Business Standard Podcast

The Reserve Bank of India’s rate hike in May, in order to be in-line with the global market sentiment, has pushed the domestic currency to record low levels. Rupee has skidded over 2 per cent against the US dollar in May, seeing its worst monthly decline in 2022. In comparison, the S&P Sensex and Nifty 50 tanked over 3 per cent each during the period. Weak economic data, rising interest rates, soaring inflation, exit of foreign investors are some of the key triggers behind the rupee’s meltdown.  That is because a depreciating rupee does not bode well for foreign investors as returns reduce from Indian investments, prompting their departure. According to data provided by Jefferies, foreign portfolio investors have sucked nearly 5 billion dollars from Indian equities, so far in the month of May. Moreover, a falling rupee expands the deficit math of an import-oriented economy like India. As Indian economy is heavily dependent on crude oil imports, a weaker rupee, as well as higher crude oil prices, weighs on the current account deficit. It also presents the risk of imported inflation. Remember, a heavier import bill along with weaker rupee widened India’s deficit to 20.7 billion dollars in April from 18.5 billion dollars in March. According to a report by S&P global market intelligence, India’s oil imports bill hit a record high in April as it surpassed 4.8 million barrels a day.  Against this backdrop, analysts believe that import-dependent companies will bear the brunt of a sliding rupee, especially when the input costs are on the rise. Pritam Patnaik, Head - Commodities, Axis Securities, says falling rupee, rising input costs weighing on economy. Inflation is rising due to weaker rupee, he says adding that import-dependent companies will bear the brunt According to a report by ICRA, the Indian rupee could trade in the range of 75 to 79 per US dollar in first half of FY23.  ‘A rise in the current account deficit, along with monetary policy tightening, dollar strength and risk aversion towards emerging markets, is expected to impart a depreciating bias to the Indian rupee. However, large forex reserves, narrowing inflation differentials and the likely stemming of FII debt outflows would prevent a further depreciation’, reads the ICRA report. That said, a weaker rupee offers silver lining for the export-oriented sectors. Analysts believe that IT, pharma, textile and specialty chemicals could gain a competitive edge amid the sharp decline in the rupee. Speaking to Business Standard, NS Ramaswamy, Head of Commodities, Ventura Securities said weak rupee will benefit IT, pharma, textile, specialty chemicals. Rising input costs can neutralise gains across export-oriented sectors, but the falling rupee will not bode well for auto, capital goods, power, telecom sectors. Overall, with rising interest rates and weak global macros, there’s little room for optimism for the domestic currency. On Tuesday, markets will track GDP data for the March quarter of 2022. Globally, Euro zone CPI data and UK’s consumer credit data will also be on investors’ radar.

India is the world’s second largest producer of wheat. But most of it was being consumed by the country itself -- leaving little room for export. And whatever little we exported, it mostly went into neighbouring countries. Like 55% of our wheat went to Bangladesh. But over the years, our wheat export has been on the rise. In FY 22, India exported a record 7.85 million tonnes of wheat. It was a 270% jump from 2.1 million tonnes the previous year.  And this year, when Russia invaded Ukraine, India found itself in a spotlight. Scores of countries which used to purchase wheat from the two countries looked towards New Delhi to fill the void. During the second week of April, Prime Minister Narendra Modi told US President Joe Biden that India was ready to supply its food stock to the world if the World Trade Organization (WTO) allowed it. Orders for wheat ocks started pouring in from foreign shorests. Farmers were happy and so was the government. Egypt, which typically gets 80% of its wheat from Russia and Ukraine, approved imports from India in mid-April.  On May 4th, Food Secretary Sudhanshu Pandey said the Centre was not moving to curb wheat exports as India had sufficient stocks.  But the food secretary said that due to an increase in market prices and higher demand by the private players, both for domestic as well as export purposes, the Centre’s wheat procurement would be lower this year. He added that a large quantity of wheat was being bought by traders at a higher rate than the Minimum Support Price, which was good for the farmers. Around the same time, addressing the Indian diaspora in Germany, Prime Minister Modi said Indian farmers were coming forward to feed the world when big nations were worried about food security. Just two days before announcing the ban, the government said it would send trade delegations to nine countries including Indonesia, Thailand and Turkey for exploring possibilities of boosting wheat exports from India. But on May 13, the Indian government pulled a surprise and shocked many. It ordered a ban on export of wheat with immediate effect. Just before the ban, the government had plans to export a record 10 million tonnes of wheat this year. According to the government, the main reason for the ban was to “manage the overall food security of the country and to support the needs of the neighbouring and other vulnerable countries”. It comes against the backdrop of the hottest March in 122 years which stunned the grain -- leading to a considerable drop in yield. The yield, this year, may barely cross the 100 million tons mark, down from the government’s initial estimate of a record 111 million-ton harvest. Meanwhile, the stock in the granaries of the Food Corporation of India is also low. And if the government extends its free grain programme, the FCI stocks may dwindle further. Currently it has 30 million tons in storage. A

