Business Standard Podcast

In a surprise announcement, RBI Governor Shaktikanta Das on Wednesday said that the Monetary Policy Committee has unanimously voted to increase the repo rate by 40 basis points, to 4.40 per cent with immediate effect. The repo rate has been increased for the first time since August 2018. What will be its impact on the economy? Also what will be the impact on homebuyers, borrowers and FD investors?    While the RBI’s rate hike signals the end of low interest regime for home buyers, China’s new lockdown measures have also put the consumer durables-buyers in India at unease. The backlog of cargo and container ships near Shanghai port is likely to affect the consumer durables market, which heavily depends on components from China. As inventories of TV, AC and refrigerator-makers in India could reportedly start drying up from mid-May, we analyse the looming crisis to understand its impact on consumers.       Back to the markets, the out-of-policy hike in repo rate by 40 basis points, and a 50 bps hike in the cash reserve ratio by the Reserve Bank of India took investors by surprise on Wednesday.  The decision came unexpectedly and on the opening day of LIC’s IPO. With the RBI getting more hawkish than expected, what does the road ahead looks like for the markets?   Apart from a bull and bear trend, markets also witness phases of consolidation. In today’s decoded, we delve into what is a consolidation phase, how to identify it and trade during such a phase. Let’s find out in this episode of the podcast.  

In an unscheduled press briefing yesterday, RBI Governor Shaktikanta Das has said that the Monetary Policy Committee’s off-cycle meet had unanimously voted to hike rates. The rationale behind this decision was the upside risks posed by global factors to India’s inflation trajectory. The repo rate now stands at 4.40 per cent, with immediate effect. Consequently, the standing deposit facility rate stands adjusted to 4.15 per cent. Meanwhile, the marginal standing facility rate and the Bank Rate stand adjusted to 4.65 per cent . However, the Monetary Policy Committee has decided to remain accommodative while focusing on the withdrawal of accommodation. This is aimed at ensuring that inflation remains within the target going forward, while supporting growth. Driven by food inflation, the headline inflation number in March had touched 7 per cent. And, high frequency price indicators for April have indicated that food price pressures would persist. At the same time, the direct impact of the increases in domestic pump prices is feeding into core inflation prints and is expected to have intensified in April.   Effective from the fortnight beginning 21st May, the RBI has also hiked the cash reserve ratio by 50 basis points, to 4.5 per cent of net demand and time liabilities. This is expected to withdraw liquidity to the tune of Rs 87,000 crore from the system.   So, how is it going to impact homebuyers? Analysts say, this is the beginning of the end of low-interest home loans. According to ANAROCK Group Chairman Anuj Puri, for home buyers, this hike signals an imminent end to the all-time low-interest regime. Low interest has been one of the major drivers behind home sales across the country since the pandemic began. The rise in interest rates will ultimately impact overall acquisition cost for homebuyers and may dampen residential sales to some extent. In fact, the policy decision will impact all loans – from home loans and car loans to personal loans. Let’s say you are planning to take a loan. You should act quickly to ensure that the loan is disbursed at the present lower rates. However, this applies to fixed rate loans such as personal loans and auto loans. This won't be of much help for new home loan borrowers because those are mostly floating rate loans.     And, fixed deposit rates are set to rise. Ideally now, a depositor should consider locking funds in shorter-duration FDs in order to enjoy the benefit of higher interest rates in the coming months.   We spoke to Madan Sabnavis, chief economist at Bank of Baroda, to understand its impact on economic recovery, inflation and cost of credit.   Sabnavis said exogenous shocks will not be mitigated and this rate hike will control excess demand pressures. While Bank of Baroda forecasts inflation in the 6%-plus band, Sabnavis says inflation could go up to 7% and cost of credit is also  likely to go up. For the financial markets, it is now evident that the central bank has finally embarked on policy normalisation process.

