood that the percentage will be decreased in the future increases with its level.

 

Reduced ratios have declining rewards and are less costly on a company, making them more likely to be steady and sustainable.

 

How Are Dividends Paid?

Although some corporations let the dividend payment be reinvested as more partial shares of the company, dividends are typically distributed to investors as cash.

 

A Dividend Reinvestment Plan, or DRIP, is what this is.

 

This may be especially enticing to investors who like to maximize their returns over the long term to reap the rewards of quick profits.

 

Important Dates with Regard to Dividend Payments

The following four dates are crucial for dividend payments:

 

  1. Date of the declaration
  2. the day of payment
  3. the entry’s date
  4. the date of ex-dividend

 

Simply put, a firm proclaims its intention to pay dividends on the declaration day, and on the payment date, the payment is actually made.

 

A recent share purchaser’s ability to receive a dividend payment for that time is determined by the record date.

 

According to stock market regulations, buyers are only eligible for payment if they purchased the shares at least two days prior to the record date.

 

The traded share will not pay a dividend to its new owner after the ex-dividend date.

 

The next payment will be sent to the original owner following this date.

 

CONCLUSION

Dividends and dividend policy will be a continuing cause of debate and comment. The theoretical position is clear: provided retained earnings are reinvested at the cost of equity, or higher, shareholder wealth is increased by cutting dividends. However, in the real world, where not necessarily all investors are logical and where transaction costs and other market imperfections intervene, determining a successful and popular dividend policy is rather more difficult.

Tamilnad mercantile bank ipo

by
learning sharks

Tamilnad Mercantile Bank Limited IPO

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IPO date05 Sep 2022 – 07 Sep 2022
Listing date15 Sep 2022
Price range500 – 525
Minimum order quantity28
(D)RHPView

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With a nearly 100-year existence, Tamilnad Mercantile Bank Limited is one of India’s oldest and most prestigious private sector banks. They provide a comprehensive range of banking and financial services primarily to retail, agricultural, and micro, small, and medium-sized businesses (MSME) clients (RAM). The bank had 509 locations as of March 31, 2022, with 106 in rural areas, 247 in semi-urban areas, 80 in urban areas, and 76 in metropolitan areas.

 

As of March 31, 2022, Tamilnad Mercantile Bank had roughly 5.08 million customers overall. Of those, 4.05 million (or 79.78%) have been with the bank for more than five years and have contributed Rs. 350,142.39 million (or 77.93%) in deposits.

 


As per the CRISIL Report, it had the second highest Net Profit for Fiscal 2022 amongst its peers, and its Return on Assets was also higher at 1.66% compared to a median of 0.80% for Peers for Fiscal 2022.

The public offer of Tamilnad Mercantile Bank comprises a fresh issue of 1.58 crore equity shares aggregating up to Rs. 831.6 crores at the upper end of the price band.

 

 

 

Financial Snapshot

Financial Year EndedRevenue (₹ Crores)Profit for the period (₹ Crores)EPS (₹)
March 20203,992.52464.8928.61
March 20214253.40654.0442.34
March 20224,656.44901.9057.67

IPO Schedule

Issue Period5th September to 7th September 2022
Finalization of Allotment12th September 2022
Initiation of Refunds13th September 2022
Credit of Shares14th September 2022
Date of Listing15th September 2022
Mandate end date23rd September 2022
Anchor Investors Lock-In End Date7th October 2022

Why should you invest in the Tamilnad Mercantile Bank IPO?

 The top two reasons are listed below:

 

  1. Dependable risk management methods and effective underwriting procedures
  2.  Solid 100-year history and a 4.91 million-strong client base that has grown by 5% CAGR over the last three years.

 

Particulars

FY21

FY20

FY19

Revenue (Cr)

3,635.79

3,992.52

4253.4

Profit (Cr)

294.61

464.89

654.04

EPS (INR)

18.14

28.61

28.61

Highlights of the Tamilnad Mercantile Bank

  1. The digital and branch transactions increased by a CAGR of 47% in the last 3 years

  2. The treasury portfolio increased at CAGR of 13.27% from ₹ 91,924.51 million as of March 31, 2019 to ₹ 117,948.80 million as of March 31, 2022

SWOT analysis of the IPO of Tamilnad Mercantile Bank

Strength

Opportunity

Weakness

Threat

The bank

reported second highest Net Profit for the Fiscal 2021 at 6.03 billion lagging only behind Federal

Bank.

