Business Standard Podcast

India has lifted 140 million people out of multi-dimensional poverty from 2015-16 to 2019-21, according to a report by the United Nations Development Programme. The report compares the above figure with a period between 2005-06 to 2015-16, when 275 million people were pulled out of poverty. In line with this, the incidence of poverty -- the proportion of people who live in multidimensional poverty -- fell from 55.1% in 2005-16 to 16.4% in 2019-21. What is multidimensional poverty? The multi-dimensional poverty index takes into account a wide range of parameters spanning health, education and standard of living as against a poverty index by World Bank, which measures income level to gauge poverty levels. Put this number on screen in form of graph 16.4% of India’s population live in poverty and about 4.2% of the population live in severe poverty. about 18.7% of people are vulnerable to poverty   The UNDP report noted that about 16.4% of India’s population live in poverty and about 4.2% of the population live in severe poverty, and about 18.7% of people are vulnerable to poverty. Unsurprisingly, the rural disparities are stark as 21.2% people in rural areas are poor compared with just 5.5% in urban areas. Poverty alleviation Interestingly, India reduced poverty at a faster pace from 2015-16 to 2019-21 at an average rate of 11.9% a year, compared with 8.1% from 2005-2006 to 2015-2016. However, when the base poverty levels are lower, the relative poverty reduction is easier to achieve. The effects of Covid-19 pandemic on the poverty numbers cannot be assessed because nearly two-thirds of data from the 2019-2021 health survey for the country were collected before the pandemic. Going by the World Bank’s measure of poverty by income, about 56 million Indians may have plunged into extreme poverty in 2020 as a result of the pandemic. The World Bank estimated extreme poverty based on a purchasing power parity (PPP) of $2.15. Despite this, the UN report said the results are striking, showing a significant reduction in all 10 multidimensional poverty index deprivations among poor people. For instance, in health, the proportion of people who are deprived from nutrition fell from 44.3% in 2005-06 to 21.1% in 2015-16 to 11.8% in 2019-21. Similarly, in education, people who are deprived of certain years of schooling dropped from 11.6% in 2015-16 to 7.7% in 2019-21. Experts say it all depends on how you define multidimensional poverty to get a sense of whether India has fared better in the last few years.   Quality of education For instance, even though the number of certain years completed in school by children has improved over the years as seen in the UNDP report, the quality of education still lags. According to a National Achievement Survey (NAS) of 2021, there is an average learning level of 59% in grade 3, 42% in grade 8 and 36% in grade 10. This indicates a decline in learning levels with an increase in grade level. Further, the Covid-led schools closure must have worsened learning across the education system, along with erosion in gains in enrolment and school completion. According to the World Bank, five months of school closures due to Covid would result in an immediate loss of 0.6 years of schooling adjusted for quality, bringing the effective learning that a student can achieve down from 7.9 years to 7.3 years. Children’s health Similarly, despite an improvement in child mortality from 2005, child stunting and wasting is still worse in India. According to the National Family Health Survey of 2019-21, the child wasting rate of children worsened from 15% in 2012-16 period to 19.3% in 2019-2021 and it is one of the highest in the world. Stunting is when a child’s height is lower for the appropriate age and wasting is when a child’s weight is too low for the height. Let us hear more from NC Saxena, former secretary at planning commission. NC Saxena, former Secretary, Planning Commissi