If you are planning to bring home an air conditioner, refrigerator or a washing machine in a week’s time or two, chances are, your nearest retailer may not have the full inventory to let you choose from. And it’s not a sulking salesman you are dealing with. You are out for shopping at a time when consumer durable companies in India are struggling with diminishing inventories.         And that’s because consumer durables companies in India – which depends heavily on components from China – have been affected by the pile-up of cargo ships near Shanghai port.   Employees of the Chinese port are reportedly unable to go to work because of strict Covid-induced lockdown in the region. Demand for summer products, like refrigerators and air conditioners, has been improving during the past few months, recovering from the pandemic setbacks. But supply side constraints and soaring inflation drove input costs at lifetime highs, making consumers brace for price hikes. This was followed by Covid-induced curbs in China – all of which are now impacting the production of consumer and electronic products.   “June could be bad if the lockdown continues in China. It is difficult to predict the impact right now” - Eric Braganza, President, CEAMA   For Eric Braganza of the Consumer Electronics and Appliances Manufacturers Association, it is difficult to predict the extent of the impact the lockdown in China would have on consumer durables companies right now. Speaking to Business Standard, he said a few models could go out of stock due to delays in components coming from China, he says. Contract manufacturer Dixon Technologies also reports shortage in components supply during the past three weeks, as shipments delayed are already in the pipeline. However, Super Plastronics, the brand licensee of Kodak, Thomson, Blaupunkt and Westinghouse in India is in a better position. The company had stocked up in October-December and January-March anticipating some disruption, says Avneet Singh Marwah, chief executive of Super Plastronics.     Talking to Business Standard, Prabhu Ram, Head - Industry Intelligence Group, CyberMedia Research (CMR), there is relatively high demand for consumer durables and companies had stocked up on inventories. However, lockdowns in China have still hit supply of components and consumers will face price rise across the board if situation is not reversed in the next month or so, he says.  Consumer product companies dealing in refrigerator and air-conditioner estimate supplies will be lower than demand from May onwards, owing to the heatwave and pent-up demand. The shortage in supply of consumer electronic components from China will only widen this demand and supply gap in the coming months.  

Indian equities came down crashing on the bourses yesterday, as the Reserve Bank of India announced a surprise rate hike. In an unscheduled policy announcement, RBI governor Shaktikanta Das pronounced the repo rate increase by 40 basis points to 4.4%, a first since August 2018. Besides, Das also increased CRR -- or Cash Reserve Ratio -- by 50 bps to 4.5% in a bid to suck liquidity out of the system.   Today’s rate hike, along with April policy’s decision on the Standing Deposit Facility, makes the effective rate higher by 80 bps. Thus, along with the simultaneous CRR hike, it would withdraw liquidity worth Rs 90,000 crore from May 21. The move, however, sent equities into a tailspin as investors had priced in a repo rate revision only by June policy. The S&P BSE Sensex tumbled 1,306 points to close at 55,669, while the Nifty50 dropped 429 points to 16,40 levels. The Nifty Bank index, meanwhile, fell 2.5% to end at 35,264 .   In the money market, 10-year government bond yields jumped nearly 4% to 7.3%.   U R Bhat, Co-founder and Director, Alphaniti Fintech, says Mid-cycle hike has surprised the market. Markets were expecting a 25 bps rise in repo rate and markets will accept this and come to terms with the development.  Analysts feel rate-sensitive sectors like banking, NBFCs, automobiles and real estate may remain choppy in the near-term as the sudden increase in interest rates signals an imminent end to the all-time low interest regime, which has been one of the major drivers for credit revival across segments. Going ahead, it could be a bumpy road for the markets as they have broken their immediate support levels on tech charts.   Thursday’s trading action, too, will be clouded by investors’ assessment of the RBI policy action and the weekly F&O expiry. That apart, the US Federal Reserve’s interest rate decision, too, will guide the indices today. Moreover, LIC’s Rs 21,000-crore IPO may also deviate participation away the secondary market. At the end of day-one, the mega public offer was subscribed over 60 per cent driven by policyholders and employees. Their portions were subscribed nearly two times and 100 per cent, respectively. Retail investors’ quota, meanwhile, was subscribed a little over 50%.

