Business Standard Podcast

The Sensex and Nifty benchmarks have corrected 13% and 15%, respectively, from their all-time highs of 2021. Some select sectors that have borne the maximum brunt of this correction are IT, banks, metals and realty. Even though it appeared that the worst was behind as Covid-19 risks subside, the geo-political crisis has sprung up new challenges that continue to drive investors away from these sectors.   The BSE IT, Bankex, Metals and Realty indices have entered the bear zone after two years since 2020, cracking 20-30 per cent so far from their record highs that were hit between October 2021 and January this year. Elevated commodity prices, an accelerated rise in interest rates, and the onset of liquidity tightening have weighed significantly on these sectors, leading to their sharp underperformance. The metal industry, for instance, has been marred by high costs as prices of key inputs touched record highs this year on supply disruptions.   Even though, the prices of ferrous and non-ferrous metals have begun softening on demand concerns, the outlook for the sector remains weak, analysts say.   According to Edelweiss Securities “Weak demand due to the lockdowns in China is now starting to weigh on prices. Hence, we believe that despite supply shock, demand could soften materially, both hurting metal prices and demand”  JP Morgan, meanwhile, has downgraded the Indian IT sector to underweight cutting target multiples by 10-20% across the pack.   Edelweiss Securities remains underweight on the real-estate sector that has long benefitted from high demand spurred by low-rates. However, it believes that rising rates, along with slowing growth could now weigh on investor returns. Despite the sharp  In the financial space, experts say that growth in pre-provision operating profits would shape returns in the sector from now on instead of reduction in credit costs. Hence, analysts at Edelweiss Securities prefer private banks over PSUs, as it believes these players tend to score well on the pre-provision profitability front in a liquidity tightening scenario.   On the other hand, they add, rising interest rates will likely be challenging for NBFCs especially, as cost of funds will see an increase. Against this backdrop, Business Standard’s Avdhut Bagkar finds out what technical charts indicate for these underperforming sectors:   According to Avdhut Bagkar of Business Standard,Nifty Bank well protected by 100-WMA. Though Nifty metal and IT remain a risky play, Bagkar says Nifty metal needs to cross 200-DMA. Nifty IT index has support of 100-WMA, he says.   Market action will be stock specific today as the Q4 corporate earnings season enters its last leg. BHEL, Zomato, JK Cement, PowerGrid, Shree Cement, Divis Lab, Birla Soft, Ramco Cements and SAIL are among those companies that will be on investors’ radar. Besides, crucial events lined up for this week include Delivery’s likely market debut on Tuesday, and the monthly F&O expiry on Thursday.

The Sensex and Nifty benchmarks have corrected 13% and 15%, respectively, from their all-time highs of 2021. Some select sectors that have borne the maximum brunt of this correction are IT, banks, metals and realty. Even though it appeared that the worst was behind as Covid-19 risks subside, the geo-political crisis has sprung up new challenges that continue to drive investors away from these sectors.   The BSE IT, Bankex, Metals and Realty indices have entered the bear zone after two years since 2020, cracking 20-30 per cent so far from their record highs that were hit between October 2021 and January this year. Elevated commodity prices, an accelerated rise in interest rates, and the onset of liquidity tightening have weighed significantly on these sectors, leading to their sharp underperformance. The metal industry, for instance, has been marred by high costs as prices of key inputs touched record highs this year on supply disruptions.   Even though, the prices of ferrous and non-ferrous metals have begun softening on demand concerns, the outlook for the sector remains weak, analysts say.   According to Edelweiss Securities “Weak demand due to the lockdowns in China is now starting to weigh on prices. Hence, we believe that despite supply shock, demand could soften materially, both hurting metal prices and demand”  JP Morgan, meanwhile, has downgraded the Indian IT sector to underweight cutting target multiples by 10-20% across the pack.   Edelweiss Securities remains underweight on the real-estate sector that has long benefitted from high demand spurred by low-rates. However, it believes that rising rates, along with slowing growth could now weigh on investor returns. Despite the sharp  In the financial space, experts say that growth in pre-provision operating profits would shape returns in the sector from now on instead of reduction in credit costs. Hence, analysts at Edelweiss Securities prefer private banks over PSUs, as it believes these players tend to score well on the pre-provision profitability front in a liquidity tightening scenario.   On the other hand, they add, rising interest rates will likely be challenging for NBFCs especially, as cost of funds will see an increase. Against this backdrop, Business Standard’s Avdhut Bagkar finds out what technical charts indicate for these underperforming sectors:   According to Avdhut Bagkar of Business Standard,Nifty Bank well protected by 100-WMA. Though Nifty metal and IT remain a risky play, Bagkar says Nifty metal needs to cross 200-DMA. Nifty IT index has support of 100-WMA, he says.   Market action will be stock specific today as the Q4 corporate earnings season enters its last leg. BHEL, Zomato, JK Cement, PowerGrid, Shree Cement, Divis Lab, Birla Soft, Ramco Cements and SAIL are among those companies that will be on investors’ radar. Besides, crucial events lined up for this week include Delivery’s likely market debut on Tuesday, and the monthly F&O expiry on Thursday.