Banking sector in india is under penetrated which provides immense opportunities for banks and financial institutes to grow

Around 37% of paid up equity share capital is subjected to outstanding legal proceedings

If India’s debt rating by an international rating agency is downgraded could have a negative impact on performance of Tamilnad mercantile bank

Net non performing assets has been lower than its peers

The RBI along with the Center and the state governments is taking measures to improve demand for housing loans

The bank

cannot open new branches unless it is listed and

also

require to obtain prior

permission from the RBI

Another Pandemic like COVID can adversely impact the banks cash flows and growth

Tamilnad mercantile bank also

had second highest provision coverage ratio among its peers

 

It is dependent on

Retail, MSME and Agricultural customers and any adverse developments in these segments could adversely growth strategies

Increase in inflation might reduced the revenue for the Tamilnad mercantile bank

Current accounts savings accounts (CASA) has grown by a CAGR of 16% in last 3 years

 

The bank’s lion share of revenue is from tamil nadu, any political / economic instability in the state can disrupt the business

Any slowdown or perceived slowdown in the Indian eco

nomy, could adversely affect banking business.

   

Banking has been a fundamentally high competition business, the penetration of competitors in Tamilnad mercantile banks locations can reduce the market share and eventually revenue

Competitive Analysis/ Market Peers

The performance of Tamilnad Mercantiles peer banks is summarised here.

Peer

Revenue( In Mn)

P/E

Tamilnad Mercantile bank

42,534

NA

City Union Bank Limited

48,394

18.26

CSB Bank Limited

22,731

23.49

DCB bank ltd

39,167

8.00

Federal Bank Limited

1,62,719

9.61

Karur Vysya Bank Limited

65,270

8.97

Karnataka Bank Limited

77,274

3.36

RBL Bank Limited

1,06,098

16.64

South Indian Bank Limited

84,909

27.71

FAQS

The 1,58,27,495 new shares in the Tamilnad Mercantile Bank IPO are offered for sale, together with 12,505 more shares.


On September 12, 2022, shares in Tamilnad Mercantile Bank will be allocated.

28 shares make up each lot in the IPO of Tamilnad Mercantile Bank.

On September 5, 2022, subscriptions for the IPO of Tamilnad Mercantile Bank will be accepted.

Retail investors are eligible to apply for at least one lot.

The IPO date for Tamilnad Mercantile Bank is not disclosed.

The shares will be delivered to your Demat account.

The UPI requirement must be approved in order for your application to be accepted; otherwise, it will be denied. Not to worry! The payment demand must typically be accepted within T+1 weeks.

Tamilnad Mercantile Bank’s MD and CEO is K. V. Rama Moorthy.

How do I apply to the Tamilnad Mercantile Bank Limited IPO?

You can apply for the Tamilnad Mercantile Bank Limited IPO using any supported UPI app by following two steps:

  • Enter your bid on Kite
  • Accept UPI mandate on your phone

On acceptance of the mandate, the bid amount will get blocked in your bank account.

Where can I find the Tamilnad Mercantile Bank Limited IPO's allotment status?

You can check the allotment status for the Tamilnad Mercantile Bank Limited IPO on the website of the Registrar and Transfer agent.

Alternatively, you can also check the allotment status on the NSE website.

Recession or inflation

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Recession or inflation? US Inc. places its cash at the ready

learning sharks

From banking to medicine to Big Oil, all are certain that the future will be bright despite stubborn inflation and a tumultuous geopolitical environment.


The Federal Reserve’s stance on interest rates may encourage lenders to raise the interest rates they charge US residents for debt.

There are concerns that credit quality may decline in the future due to the high household indebtedness relative to other nations. However, lenders are certain that the demand for credit will stay high.

 

American Express, for instance, hasn’t discovered any evidence of a decrease in consumer spending. Despite their concerns about an impending recession, bankers find solace in the economy’s low jobless rate. They claim that because of tight labour markets, households would be able to pay off their debt and perhaps be eager to take on more.

 

The impact of the exchange rate is currently being prepared for by pharma producers as a strong dollar reduces their profits. Fuel and freight cost concerns are also reducing their income. Pharma companies do not anticipate a significant drop in demand as long as Covid is still affecting some nations. Walgreen, a chain of pharmacies, is altering its approach as demand for Covid declines.