The markets go through various phases such as bull, bear and consolidation. A consolidation phase is one in which a stock or an index moves within a specific range, between the ‘support’ and ‘resistance’ levels. Inadvertently, price reverses from specific lower levels (that is, supports) and face selling pressure at higher levels (that is, resistances). This scenario, by and large, defines a consolidation phase.   Let’s delve a bit deeper into this market phenomenon and learn how to identify and trade during such phases when prices move in a range between support and resistance levels, and indicators like Relative Strength Index, moving average convergence divergence see sideways movement. Doji, Hammer, Spinning Top are some of the prominent candlestick patterns visible during consolidation. A major trade signal called a breakout happens only when the price moves out of either the support or resistance levels. Similarly, a stock’s major outlook can be studied on its monthly chart – longer the consolidation, bigger the price action can be expected thereafter. Having said that, here’s how one can trade in a stock/ underlying index when in a consolidation phase.   The major trading signal, called a breakout, happens only when the price move out of the consolidation zone, by breaching either the support or resistance level. However, traders should take note that unless there is a breakout with definite consecutive closes, one should not be in a hurry to ‘confirm’ the trend and take positions. For at times, a dull scenario on the charts can also result in a build-up of shortpositions.

The much-awaited IPO of Life Insurance Corporation is set to open for subscription today, after it recorded bumper participation from anchor investors. The interest for the issue has been gaining currency, evident from its rising grey market premium and strong anchor book. Find out what analysts make of the issue and if you should subscribe to it.   Analysts are bullish about the LIC IPO, like the way G7 leaders are optimistic about ‘wooing New Delhi away from its longstanding alliance with Russia’. To this end, German Chancellor Olaf Scholz has invited Prime Minister Narendra Modi to the G7 leaders’ summit next month as a special guest. But, that’s easier said than done. Diplomatic efforts in the past haven’t brought about the sort of response from India that the West had hoped for. What’s going to be the possible outcome of this latest attempt? Around 11% fewer households demanded work under the rural employment scheme MGNREGA in April. The Centre has asked officials to plug leakages in welfare schemes and at the same time, some beneficiaries are returning back to urban areas as economic activity picks up. So, what led to this fall in demand for MGNREGA work in April?    The Drug Controller General of India has recently approved the emergency use of the Covid-19 vaccine Corbevax for children aged five to 12. Corbevax is India’s first indigenously developed recombinant protein sub-unit vaccine. This episode of the podcast simplifies the new vaccine and elaborates how it can boost the immune response in your kid.    Watch video

The initial public offer of Life Insurance Corporation is set to open for subscription today.   At Rs 21,000 crore, the offer will be India’s biggest issue till date. The next two biggest issues that hit the Street in the past were that of Paytm-owner One97 Communication, and state-run Coal India.   Globally, this is the world’s fifth biggest IPO in calendar year 2022.   LIC’s IPO witnessed robust traction from leading investors including SBI Mutual Fund, Axis Mutual Fund and Aditya Birla Sun Life MF. The company raised around Rs 5,627 crore from anchor investors on Monday, at Rs 949 per share. However, much of this amount was raised with the help of domestic mutual funds as foreign funds invested little over Rs 1,600 crore. Analysts say the low demand may be because of the present risk aversion among foreign portfolio investors. Nonetheless, the government is hoping to see bumper subscription levels for LIC, riding on the back of retail and non-institutional investors. Over 8,500 crore rupees worth of shares have been reserved for retail investors, policyholders and employees in the IPO. LIC policyholders are entitled to a discount of 60 rupees over the issue price, the retail investors will be offered the issue at a discount of Rs 45 per equity share. Therefore, if you are someone who is wondering whether to apply for India’s biggest IPO amid market volatility, here’re the key things that you should know. LIC’s total assets under management is over 3.2 times the total AUM of all domestic private peers. It also enjoys premium based market share of 64%. At the upper price band of Rs 949, LIC is available at a price-to-embedded value of 1.1x, which is at a discount of 65% compared to the average valuation of private life insurance players. This valuation, analysts believe, factors-in most of the negatives that the insurer is currently facing.   Speaking to Business Standard, Nirav Karkera, Head of Research at Fisdom says LIC is conceding market share to private peers, and its huge dependence on sales agent network could be a vulnerability. LIC’s profitability, margins remain under pressure, he says.  The company’s lower value of new business margin, that is indicative of profit margin, was at 9.9% for FY21 compared with 23-26% for private players. It further has lower short-term persistency ratio relative to private peers, which shows lower customer stickiness.   However, the insurer’s strong market presence, coupled with the highest return on equity ratio, domestically, is keeping analysts bullish on the issue.   According to Karkera, LIC is capable of recouping lost ground and the IPO could be a long-term value creation story. LIC’s growth prospects outweigh challenges, he says.    B Gopkumar of Axis Securities, too, sees LIC as a long-term investment bet. While he expects the near-term market volatility to weigh on the stock performance, he believes the under penetration of insurance and improving financialisation of savings could make LIC a long-term value bet. Given this, analysts remain uncertain about the initial listing gains, but view the IPO as a mid-to-long term investment opportunity. As of Tuesday, the stock was commanding a premium of Rs 60 per share, indicating a likely listing gain of 6%.   Overall, though the markets are volatile, analysts believe there is enough liquidity in the Indian markets for a large issue like LIC to get enough subscriptions. Watch video