Markets witnessed troughs and peaks of volatility in Samvat 2078. Liquidity reversal, policy tightening, the Russia-Ukraine geopolitical crisis and rising inflation were the key triggers behind the volatility.  While the first half of the Samvat saw higher commodity prices of base metals and crude oil, a trend reversal was seen in the second half, due to policy tightening and fears of slowdown in global growth. Both the frontline indices Nifty50 and the S&P BSE Sensex shed up to 2 per cent since last Diwali. However, they outperformed global peers such as the S&P 500 and the emerging market index, which bled up to 31 per cent. Going ahead, analysts believe that the outperformance of domestic indices against global peers is sustainable in the long-run. Neeraj Chadawar, Head - Quantitative Equity Research, Axis Securities, says India’s macro-setup is a positive. NSE Nifty profitability at all-time high in Q1FY23. India’s outperformance sustainable in Samvat 2079. Technical charts suggest that the Nifty50 and the S&P BSE Sensex can reach all-time highs of 21,000 and 65,000 levels, respectively, during the next Samvat. Against this backdrop, brokerage houses suggest stocks that investors should bet on to re-ignite their portfolio for Samvat 2079. Brokerage firm SBI Securities suggests investors to bet on HDFC Bank, ITC, Bank of Baroda, United Spirits, Sumitomo Chemicals, and Whirpool India for Samvat 2079, with upside potential in the range of 10 to 19 per cent. IDBI Capital, on the other hand, advise investors to pick names like Kolte Patil, Mahindra CIE, Tata Power, Blue Dart, with up to 35% upside potential. Likewise, Axis Securities and ICICI Direct, too, have suggested top picks for Samvat 2079. As regards today, quarterly results, rupee movement, crude prices and FII flows will dictate market trends. Besides, investors will closely track the Q2 report card of ITC, Bajaj Finance, Asian Paints, Axis Bank and Tata Consumer.

The RBI’s state of economy report says that the inflation might have hit the peak and it could start to lose steam from here. But the same report cautions that the fight against inflation will be “dogged and prolonged”. The opinion on the future course of rate action has also put the experts in warring camps. Some believe that the RBI should breathe easy, while others are advising against it. So, amid the divided house, we try to find if the worst of inflation is behind us?  But once in a festive mood, people hardly care about prices. Most wait for festival season to loosen the purse strings. And no one knows it better than the corporate world. Online sellers start offering heavy discounts and make the most of this season. One of them, E-commerce unicorn Meesho, clocked a 68% jump in sales during a five-day festive season sale. Business Standard’s Surjaeet Das Gupta caught up with Utkrishta Kumar, Meesho’s business CXO, to know more about the record sales and also about the company’s future plans.  The Jewellery sector too is gearing up for Dhanteras and Diwali. It is expecting to benefit from pent-up demand as festive fervor kicks in. So, is it time to add stocks of jewellery retailers to your portfolio?  A recent survey by Bank of America Corp. suggested market capitulation before a rally in stocks by the first half of next year. But what is market capitulation? Listen to our next podcast to know.