 

We include information on US financial institutions including Visa, Goldman Sachs, JP Morgan Chase, and American Express in the second of our three-part series, along with pharmaceutical companies like Johnson & Johnson, Procter & Gamble, Amgen, and others.

AMERICA ONLINE

America Online (FY January-December)

 

Q2 FY22: $13.39 billion in revenues; $1.93 billion in net income

 

Net income for the second quarter of fiscal year 21 was $2.28 billion.

 

The business benefited from a strong increase in consumer expenditure on travel and entertainment. Both inside and outside of the US, customer acquisition growth was strong. The management went into detail on the rise in operating expenditures brought on by higher salaries to recruit and retain talent.

Due to the high cost of hiring due to a tight labour market, American Express has increased its operating expenses. It is not overly concerned about inflation because its credit quality and spending growth are both encouraged by a record low jobless rate.

The management predicts a recession, but that the labour market’s deterioration will be a bigger issue. The business does not see that happening and is fairly optimistic about growth resulting from consumer demand.

learning sharks

GOLDMAN SACHS

Silverman Sachs (FY January-December) Q2 FY22: $11.86 billion in revenue; $2.93 billion in net income

 

Q2 FY21: $15.38 billion in revenue; $5.49 billion in net income

 

Given the unfavourable interest rate environment brought on by the Fed’s fast rate hikes, the financial giant reported a decline in income.

 

Although revenues fell, the lending industry held up well.

 

Equity investments caused the bank to suffer a significant loss, and investment banking income fell by 41%. However, the loan industry—consumer and corporate—grew. Revenues from consumer banking increased by 25%. Revenues from corporate lending more than doubled year-on-year.

According to Goldman Sachs, there is a good likelihood that the US economy will enter a recession. In the event of a recession, it anticipates that the strain on its loan portfolio will intensify.

learning sharks

JPMORGAN CHASE & CO.

Morgan Chase & Co. (FY January-December)

 

Q2 FY21: $30.72 billion in revenue; $8.28 billion in net income

 

Although revenues were hurt, the bank saw a respectable year-over-year loan increase of 7%. The bank’s balance sheet took a hit as a result of the unfavourable market conditions. Surprisingly, the bank’s card business’s performance provided crucial consumer information.

The management claims that US consumer expenditure, including discretionary spending, is not slowing down. Spending on necessities is beginning to be affected by inflation.

 

While the bank’s revolving balances increased nine percent, card outstandings increased by 16 percent. Which demonstrates that the US consumer still has a leveraged balance sheet and is willing to fulfil desires with loans.


“Consumers are doing well. They are making purchases. They earn more money. There are lots of jobs. Spending is up 10% from the previous year and up nearly 30% from before Covid. Businesses are doing well, according to those you speak with, he said.

learning sharks

VISA

Visa (FY September-October)

 

Q3FY22: Revenue of $7.3 billion and net income of $3.4 billion

 

Q3 FY21: $6.1 billion in revenue; $2.6 billion in net income

 

Strong results for the months of April and June were published by the global payments corporation that powers cards. The company’s transaction volume increased as a result of the rise in travel and other discretionary spending.

 

The total volume of payments increased by 8%, with the US reporting a 12 % increase. Regarding their expectations for the upcoming quarters, management remained optimistic.

While investors fret about inflation, Visa may profit from the erratic market and rising prices. Visa payments have increased, as have transaction sizes, thanks to inflation. The management also has faith that consumers won’t cut back on their spending just yet. The business emphasised that such developments in consumer buying patterns show resiliency.

Asia’s central banks forced to play catch-up in global rush to raise rates

by
learning sharks

While relatively low inflation allowed Asian central banks to stay dovish in order to support the post-pandemic economic recovery, this resulted in currency depreciation and capital outflows.

 

After defying global pressure to tighten monetary policy for a year, Asian central banks are now scurrying to catch up in order to combat rising inflation and safeguard failing currencies.

 

Market analysts believe Indonesia, the last remaining dove in emerging Asia, would be the next to raise interest rates on Thursday, as policymakers strive to persuade investors that they are combating increasing costs.

 

Singapore and the Philippines startled markets this week with unexpected tightening pronouncements, highlighting officials’ mounting eagerness to act.