In a country where a big chunk of population is employed in textile sector, it might be an odd question to ask. But it is worth asking. Do we make too many clothes, buy too much of them, and junk too many of them? According to an IndiaSpend report, over 1 million tonnes of textiles are thrown away in India every year. This report is one among many others that have argued that fast fashion is hurting the environment by creating a false sense of demand for the next and latest fresh look, which is an ever-changing notion. But, what does the term 'fast fashion' actually mean? Let's find out. India is one of the top fast fashion manufacturing hubs globally and its own fashion demand is also growing. In this context, it is important to understand the concerns attached. But, first, what exactly is fast fashion? The fashion industry used to have two seasons a year earlier. Manufacturers and designers used to roll out new collections for each season. But in 2000, some international brands introduced about 52 micro seasons a year. There were new launches almost every week, flooding markets with more and more stylish cloths. This was called fast fashion. According to the Corporate Finance Institute, the term fast fashion refers to rapidly produced and consumed fashion products that are manufactured to meet fast-changing trends. In part, it is a sales technique, the rapid speed of which gives organisations using it a competitive advantage. Fast fashion calls for clothes to move quickly from the fashion ramps into the hands of consumers in a bid to take advantage of the latest trend. The average consumer goes away happy as fast fashion allows them to buy the hot new look at an affordable price. Not to mention, the rise of fast fashion reflects the success we have had in coming up with cheaper and speedier manufacturing processes and shipping methods. It also reflects the increase in consumer purchasing power, especially among the young. And when the trend changes so fast and your wardrobe fills up fast, what happens to the clothes that are now considered out of style? You end up discarding them. Fast fashion ends up resulting in a massive increase in wastage. Also, remember that these clothes are transported around the world before reaching you. The result is increased carbon dioxide emissions. The fashion industry produces about 53 million tonnes of fibre every year, 70% of which ends up in garbage dumps. While in India, over one million tonnes of textiles are discarded every year. So, what can you, as the consumer, do? Simple solutions are the answer. You can just buy less clothing. You can extend the life of your current clothing by not falling for the latest hot trend. In some countries, where the practice is prevalent, you can go in for thrift shopping. And, last but not least, you can upcycle your old clothes.

The Supreme Court on Thursday ruled that GST on ocean freight paid in case of import of goods is unconstitutional. And while upholding the Gujarat high court order on sea freight, the apex court also said that recommendations of the GST Council are not binding. And both the states and the Centre have the power to legislate on GST matters. So what does this mean for the GST framework? And how will it affect the Centre’s relationship with states, especially those being ruled by opposition parties.  From the corridors of Supreme Court, let us see what all is happening in the alleyways of Gujarat's Surat -- where over 90% of the world’s diamonds are given the right shape and the sparkle. They have become quieter since Russia started bombing Ukraine. The supply of rough stones has almost come to a halt after US sanctions on Alrosa -- the biggest diamond miner in Russia. Leaving diamond cutting and polishing units high and dry.  The mood on Dalal Street was also as sombre as in Surat. A sharp selloff hit domestic equity markets yesterday as concerns over high inflation, coupled with heavy foreign outflows, butchered bulls. Going forward, analysts believe that the markets will continue to remain on the edge over fears of recession in the US, and prospects of aggressive monetary tightening by global central banks. Listen to an analysis on what dented investors’ sentiment and what lies ahead From the unpredictable Dalal Street, let us now move on to the policy corridors of Delhi. India on Thursday slammed a resolution passed by Pakistan’s Parliament on the delimitation exercise in Jammu and Kashmir. The move has met with some resistance inside Kashmir too. Listen to this podcast to know more about delimitation. And also why it has come under criticism in the Valley. Watch video