India’s consumer price index-based inflation for the month of September surged to a five-month high of 7.4 per cent. This inflation print officially marks, for the first time, the failure of the RBI MPC to keep inflation within the mandated target range.  Since May this year, the central bank has raised the repo rate by 190 basis points to rein in persistently high inflation. The repo rate is currently at 5.90 per cent. However, the latest inflation data will likely warrant more rate hikes and a shift away from surplus liquidity conditions in the banking system. The picture on growth is also not rosy. In September, the RBI reduced its FY23 GDP growth forecast to 7 per cent from 7.2 per cent. A number of global institutions, including the IMF and the World Bank, have also lowered the country’s growth forecasts. Since higher interest rates depress aggregate demand in the economy, the extent to which the RBI is willing to go to tame inflation could either support growth or prove to be an impediment. Against this backdrop, two external members of the MPC have expressed concerns about fragile growth, calling for slower rate hikes. Stating that monetary policy acts with a lag, Professor Jayanth R Varma has called for pausing at a repo rate of 6 per cent.  In the recently released minutes of the September MPC meeting, Varma said that it was dangerous to push the policy well above the neutral rate in an environment where the growth outlook was very fragile and called for a pause after the September hike. Varma said that India had seen unacceptably low levels of growth for longer than it had seen unacceptable levels of inflation, adding that going beyond 6 per cent would compromise the second part of the MPC's mandate -- to support growth. Varma voted against the resolution to remain focused on withdrawal of accommodation to keep inflation within target. The other MPC member, Ashima Goyal, said that high repo rates imposed heavy costs on India in 2011, 2014 and 2018, leading to a credit and investment slowdown. She added that it was necessary to proceed “very carefully” now that forward-looking real interest rates were positive. Goyal was the only member who voted against a 50 basis point repo rate hike during the September policy. Instead, she had pitched for a 35 basis point hike. She told Business Standard recently that India’s real interest rate should not exceed one per cent. Going by the MPC’s inflation projections, this would imply little room for further rate hikes in the current tightening cycle. On how the MPC could minimise the impact on growth, while still achieving its inflation target, Goyal said… Ashima Goyal, Member, RBI Monetary Policy Committee says moderation is a lesson Indian policymakers have learnt. We should not let real rates become too negative or too positive. Not over-reacting key to meeting inflation targets without hurting growth too much. Monetary-fiscal coordination also necessary. However, there are two sides to this debate RBI Deputy Governor Michael Patra has said that monetary policy must shift to “red alert” because not only are inflation expectations rising, there are indications that they are becoming unanchored over a one-year-ahead horizon. According to Patra, inflation has become “unyielding and tightly range-bound around the upper tolerance band of the inflation target".   The IMF expects average retail price inflation in India at 6.9 per cent for 2022-23. IMF's India Mission Chief Nada Choueiri too believes that inflation will not come below RBI’s tolerance level in FY23. She said that the IMF projects significant momentum in prices and doesn’t see inflation falling below six per cent in FY23. However, she added that the agency expects it to fall below six per cent in FY24.

Utkrishta Kumar CXO-Business, Meesho Q: Congratulations on the big sale and all the records that you have broken. Just wanted to understand how it was and what is the kind of depth that you could get in terms of markets, towns, cities etc?  Ans:  >Executed 3.34 crore orders during the five-day mega sale in September >The September sale was 68% above the previous sale, in terms of magnitude >60% of the overall sale orders came from Tier-4 cities of India >Company’s value proposition of affordability played a role in making it the preferred shopping platform for Bharat Q: How many towns and cities, what’s the kind of penetration that you had and how has this helped in testing out Tier 4 and other cities? Ans: >Company made unprecedented penetration into Tire4 cities of the country >The sale event was a way to reach out to customers who are new to ecommerce  Q: What is the average selling price in the 60% sales, compared to the ASPs across the country? What is the behavioural change you have noticed from this experience?  Ans: >Big sale events tend to cater to certain categories or specific SKUs >The ecommerce platform has all categories that uses want  >Witnessed non-linear jump in categories like home and kitchen, electronic accessories, beauty and personal care, etc this year >Brought down prices in certain categories to make them more enticing to the customers     Q: How does the model work? What is the monetisation model that you have?  Ans: >Platform has 0% commission structure >Among different streams of monetisation, seller ads continue to be one of the major strategies to reach profitability goals Q: The distribution to last mile – who does that?  Ans: >Company has a tech-heavy set-up and owns no assets  >Works with all the 3PL (third-party logistics) in the ecosystem and leverage their capabilities >Seller pays the logistic cost and the platform charges no commission   Q: Your next investment in growth – investment in which areas? Have you sort of more or less finished off the growth in most PIN codes? Where will the requirement of investment be? Ans: >Biggest investment will be towards technology  >Wish to deliver best experience to the underserved consumer wants  >The opportunity ahead for the platform is massive