 

Asia has lagged as the rest of the globe, particularly emerging nations began raising rates as early as last June after the US Federal Reserve initiated an expedited path for policy tightening.

 

While relatively low inflation allowed Asian central banks to stay dovish in order to assist the post-pandemic economic recovery, this resulted in weaker currencies and capital outflows, even as the war in Ukraine intensified global pricing pressures.

 

Have central banks acted too slowly? Yes, I am aware that this is a frequently asked question “The Monetary Authority of Singapore’s managing director, Ravi Menon, stated this at a press conference on Tuesday.

 

And, without sounding defensive on behalf of my colleagues overseas, few people saw this coming. The markets missed it.

 

The growth in inflation has been pretty significant. It was extremely rapid… And many people thought the biggest dangers to growth were on the downside, so they didn’t see this coming.”

 

Currencies and bonds have taken the brunt of the damage. The Philippine peso is one of the hardest hit, down more than 10% year to date and just off a nearly 17-year low of 56.53 per dollar. Government bond yields have risen by around 200 basis points (bps) since the beginning of the year.

 

The Thai baht has dropped more than 10% this year, and Thailand lost $816 million in June, breaking a five-month string of foreign investment in shares.

 

A major portion of the selling has been in response to rising Treasury yields and the US dollar, both of which are variables outside the control of domestic authorities, giving Asia a justification to postpone rate hikes.

 

 

However, central banks are discovering that they can no longer ignore rising food and oil prices. In Thailand and Indonesia, inflation has reached multi-year highs this month.

 

Prices in South Korea, which began rising rates as early as August 2021, reached a 24-year high in June, prompting a record half-point rate hike last week.

 

“I assume they’re still focusing on battling inflation for the next few months because that’s where the issue is,” said Euben Paracuelles, chief ASEAN economist at Nomura.

 

Peer Pressure

 

India, which saw its central bank raised rates by 40 basis points in an off-cycle move in May, has seen six straight months of foreign investor stock outflows, adding to a record slide in the rupee.

 

The typically volatile Indonesian rupiah is only down about 5% against the dollar this year, despite a 2.2 percent monthly drop in June.

 

It has been assisted to some extent by resource-rich Indonesia’s improving trading position and the fact that foreigners currently hold less than a fifth of its high-yielding bonds.

 

Others, like the Philippines and Thailand, are far more vulnerable due to current account deficits and, in the latter’s case, reliance on a tourism sector that is still reeling following the COVID.

 

Indonesia has been able to postpone rate hikes for the most part. But I believe they will increase… simply because everyone has tightened up already “ING senior economist Nicholas Mapa stated.

 

Despite this, only 11 of the 29 analysts polled by Reuters predict Bank Indonesia to raise interest rates on Thursday.

 

The room to maintain growth-friendly monetary policy is absolutely coming to an end very soon,” said UOB economist Enrico Tanuwidjaja, referring to central banks that have yet to raise interest rates.

 

Buy this Dyes & Chemical stock – Education purpose only

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Kiri Industries Limited is engaged in manufacturing dyes, intermediaries and basic chemicals. The current market price is 509 with a MACD crossover on Daily and Weekly. Entry at the same price to get 10 to 15%

Kiri industries has been on the radar for almost 6 months now. The technical on the charts look good. Not getting into the FOMO but this is a buy. The target of the stock is 30 % up at Rs 680.

let’s look at the fundamentals of this stock. Before making a position looking at the technical, one should have a look at the Profit & Loss.

Mar 2011 Mar 2012 Mar 2013 Mar 2014 Mar 2015 Mar 2016 Mar 2017 Mar 2018 Mar 2019 Mar 2020 Mar 2021 Mar 2022 TTM
Sales + 3,682 556 554 691 931 1,030 1,125 1,117 1,394 1,305 957 1,497 1,481
Expenses + 3,662 475 531 619 831 917 966 936 1,163 1,119 874 1,376 1,388
Operating Profit 20 81 23 73 100 113 159 181 231 186 83 121 93
OPM % 1% 15% 4% 11% 11% 11% 14% 16% 17% 14% 9% 8% 6%
Other Income + 97 -19 -110 -28 2 17 159 233 9 265 233 2 2
Interest 113 54 78 80 86 74 9 3 5 5 4 5 5
Depreciation 105 32 35 37 28 27 29 34 38 44 46 50 50
Profit before tax -102 -24 -199 -72 -13 30 279 376 198 402 265 68 40
Tax % 13% -33% -0% -1% -22% 13% 5% 5% 17% 7% 5% 23%
Net Profit -88 -32 -200 10 182 196 266 358 164 376 252 389 352
EPS in Rs -46.40 -16.84 -105.02 5.22 79.88 73.71 95.40 118.38 52.36 111.69 75.10 75.00 79.68
Dividend Payout % -3% -0% -0% -0% -0% -0% -0% -0% 4% 0% -0% -0%