In a ruling that will have major implications on the GST framework and Centre-State financial relations, the Supreme Court of India on Thursday said the recommendations of the council are not binding on the Centre and State governments.   The observation followed a judgement over the applicability of Goods and Services Tax under the Reverse Charge Mechanism on transportation of imported goods through the sea route.   The apex court dismissed an appeal by the Centre against an earlier Gujarat High Court judgement that said that Integrated GST on ocean freight is unconstitutional. The Supreme Court held that GST Council’s recommendations will only have a persuasive value, adding that the Parliament and state legislatures possess equal powers to legislate on GST. Abhishek A Rastogi, a partner at Khaitan & Co, who argued on behalf of importers, said there will be a pragmatic approach to the provisions which are subject to judicial review by way of challenge to the constitutionality of such provisions based on GST Council recommendations.   The decisions in the GST Council are taken by a majority of not less than three-fourths of the weighted votes cast. The Centre has one-third weightage of the total votes cast and all the states taken together have two-thirds of the weightage.   In the last five years of GST, the Council has taken all decisions on the basis of consensus, with the exception of the levy on lotteries, in which voting took place in December 2019.   Abhishek A Rastogi, Partner, Khaitan & Co says GST Council’s recommendations are unconstitutional can’t be implemented. Process of voting in the GST Council remains intact. States having different GST rates will defeat the objective of GST and the states will have to debate if they want to deviate from the harmonised system.  The Finance Minister of Tamil Nadu Palanivel Thiaga Rajan welcomed the court’s observation, saying it clarifies issues that he had raised last year. He had said the GST system and the Council function with an all-encompassing mandate not envisioned in the Constitution of India. He said the vesting of enormous de-facto power in bodies not directly connected with the GST Council, such as the Tax Research Unit of the Central Board of Indirect Taxes and Customs, GST Secretariat and the GST Network, is fraught with questions of constitutional legitimacy.   What would the Supreme Court’s remarks mean for Centre-State relations going forward?   Speaking to Business Standard, Jatin Arora, Partner, Phoenix Legal, says this will lead to interpretational issues with regard to states’ powers. Tamil Nadu govt says most of the powers related to levy of taxes rest with the Centre. It says agenda set by the Centre is followed typically in GST Council. The SC ruling gives more teeth to states to raise their concerns. Arora says it will be worrisome if states legislate on GST matters outside of the GST Council. Centre will have to be more accommodative of states’ issues.    Another legal expert says that yesterday’s ruling does not change the way in which the GST Council functions.   According to Rajat Bose, Partner, Shardul Amarchand Mangaldas & Co, there is no change in provisions related to GST Council. The GST Council can deliberate on differences of opinion between states and centre and it is empowered to decide on those differences.  Meanwhile, Revenue Secretary Tarun Bajaj said the ruling is unlikely to materially impact the one-nation-one-tax regime as it is only a reiteration of the existing law that gives States the right to accept or reject the council’s recommendations -- a power that  The official further said that states never went back and framed legislations that were not in line with the panel's recommendations even when they differed on tax rates on a particular good or service in the Council. To sum up, the SC ruling affirms that GST Council is merely a recommendatory body and its suggestions must pass the

Situated on the banks of Tapti -- which follows an east to west itinerary -- Surat has been a bustling industrial city for ages. It is a hub for fabric production. And, it is also the city which gives shapes to over 90% of the world's diamonds. Inside the row upon row of run-down factories, rows of workers sit for hours at a stretch to slice and polish tiny stones -- until they take the perfect shape with 58 facets. The journey of the diamonds which begins from mines in Russia and Australia ends in these congested lanes of Gujarat’s Surat -- from where they are sent for sale on the high streets of Europe, the US and other parts of the world. Surat is home to over one million workers who come from UP, Bihar and several other states to eke out a living by polishing diamonds. But the streets of Surat are not as bustling as they once used to be. And workers are not getting the amount of work which they used to get over two years ago—when the pandemic struck. The second wave of pandemic led to an exodus of workers and a subsequent dip in production. Even as things were returning to normalcy, an altogether different challenge has emerged for the industry. The crisis originated in faraway Ukraine when Russian President Vladimir Putin decided to send in his military into that country and, in turn, got Moscow placed under far-reaching sanctions by the US and its allies. Partly owned by the Russian government, the world’s largest diamond mining company, Alrosa, also came under sanctions. It accounts for 40 per cent of the world's rough diamonds supply in volume and 30 per cent in value. And the Surat’s diamond industry is also heavily dependent on Alrosa’s rough diamonds. Sanctions have now forced diamond polishers and exporters to cut production due to the lack of raw materials.   And, at the same time, over 25 percent of Surat workers are on annual summer leave. The industry will see significant job losses in June if it doesn't receive the Russian rough diamond imports. At present, even as production has been hit by the lack of rough diamonds, the industry has sent over 250,000 workers on 15 days’ leave till June. Quoting one of the leading Surat-based diamantaires, a Business Standard report explains what could happen going forward. The real impact of sanctions on Alrosa will be seen in June, which is when production will resume after the summer vacation. That's when the real problem could occur if the shortage of rough diamonds continues. Add to this the fact that there is hardly any inventory in the industry. The Gems and Jewellery Export Promotion Council has been calling for an intervention by the Central government, especially the Ministry of Commerce. However, the council's vice chairman, Vipul Shah, has said that until that happens, the industry might be staring at huge job losses in June and July. There's no telling when the war in Ukraine will end. In any case, the sanctions on Russia could outlast the war itself. Thus, if no steps are taken now, the shortage of Russian rough diamonds is likely to continue in the coming months. Amid all of this, there is one possible solution that the government could offer, even though it has its challenges. There's also one option that the industry can explore on its own. Shreyans Dholakia, Entrepreneur and Brand Custodian, Shree Ramkrishna Exports Pvt Ltd, says polishing process for natural and lab-grown diamonds is the same, some players have already shifted to lab-grown diamonds during Covid. Those dependent mostly on Russian supply can do the same now.  However, lab-grown diamonds might not prove to be an immediate alternative if US sanctions on Alrosa continue. As the Business Standard report highlighted, it takes 6-8 months to set up a laboratory to grow diamonds. And, the actual production begins after almost a year.   Known for polishing 9 out of 10 diamonds in the world, Surat houses roughly 6,000 dia