Expectations of strong sales this festive season have led to a sharp run-up in shares of jewellery retailers in the past few months.  For instance, shares of Kalyan Jewellers and PC Jeweller have rallied up to 380% so far in fiscal 2023, while Titan is up 3% as compared to a fractional decline in the BSE Sensex during this period. Going by past trends, jewellers could see bumper sales this Dhanteras riding on high pent-up demand after a Covid-19 lull, and softening in gold prices. As per HDFC Securities, the first 10 festive days have already clocked 20% jewellery sales volume growth.  Analysts remain fairly upbeat on jewellery stocks as they expect this trend to continue going forward.  Deepak Jasani, Head of Retail Research, HDFC Securities says, have positive outlook on jewellery retailers. Sector to benefit from peak season till February. Pent-up demand leading to more buying. Investors need to keep valuations in check.  The upbeat outlook has also been backed by the industry in their recent pre-quarterly updates.  For the July-September quarter, Titan said it saw a healthy 18% yearly growth in its jewellery sales, while Kalyan Jewellers’ overall sales grew 20% on positive consumer sentiment and increased store walk-ins. The latter added that it has seen significant benefits from the ongoing shift in demand towards branded retail outlets. This transition among shoppers from traditional, small retailers to national chains is another key factor making analysts positive on the space.  AK Prabhakar, Head of Research, IDBI Capital says, consumer shift towards organised players a key positive. Sector seeing structural bull rally on likely market share gain. No material impact for companies due to low gold prices. Inventory losses to be manageable on YoY basis.  Among stocks, IDBI Capital’s Prabhakar remains bullish on Titan and Kalyan Jewellers from a long-term perspective.  Though, he does not expect the sector to mirror the recent rally in the short term, as the Street has already factored in festive season gains.  Today, foreign flows and global cues will guide the markets. Besides, the Q2 earnings of three Nifty companies -- IndusInd Bank, Nestle and UltraTech Cement will also be tracked. 

Capitulation in financial markets refers to a phenomenon where investors liquidate their positions during periods of extended decline in the stock price for fear of incurring a bigger loss. This panic selling may even emerge due to negative news flow, global sentiment, calamity and margin calls etc. How to identify capitulation? Whenever a stock or index starts to fall with heavy volume, one can observe panic selling. In the chart, one can see the Nifty 50 benchmark index drop from 11,500-odd levels to near about 7,500-levels in a matter of just 13 trading sessions owing to the Covid-19 induced lockdown in India. One needs to gauge the momentum through various candlestick patterns or formation for confirmation. Not all market weakness leads to panic selling or capitulation. One needs to be aware of the overall market sentiment and the trigger that causes the mayhem. What does capitulation tell you? The stock market is likely to see a bottom once the capitulation subsides. Squaring off one’s position during capitulation gives traders a sense of relief. Technically or even fundamentally it is nearly impossible to predict the scope and time-frame of a capitulation. The worst part of a market capitulation other than the financial loss, is the impact it has on the investor’s mindset. Investor psychology This behavior is heavily influenced by various market news, FII inflow/ outflow, fear of losing out, etc. There is also the tendency of investors to shift from one segment to another during such times. Investors may find equity highly risky at times and may thus shift to bonds, commodity, currency etc. Over the years, investors have become highly cautious and now prefer to buy stocks a little higher but only after the negative sentiment ebbs. More often than not, to lift the overall market mood, the regulator or the government brings in policies that restores sentiment.

Wheat exports from India shot up by 116% in the first five months of the current financial year, thanks to aggressive buying by private players who offered lucrative prices to farmers. Meanwhile, India’s own stocks of the food grain saw a decline, and procurement fell by 57 per cent. The wheat stocks with the Food Corporation of India stand at a six-year low now, slightly above the minimum prescribed buffer. So what is the likely road ahead? Will India turn into a net wheat importer now, just months after promising to feed the world?  Almost all the countries of the world are scrambling for ways to prop-up their economies. Central banks are raising rates to suck liquidity and bring down the soaring inflation. And banks too are passing on the rates. Amid all this, where should you park your hard-earned money?  Given the volatility, one should tread cautiously on Dalal Street. Though there have been stock-specific wealth creators, the overall scenario wasn’t that good this year. Andrew Holland, CEO, Avendus Capital Public Markets Alternate Strategies spoke to Business Standard’s Puneet Wadhwa on the opportunities and pitfalls investors should be mindful of in Samvat 2079. Thanks to the Gift City, which has come up in Ahmedabad, Indians can now invest in international stocks too. And, through this special zone, India is also trying to become a global hub for aircraft leasing. But why do most airlines prefer leasing aircraft rather than buying them? And what kind of leasing options do they have? Find out in this episode of the podcast. 