PM Modi in his statement on Russia-Ukraine conflict recently said, from the start of the Ukraine crisis, India has called for immediate cessation of hostilities and stressed that talks are the only solution to resolve the dispute. India believes there will be no winner in the Russia-Ukraine conflict and all will suffer losses. That is the summation of India’s stand on the ongoing European conflict. However, the US and EU have responded to Russia’s actions by adopting a tough stance, such as imposing far-reaching sanctions that have been described as crippling in the Western press. And, they are keen to enlist greater support from New Delhi in all of this, particularly in ensuring that it doesn’t help Moscow circumvent their sanctions in any way.   Then there is the fact that India has refrained from overt criticism of Russia. India was among the countries that abstained in a UN vote to suspend Russia from the UN Human Rights Council. However, India also refrained from backing a Russian resolution that sought to deflect the blame for the humanitarian crisis it has created in Ukraine. Amid all of this, Moscow has praised New Delhi’s “independent foreign policy” with regard to the ongoing conflict.   [Byte of Sergeĭ Viktorovich Lavrov, Russian Foreign Minister, during his recent India visit.] While Moscow might appear to be satisfied, the West, particularly the US, isn’t. And their view of India’s policy with regard to the Russia-Ukraine crisis was best summed up by the US President himself earlier in March.     At the end of March, the US had said that it would not like to see a rapid acceleration in India’s imports from Russia, including energy and other commodities.    India, however, has followed a policy that it says is in keeping with its national interests.   Just consider the following Business Standard reports - Imports from Russia rose nearly 33 per cent to 1.1 billion dollars in March from a shade above 831 million dollars in the previous month. This growth in imports was largely on account of oil. Note that India and Russia have also been exploring transactions through the rupee-ruble mechanism. Such a mechanism would also cause tensions between India and America and its allies.   There have also been calls for India to curtail its purchases of Russian military equipment. However, given the strategic nature of some of these platforms, that too might prove to be a tall order, at least in the immediate future. This is the context in which Prime Minister Modi will be participating in the G7 summit.   Speaking to Business Standard, Shyam Saran, Former Foreign Secretary and Senior Fellow, CPR, said G7 summit invitation should not be looked at through narrow lens of India-Russia ties alone. India-Russia ties are only one part of the agenda. It is important that India, Europe, US and other Quad countries work together to shape the geopolitical environment, he said. The West understands that India-Russia ties have legacy issues and the ties have been declining in past few years. India’s rhetorical neutrality is not so important, Saran says adding that India and the West must instead work on substantive issues. India’s ties with US, Europe and Japan will be crucial for its technological and economic transformation.  Yet, there’s unlikely to be a sudden shift in India-Russia relations due to Western coaxing. Instead, they will follow the trajectory that has become evident in the past few years, where India will find growing convergence with the West, but continue to balance its ties with Russia, even as those ties lose the sheen they had during the Soviet era and the early 2000s.