Dalal Street witnessed another bloodshed on Thursday as weak earnings by retailers listed on Wall Street rang alarm bells regarding subdued consumer demand. The BSE Sensex crashed 1,416 points to slip below the 53,000-mark, while the Nifty50 gave up over 300 points to slip below the 15,900-mark. So far in calendar year 2022, frontline indices -- S&P BSE Sensex and Nifty50 -- have bled over 10% each whereas, broader markets have tumbled up to 21 per cent. The selling comes on the back of monetary tightening by global central banks that are walking a tight-rope to tame inflation while allowing growth to prosper. Soaring oil prices and earning downgrades are expected to keep market confidence muted in the near-term.   That said, what has worsened the correction is the relentless selling by foreign portfolio investors for eight consecutive months. Since October last year, FPIs have sold equities worth nearly 2 trillion rupees with 4 of the eight months seeing selling of over 30,000 crore rupees each. And despite retail investors and domestic institutional investors giving muscle to the market, FPIs are having an upper hand. So what’s worrying the FPIs and when will this selling abate?   Nischal Maheshwari, CEO – Institutional Equities, Centrum Broking, says rising inflation, tapering balance sheet spooking markets. Exit of easy money policy stoking inflationary pressures, he says. Money moving back to US; 10-year yields at 3%.  He says that Daily FII sell-off is seeing slowdown, but FII will remain cautious until inflation is controlled. FII buying still a couple of quarters away   While Maheshwari believes retail investors have behaved maturely during this breakdown a break below 15,000 on the Nifty can trigger fresh bout of panic selling. After yesterday’s closing, tech charts suggest that the Nifty50 formed bearish pattern on the daily charts on Thursday, signaling a negative trend. The index now needs to hold 15,671 for a reversal, while it may face stiff resistance at 16,000. On Friday, investors will watch out India’s forex reserves data, the UK’s retail sales data for April, March quarter results, and other global cues for today’s trading session.