India's march towards self-reliance has been a long, and arduous one. In the mid 1960s, food grain shortage had prompted the then prime minister Lal Bahadur Shastri to ask the people of the country to skip a meal every week. Drought had ravaged the country two years running, in 1966 and 67, and India imported its highest ever quantity of wheat under PL480 that year. It was 10 million tonnes. But, the Green Revolution and several other schemes made India self-reliant in food production. So earlier this year, when the world was staring at a wheat shortage due to the Russia-Ukraine war, India was expected to rise to the occasion. Its wheat export doubled in the first five months of the ongoing financial year. But extreme weather played spoilsports. Wheat production dipped and so did its procurement. According to Food Corporation of India data, at 22.75 million tonnes, wheat stocks in public godowns on the first of October were at a six-year low and just above the minimum buffer requirement of 20.52 million tonnes for that date. Meanwhile, at 28.39 million tonnes, rice stocks, including grain derived from un-milled paddy, stood at nearly 2.8 times the minimum buffer of 10.25 million tonnes.   Overall, wheat and rice stocks with government agencies stood at 51.14 million tonnes as on the first of October. Not only did this represent a 37 per cent decline from the 81.6 million tonnes in stocks a year ago, it was also the lowest level for the same date since 2017. The fall coincides with the consumer price index-based inflation for the month of September surging to a five-month high of 7.4 per cent, largely due to a spike in food inflation, which jumped to a 22-month high of 8.6 per cent for the same period. Meanwhile, the consumer price index for cereals and products rose 11.53 per cent year-on-year in September, representing the highest-ever annual inflation for cereals according to the current price index. While the overall cereal stocks position appears to be relatively comfortable for now thanks to the rice stocks, things could change going ahead due to persistently high inflation.   With regard to non-PDS wheat and atta flour, annual retail inflation hit an all-time high of 17.41 per cent in September. Market players and traders hope that the prices of agri commodities will soften as the arrival of kharif crop peaks in the weeks ahead. However, the decline in prices could be limited when it comes to cereals because of the low stocks in government godowns and damage to the standing harvest due to the late withdrawal of the southwest monsoon. A decline in prices is also improbable because the next wheat crop will hit the markets after mid-March next year. Thus, the declining stocks of the foodgrain could become a cause for concern.   In the open market, wheat prices have largely stayed above the minimum support price, or MSP, of 2,015 rupees per quintal this year. There are two reasons for this. First, there has been a drop in production because of a rise in temperatures during the crucial harvest months of March and April this year. The second one is favourable demand. Meanwhile, the Russian invasion of Ukraine has pushed up global wheat demand, which has caused a price spike in Indian markets. Owing to this sharp jump in prices and a massive drop in procurement, the Centre in May imposed a ban on exports. However, that did little to cool prices and the markets have been trading above the MSP due to the fact that there are no pipeline stocks with flour millers. The drop in procurement has also limited the Centre's ability to intervene in domestic wheat markets to cool prices through open sales.   Meanwhile, despite a slowdown in exports after the sudden mid-May ban, India exported 4.35 million tonnes of wheat during April-August this year, amounting to a 116.7 per cent increase compared to the corresponding months last year. Exports of the foodgrain received a boost after demand for Indian wh