The unprecedented crisis triggered by the pandemic during the first lockdown in March 2020 had forced more than 10 million migrant workers to return to their villages.   Most of them, unable to find sustenance in agriculture during the lean season, took refuge in MGNREGA schemes. This shot up the demand for the rural job guarantee programme.   MGNREGA guarantees at least 100 days of wage employment in a financial year to every rural household whose adult members volunteer to do unskilled manual work.   Provisional data for the month of April indicates a turnaround in the employment situation in rural areas. The number of households seeking work under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) in April was 11.15% lower than the numbers in the same month last year.   Nearly 23.26 million households sought work under the scheme compared to 26.18 million households last year.  As economic activities picked up, workers are once again migrating back to urban areas. However, a disproportionately large number of people are still seeking work under the scheme. In the comparable pre-pandemic months 16-17 million households demanded MGNREGA work. Talking to Business Standard, S Mahendra Dev, Director, Indira Gandhi Institute of Develop­ment Research (IGIDR) says demand declined partly due to an increase in urban employment. While economic activity has still not caught up to the pre-pandemic level, contact-intensive sectors are recovering to normalcy. Non-form activities in rural areas may have improved, he says curtailing govt expenditure could lead to lesser jobs creation.  Business Standard recently reported that the finance ministry has asked various line ministries and departments responsible for implementing subsidy and welfare schemes to cut wasteful expenditure expeditiously and to plug leakages.   The number of MNREGA beneficiaries rose to around 70 million when the economy slumped during pandemic lockdown, up from 50 million before the lockdown. Policymakers at the centre are reportedly concerned that the figure has not come down to pre-pandemic levels yet. Chakradhar Buddha, a researcher at study group LibTech India, said the work demand data pointed towards the fact that “we haven’t come back to pre-pandemic normal economic activities in rural areas”.   An official told Business Standard that departments have been asked to map the most backward districts and compare them with relatively developed ones. “If a developed district in a state has more beneficiaries than an aspirational district, it means there are ghost beneficiaries of welfare schemes,” the official said.   Meanwhile, civil society activists have been pointing out that the money allocated for the programme in the Budget FY23, at Rs 73,000 crore, is inadequate and could lead to demand getting artificially suppressed.   The actual expenditure could be lower because a significant part, almost 20,000 crore rupees, could be spent on clearing the dues of FY22. In FY22, the Centre had budgeted 73,000 crore rupees for MGNREGA but ended up spending almost 98,000 crore rupees. According to Nikhil Dey, Founder Member, Mazdoor Kisan Shakti Sangathan (MKSS), demand is a reflection of the amount of money available in the system. The main reason for the fall in demand is the squeezing of funds by Centre, and regardless of economic recovery, there is a huge unmet demand, he says. There are ghost beneficiaries but transparency measures causing confusion on the ground, he says adding that such measures should not lead to suppression of demand.    A host of factors like revival in urban economic activity, cracking down on ghost beneficiaries and rationing of funds by the Centre could have contributed to a fall in MGNREGA demand in April.  

As Covid-19 cases rise in various parts of the country, the Drugs Controller General of India has approved the restricted use of Covaxin and Corbevax in emergency for children below 12 years. The later was already being used for inoculation against Covid-19 in the 12-18 age groups.   Corbevax is a protein sub-unit Covid-19 vaccine, developed by Hyderabad-based bio-products company Biological E, in collaboration with biopharmaceutical company Dynavax Technologies and Baylor College of Medicine in the US.   India’s Department of Biotechnology and its public sector undertaking, Biotechnology Industry Research Assistance Council, have supported the vaccine candidate from the pre-clinical stage through Phase III clinical studies.   Corbevax uses a traditional recombinant protein-based technology that enables its production at large scales making it accessible to inoculate the global population. The vaccine technology was created and engineered at the Baylor College of Medicine in Texas, US.   It was then licensed to Biological E through a commercialisation team at the Texas-based university for development and production. The adjuvant used in the vaccine is developed by Dynaxav Technologies in the US.   It is made from the receptor-binding domain (RBD) of the coronavirus spike protein, which allows the virus to latch on and enter human cells. When injected, the harmless piece of the spike protein is expected to trigger an immune response in the body.   The available safety and immunogenicity results of the ongoing phase II and III clinical studies indicated that the vaccine is safe and immunogenic. The Translational Health Science and Technology Institute, an autonomous institute of the Department of Biotechnology, provided immunogenicity data for the Phase II and III studies. Corbevax is a two-dose vaccine administered intramuscularly and can be stored at 2ºC to 8ºC. Clinical trials indicate that Corbevax can effectively prevent Covid-19 disease following two doses given at four week’s interval. However, the duration of protection against Covid-19 disease is currently unknown.         