Earlier in May, as it redrew Jammu and Kashmir’s electoral map, the government’s three-member Delimitation Commission recommended creation of six assembly constituencies in Jammu and one in Kashmir. With this, there will be 47 assembly segments in the Kashmir division and 43 in Jammu. So there are 90 assembly seats in JK, up from 83 earlier. According to the 2011 Census, the population of Jammu and Kashmir is 12.5 million. Of them 6.89 million live in Kashmir, 5.38 million in Jammu and 2, 74,00 in Ladakh. The exercise and the proposal have drawn heavy criticism from various political quarters, especially within the Kashmir Valley. “The delimitation commission has become an extension of BJP… We reject it, we have no faith in it,”   Former JK chief minister Mehbooba Mufti BJP’s former ally Mehboob Mufti was blunt in criticism. She said that the commission has ignored the basic parameter of population and added or removed areas as per their wishes. But what exactly is delimitation? Delimitation is the process by which the limits or boundaries of a country's territorial constituencies are rejigged to reflect changes in population. The redrawing of these boundaries is based on the recent census. In India, the number of Lok Sabha seats allocated to different states, along with the total number of seats in a state's Legislative Assembly, can change as a result of a delimitation exercise. And the body tasked with carrying out the exercise is called delimitation commission or boundary commission. Such commissions have been constituted four times in India. First was in 1952 under the Delimitation Commission Act, 1952, then in 1963 under Delimitation Commission Act, 1962, in 1973 under Delimitation Act, 1972 and in 2002 under Delimitation Act, 2002. The delimitation exercise is done for three main reasons. First, to ensure a fair division of geographical areas. Second, to ensure equal population representation from every seat. And, third, to ensure that the principle of “One Vote One Value” is maintained. Now, let us delve into the controversy in Kashmir over the delimitation commission’s proposal. The report has five major takeaways. First, the five parliamentary constituencies have been re-organised so that each now has 18 assembly constituencies. Second, six assembly seats in Jammu and three in Kashmir have been reserved for Scheduled Tribes. The third is the formation of the Anantnag-Rajouri Parliamentary constituency by merging Kashmir’s Anantnag area with Jammu’s Rajouri and Poonch. The fourth is the addition of six new Assembly constituencies in Jammu and one in Kashmir. Last and fifth, it has been proposed that the Union Territory’s Legislative Assembly should include at least 2 people from the Kashmiri migrant population. So, why the criticism and opposition? As a recent Business Standard editorial explains, the main reason for this is the seat distribution in both the Assembly and Lok Sabha. It appears that the old communal divide between Jammu and Kashmir has been maintained by allocating them 43 and 47 seats, respectively. This allocation significantly alters the vote shares in the Assembly. Jammu, with 44 per cent of the population, will get to vote for 48 per cent of the seats. Meanwhile, the Kashmir division, with 56 per cent of the population, will get to vote for 52 per cent of the seats. Under the earlier configuration, Jammu had 44.5 percent of the seats and Kashmir 55.4 per cent. And when it comes to the realignments of the parliamentary seats, critics see the influence of Kashmiri-speaking Muslim voters being reduced with the restructuring of the Jammu and Anantnag seats. No wonder there have been allegations of gerrymandering.

Amid the race to hire and retain talents, several information technology companies are outdoing each other in doling out attractive packages and bonuses. HCL has taken the lead by substantially increasing the fresher pay packages. TCS is giving double digit raises up to 25%. Will such hikes become the new norms?  Like the IT companies, the government too wants to raise the bar. Prime Minister Narendra Modi on Tuesday said that India is planning to launch 6G services by the end of this decade. But are we ready? The 5G launch still looks like a distant dream and a big chunk of the population is struggling with slow 4G speed.  Meanwhile, the shares of Bharti Airtel nosedived on Wednesday even after it posted more than two fold year-on-year (YoY) jump in its consolidated net profit. The sharp correction in equity markets has taken a toll on mid-and-small cap stocks that have underperformed their large-cap peers. From their lifetime peaks, broader indices have tumbled up to 20% as against a 13-14% slide in benchmarks. However, analysts expect these two segments to clock a sharp rebound once the dust around the near-term uncertainties settles, and economic growth prospects become clear.  After the markets and money, let us move on to the bustling lanes of Kashi -- which are believed to be older than history. But for the last few days, two religious places -- which existed next to each other for ages in one of its lanes – are in the news. A court has ordered a survey of Gyanvapi mosque after a petition claimed the presence of Hindu deities inside the mosque. The Muslim side has claimed protection under the Places of Worship Act, 1991. Let us know more about this law in this episode of the podcast.  Watch video