Q1: Diwali is all about happiness and the festive spark that brings cheer all around. Is the spark missing this time as far as the market action is concerned? Ans: >Optimistic on the road ahead for the Indian markets >Global backdrop unsupportive; too many negative cues >From economy to flows: Several positives for Indian markets Q2: The markets, in terms of headline number for the frontline indices, have not done much this year. However, there have been stock specific stories. Is that how the markets will be in the foreseeable future? Ans: >Possible; investors must focus on ‘themes’ >Key theme for 2023: Corporate capex cycle globally >Traditional capex plays, new themes such as semiconductors should do well >China+1 strategy; electronics industry India to boom Q3: Is there any silver lining in store for the markets in Samvat 2079? What are the key themes or sectors you are working with for the next year where investors could park their money? Ans: >US Fed, other central banks to hold rates in 2023 >Pivot will be reached on the onset of recession; rates likely to fall thereafter >Drop in rates will be good for markets; India will stand out then >Dollar likely to weaken; emerging markets (EMs) will do well >Key themes for 2023: Banks, autos and auto parts, capex-related plays, electronics Q4: Rearrange these asset classes in your order of preference in terms of the likely returns in the next one year starting with the largest first – gold, large-cap stocks, mid-and small-caps, real estate, bonds and fixed deposits. Or just stay in cash? Ans: >This is a good time to lock into higher FD rates >Next big allocation should be to equities >Markets to see around 12% return in 2023 >Stock pickers market; choose the right sectors and stocks Q5: Your advice to retail investors for the Samvat 2079? Ans: >Continue with the SIPs >Indian markets have been consolidating; resilient >Explore different asset classes. Diversification is key

Airlines prefer to lease aircraft to reduce purchase costs and ramp up capacity at the same time. In aviation, there are two types of leasing arrangements -- wet leasing and dry leasing. Wet leasing Wet leasing is an arrangement where the lessor provides an aircraft and the crew too. So here, the lessor is responsible for the operational maintenance of the flight. Dry leasing In contrast, dry leasing is an arrangement where the lessor offers only an aircraft, without crew and ground staff. Here the lessee will be responsible for the operations of aircraft. In dry leasing, the aircraft is also operated under the lessee’s air operator certificate. Pros and cons Both wet leasing and dry leasing have their pros and cons, depending on the requirements of the airlines. Wet leasing is slightly costlier and can increase operational costs for the airline as the lessor provides for maintenance and crew. In dry leasing, the lessee is responsible for training the crew, costs of maintenance, staffing etc. In this case, the airline will also be in full control of the flying  experience. Airlines resort to wet and dry leasing of aircraft in peak seasons to run operations smoothly. According to reports, both IndiGo and SpiceJet are planning to wet lease aircraft to increase capacity during the winter. As the demand returned after the pandemic, airlines fear losing out market share without additional capacity. According to regulator DGCA rules, wet lease is only permitted in emergency situations for up to three months and the contract is subject to an additional extension of three more months. Meanwhile, dry leasing is permitted for up to 12 months and the contract can be extended for 12 more months.

Singapore Airlines and Tata group are in talks, exploring the viability of merging Vistara and Air India. While Air India is fully owned by Tatas, Vistara is a joint venture of the Indian conglomerate and its Singapore partner. So, if materialised, what will this merger mean for Tata’s aviation ambition?  Aviation sector as a whole is still wading through troubled waters. A recent report has put the domestic industry’s loss in the range of Rs 15,000-17,000 crore this fiscal. RBI, on the other hand, has also been in a fire fighting mode. The details of RBI’s September Monetary Policy Committee meeting were made public on Friday. Ashima Goyal was the only dissenting MPC member who pitched for a 35 basis point rate hike while RBI raised rates by 50 points. Business Standard’s Bhaskar Dutta caught up with her.  Moving on to markets, IPOs of small-and-medium enterprises or SMEs have become quite a phenomenon recently with firms heading to primary markets in large numbers. Despite weakness in the secondary markets, many of these IPOs have delivered premium returns. So should investors exercise caution before jumping on the bandwagon?  Staying with the markets theme, anchor investors are offered shares in an IPO a day ahead of its primary market debut. But they cannot offload it for the next 30 days. It is called the lock-in period. Various other investment options come with similar riders. This episode of the podcast tells more about it. 