If there was one theme in the startup ecosystem that dominated 2021, it was unicorns! After all, 2021 saw the rise and rise of India’s start-ups with the unicorn-base doubling. Out of India’s 90 unicorns at the beginning of 2022, about 46 had emerged in 2021 itself. “The unicorn wave in India is still going strong: one unicorn has been added every five days within the first two months of 2022, and India is expected to have 100+ new unicorns in 2022” - HDFC Securities report   And, in various quarters, the optimism has also carried on into 2022. According to an HDFC Securities report, accelerated funding activity is expected to create over 100 new unicorns in India in 2022. In fact, according to a report, from the beginning of 2022 till April-end, India saw the rise of 14 new unicorns. These are Fractal, LEAD, Darwinbox, DealShare, ElasticRun, Livspace, Xpressbees, Uniphore, Hasura, CredAvenue, Amagi, Oxyzo, Games24x7 and Open. All of this, has papered over some of the early indications in the ecosystem -- from corporate governance concerns to the sobering performance of some start-up IPOs. And, dark clouds could be around the corner. A number of venture capitalists recently told Business Standard that the pace at which unicorns will emerge in India might get a bit slower in 2022. One of the major reasons for this slowdown could be the challenges within the ‘soonicorn’ ecosystem. In fact, only a handful of soonicorns have been able to raise funds in the first quarter of CY22.   “The pace will reduce in the second half of the year due to global macro risks affecting liquidity. But net-net, we may still end up with a number close to that of 2021” - Anand Prasanna, Managing Partner, Iron Pillar Fund Iron Pillar Fund Managing Partner Anand Prasanna told Business Standard that the pace at which unicorns emerge would reduce in the second half of the year owing to the effect of global macro risks on liquidity. According to Prasanna, increasing customer acquisition costs, poor performance by some consumer tech unicorns that went for IPO recently, and India’s macro-economic challenges could affect the pace of unicorn creation in 2022. Some other reasons for the slowdown are a spike in the US interest rates, the Russia-Ukraine conflict and of course the rising inflation. Another major reason for a slowdown in unicorn creation could be that   After a frenzied investment activity in 2021, the market is likely to be cautious this year and investors much more choosy. This could be another reason for a slowdown in unicorn creation, and not necessarily a bad thing. There might be a need to slow things down and look at the sustainability of these unicorns. Let’s start with valuations. Consider the funding lifecycle of a start-up. First comes the seed round. Then comes Series A, Series B, Series C, and pre-IPO series rounds, all of which usually culminate in an IPO. Now, as one news agency pointed out, there are doubts that the valuations, which multiply with every funding round, are based in a large part on opaque formulas. Metrics that are the gold-standard for traditional companies, from profit after tax to EBIDTA, are not generally useful when it comes to companies that continue to run in losses. Instead, cost of goods sold, GMV and active user counts are the valuation metrics that have to be used. This might not be a matter of great concern as long as it is the venture capitalists alone who are shelling out cash based on these valuations. But, it becomes unsettling when retail investors get involved through an IPO. Then there are matters of ethics and corporate governance. Amid reports of data fraud and tax evasion at Indian start-ups, the Commerce and Industry Minister Piyush Goyal recently said that new-age companies must strengthen ethical and corporate governance standards, otherwise, start-ups would earn a bad name. While Goyal didn’t mention the name of the startups, his statement comes after