This is not a call, it is just for educational purposes. Do your own proper research on this stock. Stock is looking bullish to the naked eye. Kiri Industries is into chemicals and dyes. The stock has been facing a lot of resistance at the 500 price range. While looking at the market, it seems it is about to break that price. Since the market is euphoric and bullish, you may see a breakout.

Laxman Narsimhan

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learning sharks

Starbucks next ceo Laxman Narasimhan

With a $1.3 million annual salary, Starbucks chooses Laxman Narsimhan as its new CEO.

The multinational coffee giant Starbucks has appointed Indian-born Laxman Narasimhan as its new CEO, succeeding Howard Schultz, who will serve as the organization’s interim CEO through April 2023. On October 1, 2022, Narasimhan must start by moving from London to Seattle, where the company is based.

 

According to a regulatory filing, Narasimhan’s base remuneration will be $1.3 million per year. To make up for the incentives he will lose by leaving Reckitt Benckiser, he will also receive a replacement equity award with a target value of $9.25 million and a cash signing bonus of $1.5 million. He will also be qualified for annual equity awards totaling $13.6 million beginning in the fiscal year 2023.

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“Starbucks’ dedication to improving mankind through connection and compassion has long set the company apart, creating a unique, internationally acclaimed brand that has revolutionised how people interact over coffee. I feel honoured to be joining this storied business at such a critical time, as our investments in partner and customer experiences have given us the opportunity to reinvent ourselves in order to meet the ever-changing demands we face today and position us for an even brighter future, said Narasimhan.

 

Less than 1% of the company’s shares gained in after-hours trading, barely registering a change. Since Schultz took over as temporary CEO, they are currently down by 24 percent.

 

 

Ashish Sinha, portfolio manager of Reckitt shareholder Gabelli, said “He took a really balanced approach to strategy… He didn’t go in all guns blazing – he took a very scientific way to get things right.”

 

 

During the transition period, according to Starbucks, Mr. Narasimhan will spend time with Schultz and the management team, working as a barista, getting to know the staff, and touring manufacturing facilities and coffee farms.

 

While it surprises us that Starbucks chose a replacement from outside the discretionary industry, Andrew Charles of Cowen wrote in a note that he is confident Mr. Narasimhan’s experience as the CEO of a publicly traded multinational corporation and his background in beverages at PepsiCo will benefit Starbucks in the future.

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Less than 1% was gained by the coffee chain’s shares in after-hours trading. Since Schultz’s appointment as temporary CEO, they are down 24%.

Emkay predicts a 40% increase in this bank stock and raises his target price.

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With asset quality stress and concerns around management stability/credibility now largely behind, Karur Vysya Bank (KVB) is on course to regain its mojo led by accelerated growth and reclaiming the >1% RoA (return on assets), as per brokerage Emkay. 

Karur Vysya Bank is the most appealing ‘Buy’ among smallcap banks, according to Emkay, because it has the best capital position (Tier I >17%) among peers and reasonable prices despite the recent run-up.

Based on a 4-5% increase in earnings for FY23-25E owing to stronger growth/lower LLP and rolling over valuations due to better RoE, the brokerage firm has raised its target price for the bank stock to $95 per share from $78 per share, representing a 40% increase from the current stock level. However, the brokerage believes that the primary risks include a slower-than-expected rate of growth and asset quality improvement as a result of adverse macroeconomic conditions.

“The bank has guided to reporting negative slippages in FY23, owing mostly to improved recovery patterns in the RAM (Retail, Agri, MSME) segment and lower corporate stress reflected in SMA 1/2, both at 0.5% of loans.” “The restructured book is also reasonable at 2.6% of loans,” according to the note.

A scheduled commercial bank headquartered in Tamil Nadu, Karur Vysya Bank shares have surged about 49% in 2022 (year-to-date or YTD) so far.