Singapore Airlines confirmed last week that it was in talks with Tata Group about a potential merger of full-service carriers Vistara with Air India.  (VO 1) The Singapore national airline owns 49% of Vistara. Tata holds the rest.  Vistara is India’s second-biggest domestic airline and held a market share of 9.7% in September, far behind IndiGo’s 57.7%. Air India, with 8.5% domestic market share is at fourth spot -- just behind GoFirst. Tata Group also has an 83.67% shareholding in AirAsia India, which is in the process of being merged with Air India. The conglomerate had acquired Air India from the India government in January. It then roped in Singapore Airlines Group veteran Campbell Wilson as Air India’s CEO to lead its turnaround plan. In September, two months after Wilson took over, Air India announced a five-year transformation plan to take its domestic market share to at least 30%.  The plan itself was an indication of merger of all group airlines. Cumulatively, Tata’s four airlines including Air India Express rule 24% of domestic skies. Meanwhile, Singapore Airlines has cautioned its investors that there is no certainty of a deal. But it said the discussions are in line with its multi-hub strategy of getting access to important sources that complement its strong Singapore hub. The International Air Transport Association has noted that India will become the third-largest aviation market in the world-- including international and domestic traffic - by around 2024. Any potential merger would create a more formidable competitor to India’s dominant airline IndiGo as well as Middle Eastern rivals that carry a large share of the country’s international traffic. Singapore Airlines: India’s air traffic flows to double in 10 years Singapore Airlines said India had strong domestic and international traffic flows that were expected to double over the next 10 years. Air India recently said it will lease 30 Boeing and Airbus aircraft, expanding its fleet by more than 25%, as its new owner faces a tough task to upgrade the carrier’s ageing fleet and turn around its financials and service levels after years of losses. It is also looking at growing the international routes significantly to put the airline “on a path of sustained growth, profitability and market leadership’’. Air India is launching more services to North America, where its use of Russian airspace gives it a shorter flight time than rivals that have avoided it since Moscow began its invasion of Ukraine. Singapore Airlines has a chequered track record in mergers and acquisitions. It owned a 20% stake in Virgin Australia that was wiped out after the Australian carrier entered voluntary administration in 2020. In 2012, Singapore Airlines sold its 49% stake in Virgin Atlantic to Delta Air Lines for $360 million, well below its initial purchase price of 600 million pounds in 2000. Speaking to Business Standard, Ajay Awtaney, Founder and Editor, Live From A Lounge, says it makes no sense for Tata to have two full-service airlines. SIA may end invest more now as it’s recovering from pandemic. It may end up with minority holding in Air India. Air India will lead int’l ops.  For customers of Vistara who are signed up to its frequent flyer programme, merger with Air India will provide them with an added benefit. Air India is part of the Star Alliance, the world’s largest global airline alliance with 26 members. A member of Air India’s frequent flyer programme can earn miles when they fly with any of the Star Alliance members. A potential merger with Vistara will significantly enhance Air India’s fleet, increasing the routes it can fly and frequency of operations. It could also a go a long way towards realising Air India’s stated goal of achieving a 30% domestic market share in five years. It may even have a positive impact on profitability because of cost optimisation. However, experts feel that all of