The Indian real estate sector is headed for normalcy. Fuelled by attractive home loan rates and availability of inventory, sales are now showing a consistent growth. In a recent interview, HDFC Chairman Deepak Parekh said he has not seen housing demand for affordable and mid-income segments the way it is today, in his 44 years with the mortgage lender.  In fact, according to real estate consulting firm CBRE, housing sales in the first three months of this year jumped almost 40% year-on-year to more than 70,000 units. Another property consultant, Anarock, reported housing sales in the March quarter were at their highest level since 2015, with approximately 99,550 units sold across the top seven cities of India.  Ravi Subramanian, MD & CEO of Shriram Housing Finance said the demand for housing is immense in the affordable segment and the sector has barely scratched the surface. Anarock data shows that unsold affordable housing stock declined 21% in two years to 1.86 lakh units.  Meanwhile, home loans are set to get costlier. HDFC increased its retail prime lending rate (RPLR), on which its adjustable-rate home loans are benchmarked, by 5 basis points. This comes after many large banks, including the SBI increased their marginal cost of funds-based lending rate (MCLR) by 5-10 basis points last month. An increase in the Reserve Bank of India’s repo rate is on the anvil, marking a turn in the interest rate cycle.  At the same time, builders have no option but to pass on the input cost inflation.   Data shared by Macrotech shows that commodities like cement, steel and tiles have seen year-on-year cost escalation of as much as 35.1%. However, the weighted impact is about 13.7%. While inventory prices have already gone up by 6% last fiscal, they are set to rise another 6-8% this year, which is below the expected average wage growth of 10% in India, based on a survey by Aon for FY23.  The rise in average wages will enable real estate players to pass on the cost increase to customers and maintain margins.  Macrotech’s MD and CEO Abhishek Lodha, at the fourth-quarter earnings call, said that modest price growth in fact bodes well for the sector as the company expects inflation to moderate. Speaking to Business Standard, Abhishek Lodha, MD and CEO, Macrotech Developers, says volumes fell significantly when prices were flat in pre-Covid years and price growth is improving sentiment among home buyers. Realty price growth staying below the average wage growth will ensure affordability, he says.  Experts also indicate that the pandemic helped shift consumer sentiment heavily toward homeownership and the Work-From-Home trend is boosting demand for larger homes. Vivek Rathi, director of research at Knight Frank India, said that the sustained sales momentum post the third coronavirus wave shows the sector is under a new upcycle. According to Prashant Thakur, Sr Director & Head - Research, ANAROCK Group, residential real estate made a strong comeback after second wave. Interest rates were at record low and developers kept prices at a reasonable level, he says. While he believes buyers can absorb price hike of up to 10%, interest rates inching up will not be a big dampener.  While high raw material costs and the ongoing Ukraine-Russia war are likely to be a near-term damper, the industry estimates that the risks due to rising inflation and mortgage rates are overstated. All signals now suggest that residential real estate is heading for a structural growth cycle after years of downtrend.

Equity markets are turning choppier by the day as they prepare for the US Federal Reserve’s two-day monetary policy meeting. The benchmark indices, for instance, fell over 1% in the intra-day trade yesterday, but ended near flat-line.    Moreover, over the past six months, the S&P BSE Sensex and the Nifty 50 have slipped around 5 per cent on the bourses amid expectations of rate hikes by global central banks due to the ongoing Russia-Ukraine war and historically high inflation. Against this backdrop, all eyes are on the US Fed meeting, which begins later today. The outcome might result in a 50-basis point rate hike in the world’s biggest economy -- its biggest hike since 2000. Moreover, it could also be the first time in 16 years that the US Fed officials will hike borrowing costs at two consecutive meetings. Analysts expect the US central bank to announce plans to start shrinking its near 9 trillion dollar bond portfolio at a likely pace of 95 billion dollars a month. If so, that would be nearly twice as fast as the previous time officials delved into trimming the money supply in 2017.  Speaking to Business Standard, Narendra Solanki, Head- Equity Research (Fundamental), Anand Rathi Shares & Stock Brokers, says markets are pricing in 50 bps rate hike, as US Bond market indicates expectation of steeper rate hike. Indian market, however, haven’t priced in more than 50 bps hike, and there could be mispricing in the Indian markets, he indicates.  Concurring with Solanki, Dhananjay Sinha of JM Financial believes that riskier asset classes could be in for a volatile phase as they haven’t priced in elevated rates yet. According to Dhananjay Sinha, Managing Director & Chief – Strategist, JM Financial Institutional Securities, today investors will track if the Fed is more hawkish than expected. He said the likelihood of steeper Balance Sheet tapering is high, but what is not known is the impact of Balance Sheet normalisation on asset prices across equities, fixed income, commodities etc. He pointed at the high volatility in fixed income markets and says that equity markets have modest expectations regarding therate hike. The impact of liquidity normalisation will be seen more on risk assets. So, how should investors position themselves in such a market? According to analysts, markets could see a knee-jerk reaction on the downside if there is a 75 bps rate hike in May, or faster-than-expected hikes throughout 2022. In the long-term, domestic markets may resume their uptrend. Jyotivardhan Jaipuria of Valentis Advisors points out that the US Fed hiked rates 17 times by 25 bps each in the 2004 to 2006 cycle. During the period, Nifty went up 99.1%, though Dow Jones went up only 7.2%. During the 2015 cycle, the US Fed hiked rates by 2.25%, when the Nifty went up by 40.1% and Dow Jones rose 31.4%. Given this, analysts say investors should use periods of volatility to gradually increase allocation to equities to benefit from healthy earnings growth that can unfold over the next two-three years. Apart from the US Fed’s meeting, developments around rising Covid-19 cases in China, and the Ukraine-Russia war will be tracked by global markets today. Back home, domestic markets are shut on Tuesday on account of Id-Ul-Fitr.