India’s third largest software services exporter HCL Technologies recently took everyone by surprise. It decided to raise fresher pay packages from 3.6 lakh rupees to 4.25 lakh for FY23. This new package would also be applicable to those freshers who joined the firm in FY22. Last year, mid-sized IT firm Happiest Minds Technologies reportedly increased its fresher salary to 5.5 lakh rupees, which includes a base salary of 4.25 lakh rupees and the rest being joining bonus.  Freshers’ salaries remained stagnant between 2.5 lakh to 3.5 lakh rupees for a decade now. In a bid to attract fresh talent and keep them for longer to counter the impact of rising voluntary attrition rate, companies are giving joining bonuses, double-digit pay hikes and promotions.   Some employees are seeing their salaries double when they switch jobs. According to a news report, Infosys, which reported a 27.7% attrition rate last quarter, plans to have an average salary hike of 12-13%. High potential employees will get increases of 22-23%. Globally too, tech talent is being rewarded as never before. Microsoft said it will “nearly double” its budget for employee salaries and boost the range of stock compensation it gives workers by at least 25%, mainly affecting “early to mid-career employees”. Shiv Agrawal, managing director at recruitment firm ABC Consultants, believes that the recent salary hikes are among the highest ever.  An HR executive told Business Standard that salary hikes at TCS are already in double digits and in some cases it's upwards of 25%. In the third quarter of FY22, TCS had given promotion to over 110,000 employees. At Wipro, the company announced that at the junior level, promotions will happen on a quarterly basis. Employee costs for the top 5 Indian IT services have touched an all-time high of 2.85 trillion rupees last fiscal, driven by strong fresher hiring and pay hikes. They grew between 15% to 35% for these companies.  Universities that see bulk hiring noted that differential hiring has gone up. What this means is that based on a student’s skills, he/she can attract a higher package. TCS has a programme called TCS Digital that looks at hiring students with specialisation and the pay package starts from 7 lakh rupees. Cognizant’s Digital Next, for which if selected, a fresher can get a starting pay package of 6.75 lakh rupees. Wipro Turbo, a similar programme from Wipro, can take a student’s salary package to Rs 6.5 lakh. The sector had seen major layoffs just before the pandemic. Companies are now trying to fill the gap to cater to the strong post-pandemic demand pipeline. For long, enterprises have had the command over the pay and this seems to be changing now. While IT companies have been managing their operational costs by keeping a tight check on the fresher salaries, they may find it difficult to attract new talent now at the old packages. We can therefore expect the industry to settle at an overall higher pay structure even after the current talent supply issue is resolved.

Connectivity will decide the progress of the country in the 21th century, Prime Minister Narendra Modi said at an event organised by Trai where he unveiled the 5G testbeds for companies to test and validate their products, services and use cases. PM Modi also said that India is targeting the rollout of 6G telecom network by the end of the decade. The PM’s announcement may set things in motion for timely rollout of 5G services and put India ahead of the curve in time of launching 6G, believes Lt Gen Dr SP Kochhar, Director General, COAI. We may get ahead of the curve in future for 6G because we are starting early, but are we on track for timely rollout of 5G services? While many countries across the world have rolled out 5G services, India is yet to auction the 5G airwaves, let alone the commercial rollout. According to Ookla’s 5G network tracker, India is one of the few major countries without a 5G network. Countries like France and Germany have extremely dense 5G coverage. Apart from European countries, China, Australia, the US, several South American countries and a few African countries also have 5G in some capacity. For context on where we stand today, let’s take a look at what Bharti Airtel management said in a post-earnings conference call on Wednesday. The company believes that it will take another 3-4 years to cover most part of urban India. But why do we need 5G for connectivity when 4G is capable of high-speed data services. Well, the answer is simple. We have a wide coverage of 4G networks in the country but speed is as good as 2G. According to OOKLA’s global ranking index, India is positioned at 118 with 14.19 Mbps medium mobile download speed in April. In comparison, 4G speed in the US ranges between 35-40 Mbps. That said, it is vital to take steps now to have better speed on 5G along with wide network coverage. Otherwise, it will be the repeat of 3G and 4G for India. Besides, the delay in 5G network rollout and abysmal 4G speeds there is a legacy issue of mobile users stuck on 2G network. It needs immediate attention if the country has to move to a fully functioning digital economy where ultra-fast connectivity takes precedent. India is home to more than 1.16 billion telecom users, according to Trai subscriber report for March 2022. Of them, about 350 million users are on the 2G network. Telecom operators and mobile phone makers have made efforts to bring 2G users to 4G network, but the pace of progress has been slow due to premium price factors associated with 4G data tariffs and smartphones.