Q: You were the sole voice of dissent when it came to the rate hike. You had voted for 35 basis points, when the rest were for 50. You mentioned in the minutes that the real rate of more than one per cent of inflation were to fall more than expected could be dangerous for growth. So, what would be your preferred real rate?  Ans: >Real rate should not be more than one per cent in the present state of economic recovery >A positive real rate is required, but it should not run above one per cent Q: You have mentioned a fear-driven over reaction when it comes to maintaining the rate differences with the US. Do you feel that there is a pressure in the MPC to respond to the Fed’s action? Ans: >MPC’s mandate is managing domestic inflation and growth >Interest differential does not matter for Indian exchange rate because India has caps on interest-sensitive inflows and have a low share of the markets >We need not worry about keeping up with the US Fed rates. Instead, we should calibrate our real rates to our inflation   Q: You mentioned in the minute that India retains the policy space to smoothing global shocks. Does this imply space for rate cuts, if there were to be another adverse global development?  Ans: >Our rates should be counter-cyclical to our domestic cycle.  >Apart from the monetary policy, fiscal, foreign reserve management, capital flow management etc could be counter-cyclical   >Strength and resilience of the financial sector also allows some policy space Q: Turning to liquidity, you mentioned the need to counter the global QT and possible outflow. We’ve seen that money market rates have moved higher and with regular instances of banks now tapping the MSF window. So, in your view, should the central bank provide liquidity when the current surplus drains out durably?   Ans: >Durable liquidity is in surplus, with very short episodes where market rates stretch above the upper band >RBI has developed tools to manage short-term liquidity  >Many large durable liquidity have gone out of the country because of foreign outflows  >The country suffered in 2019 when there was liquidity squeeze >Surplus liquidity is essential for financial stability. But too much surplus is bad for financial stability    Q: You also mentioned that the high repo rates in 2011, 2014 and 2018 led to a credit and investment slowdown. Given the fact that inflation still remains well out of target, how could the MPC achieve its target with minimal growth sacrifice?    Ans: >Indian Monetary Policy had allowed too much stimulus after the global financial crisis. Then there was double deficit and various fragility  >Monetary and other policy makers have learnt to be moderate in terms of being counter-cyclical, and not let the real rates become too negative or too positive  >Monetary and fiscal coordination is required to bring down inflation  >Have the policy space to moderate inflation without hurting growth too much

Fears of a global slowdown and a weak macroeconomic landscape have not deterred the small and medium enterprises of India from entering the primary market this year.  Despite soured sentiment in the secondary markets, 87 SMEs have launched their IPOs so far in calendar year 2022, raising Rs 1,460 crore as against Rs 783 crore raised by 56 such firms last year.   In the first half of the current fiscal, 62 SME IPOs hit the street and garnered a total of Rs 1,078 crore in comparison to 30 IPOs in the same period in 2021-22, which collected Rs 346 crore, data from PRIME Database showed.  Analysts attribute this to a healthy domestic economy, and liquidity conditions that have kept equity markets buoyed over the last few years.  According to G Chokkalingam of Equinomics Research, the share of SMEs in the overall market cap is less than 1% and the market will see a couple of thousands of SMEs getting listed in the next five years.” “These firms are widely diversified and their performance would vary, but wealth creation would be enormous, as we have already seen many of these firms become large companies in the past,” says G Chokkalingam, Founder and CIO, Equinomics Research.  However, experts advise caution against the frenzy of SME IPOs amid looming risks of a global recession.  With over 40% of India’s exports being led by medium and small enterprises, the ongoing slowdown in global trade raises uncertainty for these domestic export players. As per Kotak Securities, the US and major European economies contribute nearly 50% of the exports by MSMEs. The impact on the production side would be felt through manufacturing, wholesale and retail trade. If the global situation was to exacerbate and affect MSMEs substantially, it may also slow down credit and increase pressure on asset quality.  Besides, analysts remain wary of the record returns that SMEs have been delivering in the market.  Nine small and medium enterprises made a stellar stock market debut on October 10 with some of the counters even doubling in value. Six of these nine held on to the listing pop by close. Speaking to Business Standard, Ambareesh Baliga, Independent Market Analyst says several SME stocks have become multi-baggers post listing. Investors flocking to these issues to make easy money. This is leading to froth building up in this space. Unsure how long this frenzy will last.  Today, the market trajectory will be guided by global cues, domestic corporate earnings of companies and how the rupee plays out.