After an initial hiccup -- marked by intense media glare-- the world’s richest man known for his penchant for controversy, has finally locked the deal to purchase Twitter for about $44 billion. The social media users -- and the Twitter as a company too-- are waiting with bated breath for the change of guard, and also the changes which Elon Musk will bring with him. Twitter CEO Parag Agarwal may be a worried man now. And so are those floating spam bots. While he was executing the takeover, the Tesla and SpaceX chief had tweeted that he would defeat the spam bots on Twitter or 'die trying'. Musk has called spam bots the “single most annoying problem” on the social media platform. But, why have these bots earned Musk's ire? Have you seen Twitter accounts claiming that they have found a cure for Covid-19? Or, perhaps touting a get-rich-quick scheme powered by cryptocurrencies? Then you've possibly come across Twitter bots. These bots are used for trolling and spreading misinformation. The purpose behind their use can range from influencing national elections to spreading malware. Twitter bots have earned favour with scammers as a tool that can infiltrate social media accounts and potentially even a user's personal information. Norton, the maker of one of the most popular anti-virus and anti-malware softwares, has a very detailed explanation on bots, which are also known as zombies. Twitter bot is the name given to an automated Twitter account that is controlled by bot software. A bot is programmed to perform tasks that can resemble those of human Twitter users, from liking tweets to following other users. However, a bot’s purpose is to tweet and retweet content in pursuit of specific goals, and that too on a large scale. However, one such account is not enough to achieve the intended goals. In truth, it takes a much larger effort. Therefore, Twitter bots are usually found to be a part of a botnet. CA botnet is a large network of automated accounts. The bots in a botnet work in concert to appear legitimate. They like and follow each other, and push each other's content, as if they were real human Twitter users. However, whether or not a bot is malicious depends upon who is deploying it and for what purpose. For example, cybercriminals have made use of Twitter bots to simultaneously spread content containing malware to large groups of people on Twitter.   But, Twitter bots can also be used for benign purposes like broadcasting information and warnings about weather emergencies in real time.  

The government-backed open network for digital commerce or ONDC was launched last week in select cities. Mentored by Nandan Nilekani, ONDC is a not-for-profit system which the government believes will be a game-changer -- just like what UPI was for digital payment. From small kirana stores to leading FMCG players, all will get equal exposure to consumers on this platform. But will it emerge as a challenger to two multinational giants who, in the government’s own words, have been giving preferential treatment to a bunch of players in India? And will it really benefit small sellers and the public at large?  The country took yet another leap towards self-reliance last week when an aircraft made a successful landing using the indigenous navigation system called GAGAN. With this, India became the first country in the Asia Pacific Region to achieve this feat. So what exactly is GPS-aided geo-augmented navigation or GAGAN and how will it help aircraft land safely in rough weather and in poor visibility? And how will it help India expand air connectivity to far-flung areas?  Let us turn to the markets now. Geopolitical tensions, rising inflation, skewing margin of India Inc and slow growth are casting a shadow over Dalal Street. While April saw equity markets reverse losses from March lows, bears returned to Street in the latter half. Will May see investors following the adage of ‘sell in May and go away’?  May is also the month when the heat wave is most brutal in northern India. The weatherman has now said that mercury will soar further this week and cautioned people against stepping out in the afternoon. But what exactly is a heat wave? Let us find out in this episode of the podcast.  Watch video