Equity markets seem to be in the midst of a perfect storm, displaying an extreme volatility. The concerns related to inflationary pressure and policy tightening by the global central banks seems to have gotten exacerbated in the past couple of months, especially with the long-drawn geopolitical crisis in Europe, and the fresh wave of Covid-19 in China.   Over the past one-month the benchmark S&P BSE Sensex and the Nifty50 indices have declined over 5% each, while the BSE MidCap index has cracked over 8%. The BSE SmallCap index, on the other hand, plunged nearly 10%. Such a slide in the indices came as investors gauged the spill-over effects of the macro headwinds such as inflation, margin pressure across sectors, and the cautious commentaries by various corporates. According to analysts, there are increasing concerns building up on possibility of a ‘stagflationary’ scenario, which coupled with rising bond yields, does not bode well for Equities as an asset class. The rising dollar index and the persistent selling by the FIIs are also not helping the cause. Given this, Milind Muchhala, Executive Director at Julius Baer India says all intra-day recoveries are getting sold off, and various technical levels are getting broken, making the markets more nervous. While, there could be some technical pull-backs, the markets will continue to remain influenced by incremental news flows related to central bank actions and inflationary trends in the short-term.   Muchhala also pointed out that FIIs seem to be holding one of the lowest net long positions in the recent times in the F&O segment, which can trigger some short covering in case the markets.   No wonder then that benchmark indices have gained close to 3% so far this week, as against 4% rally in the broader indices. As broader indices see a sharper recovery after a steep knock, should one consider nibbling in the space? According to analysts, while investors dumped mid-and small-cap stocks as the markets turned choppy, these two segments could see good investor interest from a medium-to-long term perspective. Speaking to Business Standard, G Chokkalingam, founder and CIO, Equinomics Research, reminds that corrections cycles are short-lived and valuations have corrected sharply. Individual mid-, small-caps have corrected up to 50%, he says, indicating that it is the best time for wealth creation. Broader indices to start performing within 2-3 months, he says.   Sujan Hajra, Chief Economist and Executive Director at Anand Rathi Shares & Stock Brokers, on the other hand, believes that the negatives have been over-estimated by the markets.   Hajra believes analysts are overestimating concerns on growth, inflation and pace of monetary tightening. The actual measures/policy steps could be moderate. Tightening inflation will improve over the next three to six months, he says adding that growth slowdown may trigger accommodative fiscal policies. Hajra is positive on equities from one year perspective.   Therefore, as expectations mount that mid and smallcaps may outperform their largecap peers over the next 1-2 years, Chokkalingam of Equinomics Research suggests investors should check the quality of the management and the guidance they give. Secondly, investors should pick stocks with 5-10 years of listing history. He says one must analyse the Balance Sheet's strength before investing.   In nutshell, mid and smallcaps will likely outperform over the next 1-2 years as retail investors throng the markets in search for a better returns, and as macro headwinds subside over the next couple of quarters.   On Thursday, markets will track global cues, weekly F&O expiry, and March quarter results for the markets' trajectory. Besides, initial public offer of Paradeep Phosphates and Ethos will be eyed.  

The year was 1991. And it was the peak of Ram Janmabhoomi movement. The country had seen communal riots in Gujarat, Uttar Pradesh, Karnataka and Andhra a few months ago, leaving scores dead and P V Narasimha Rao was in the Prime Minister's seat. It was then that the Rao government introduced a law in an effort to put a lid on any future controversy arising out of the ownership and character of any place of worship in the country. This was introduced to prevent another Ram Janmabhoomi movement kind of controversy from erupting. The Babri mosque in Ayodhya was razed a year later. While introducing the Bill in Parliament, then Home Minister S B Chavan had said that it will effectively prevent any new controversies from arising in respect of conversion of any place of worship. “An Act to prohibit conversion of any place of worship and to provide for the maintenance of the religious character of any place of worship as it existed on the 15th day of August, 1947, and for matters connected therewith or incidental thereto,” reads the Act.  The law, Places of Worship Act, 1991, lays down that the character of a religious place cannot be altered from what it was on August 15, 1947-- the day India got its independence. So, if a building was being used as a temple on August 15, 1947, it cannot be turned into a mosque, church or a gurdwara. While Section 4(2) of the Act says any suit or legal proceeding with respect to the conversion of the religious nature of any place of worship existing on August 15, 1947, pending before any court, shall abate. And no fresh suit or legal proceedings shall be started. The Bill had met with vehement opposition from the BJP in Parliament. While referring to Kashi Vishwanath temple-Gyanvapi mosque dispute, Uma Bharti had then asked, “Was not the intention of Aurangzeb behind leaving remnants of the temple at the site of mosque, to keep reminding Hindus of their historical fate and to remind coming generations of Muslims of their past glory and power?” A five judge bench of the Supreme Court, which had in November 2019 ruled in the favour of the Hindu litigants, had also quoted heavily from the 1991 Act. “In preserving the character of places of public worship, Parliament has mandated in no uncertain terms that history and its wrongs shall not be used as instruments to oppress the present and the future.” While holding the sanctity of the Places of Worship Act, 1991, the bench led by the then CJI Ranjan Gogoi had said that they were making an exception in case of Ayodhya as it was an ongoing episode. The bench had said that “history and its wrongs shall not be used as instruments to oppress the present and the future.” “Non-retrogression is a foundational feature of the fundamental constitutional principles of which secularism is a core component. The Places of Worship Act is, thus, a legislative intervention which preserves non-retrogression as an essential feature of our secular values” The apex court had said that the Places of Worship Act, 1991 is a legislative intervention which preserves non-retrogression as an essential feature of our secular values.

Shares of state-owned Life Insurance Corporation of India (LIC) kick-started their journey at secondary markets on a weak note on Tuesday. Against the IPO price of Rs 949 apiece, they opened at Rs 867 on BSE -- wiping off nearly Rs 43,000 crore worth of investor wealth. While analysts are unperturbed with the stock performance, the government may have more to worry about than just LIC’s stock. Take a dive into what LIC’s weak debut means for this year’s divestment target  The weak listing has brought down the market valuation of LIC to around ₹5.57 lakh crore -- from the earlier six lakh crore. Unstable market conditions is one of the reasons for it. Meanwhile, FMCG companies too are struggling. They have now resorted to “shrinkflation” to cope with the increased input cost, without passing on the price burden to consumers. The low cost packets of biscuits, chips, juices, soaps etc have shed weight. So, the same Rs 10 chips packet will have lesser chips, and more air.  Global headwinds and increased input costs are indeed taking a toll on India Inc. In an interview with Business Standard’s Nikunj Ohri and Arup Roychoudhury, the new CII president and Bajaj Finserv chairman Sanjiv Bajaj offered some suggestions to deal with it. He claimed that cutting petrol and diesel duties will spur consumption and demand. Bajaj also said that inflation will continue to hurt margins of companies. However, that will not disrupt private sector capex revival, which is getting stronger.  Health and education are indeed the key to a nation’s growth, as recently pointed out by Sanjiv Bajaj -- who wants the government to substantially increase the outlay in these sectors. Meanwhile, the government’s efforts to tame the country’s population have started paying off. Indian women are giving birth to fewer children now than in the past. And it is irrespective of their religion. From 5.9 in the 1950s -- when the population control programmes were launched -- the total fertility rate has fallen below the replacement level now. What does it mean? Let us find in this episode of the podcast.  Watch video

India’s insurance goliath, Life Insurance Corporation of India, proved to be non-profitable for all categories of investors as its shares fizzled out on the bourses yesterday. Against expectations of a marginally lower listing, shares of LIC debuted on the BSE at 867 rupees, down nearly 9% against its issue price of 949 rupees.   They further fell to a low of Rs 860, before settling the day at Rs 875 apiece. With this, LIC’s market cap stood at Rs 5.53 trillion at the end of its debut day. This means, investors lost roughly Rs 47,000 crore in the IPO, which valued LIC at Rs 6 trillion. However, analysts are unperturbed by the muted debut as they eye LIC’s long-term growth prospects.   Girirajan Murugan, CEO of FundsIndia says LIC is a long-term play and recommends adding LIC to one's portfolio on dips. There may be a bit of selling initially due to overall market sentiment, he says, but BFSI stocks will rebound after geopolitical tension eases/    B Gopkumar of Axis Securities, too, opines that investors should not exit LIC’s stock at current levels as it is a play on the growth story of the under-penetrated life insurance industry. LIC’s sustained market leadership position, robust pan-India distribution network, and shifted focus towards profitable products will support margins and improve persistency ratios. All these factors will collectively make LIC an attractive pick from a long-term perspective. However, there’s more to LIC’s listing than what meets the eyes. Funds from IPO will be critical to bolstering government finances and meeting a deficit target of 6.4% of gross domestic product for FY23.   LIC’s IPO was already slashed by almost 50% to ride the market volatility. And still, a tepid response to one of the most well-connected state-owned entities may prompt the government to re-think its divestment strategy.   Speaking to Business Standard, UR Bhat, co-founder and director, Alphaniti Fintech says govt still has scope to sell further stake in LIC. Govt may consider OFS when market sentiment improves, he says, but BPCL divestment is complicated. "Government needs to clean the company, offer what investors want," he says.   According to a Reuters report, the government is considering inviting bids for a 20%-25% stake in Bharat Petroleum Corporation, instead of an outright sale of its entire 52.98%. Similarly, it will likely put on hold the sale of state-owned helicopter service provider Pawan Hans indefinitely, as per a Business Standard report. The Centre has missed its revised divestment target twice in three years. Now, achievement of this year’s target looks difficult, too, which assumed the completion of the process to privatise BPCL and SCI, amid a market rout due to the spill-over effects of the ongoing war.   Against this backdrop, Bhat expects the government to receive decent market proceeds from various stake sales as and when market conditions stabilise and the govt re-works bid offers as per investors’ interest. On Wednesday, investors will eye any rebound in LIC shares. Besides, they will also track March quarter results, and global cues for further market direction.