Davos might have missed some big names and even bigger countries this time, but India went with the aim of making a mark.   “Attendance from China, Japan and Korea was sparse this year and of course we heard nothing from Russia or much from Ukraine attendees” – This is what Gautam Adani, Chairman of Adani Group, wrote about his experience at Davos 2022. Even as the world’s rich and powerful descended on Davos, the sentiment at World Economic Forum’s annual meeting wasn’t the same as before. Consider the conspicuous absence of many titans of finance.   According to Bloomberg, the chiefs of JPMorgan Chase and Goldman Sachs were not in attendance. Neither was BlackRock Inc’s Larry Fink or Blackstone’s Steve Schwarzman.  Meanwhile, nearly 100 participants and dozens of political leaders from India attended the World Economic Forum, and presented the country’s position on the energy situation, food security and health equity at Davos. And, India’s enthusiasm was well-founded. Here’s what Business Standard reported from Davos.   India found itself at the centre of many dialogues on emerging issues, ranging from climate change to crypto technologies. European business leaders were eagerly scouting options for diversifying trade and investments. India appeared to be the best option for most of them, thanks to its political stability and reformist policies.   Many global investors endorsed India’s rising economic relevance. For example, Saint Gobain Global CEO Benoit Bazin said that the company plans to invest over Rs 5,500 crore in the next four years in India. Bazin was bullish about the 45-billion-Euro company’s growth story in India.    David Rubenstein, co-founder of the private equity Carlyle Group, told reporters in Davos that “India has been more attractive [to buy assets] of late than China.” Clearly, India benefitted from the absence of China and concerns over its heavy-handed ‘zero Covid’ strategy.     Speaking from Davos, Pranjal Sharma of Business Standard says India is presenting itself as a stable, dynamic and growing emerging market at Davos. This is in contrast to the troubles in Europe and the US due to the ongoing Ukraine war. The idea is to attract investors worried by the uncertainty in markets and rising inflation, he says. State govts and the Centre aligned in their goals of presenting Brand India aggressively at Davos, Sharma says.  Ministers from several state governments, including those of Tamil Nadu, Maharashtra, Telangana, Andhra Pradesh and Madhya Pradesh, were also in Davos to attract global investors. Andhra Pradesh reportedly signed renewables investment pacts cumulatively worth about 1600-crore rupees with three companies. The investment commitments were made with India’s Adani Green Energy, GIC-backed Greenko and India’s Aurobindo Realty & Infrastructure.  The Maharashtra delegation reportedly signed at least 23 MoUs worth 30,000 crore rupees. Of these investments, more than 55 per cent are by way of FDI from the US, Singapore, Indonesia and Japan. The team led by Karnataka Chief Minister Basavaraj Bommai inked MoUs with two major companies for a total investment flow of 52,000 crore rupees. India also took its vibrant start-up story, already featuring daily in the domestic news, to the world stage. Consider the fact that along with several legacy leaders the Indian delegation also included unicorn founders such as Zerodha’s Nikhil Kamath, EaseMyTrip’s Prashant Pitti, Ashish Singhal of Coinswitch, and Vidit Atrey of Meesho. With the government proudly referring to the rise of unicorns in India, the founders were pleasantly surprised by the attention they were getting from delegates from India and abroad.    Pranjal Sharma of Business Standard speaks to Prashant Pitti, Co-founder of Easemytrip.   India also adopted a strategy at Davos that was significantly different from previous years – the Indian delegation was focused on improving

Q1: You know, obviously there is going to be, and it started already, a clear shift towards electric vehicles. The industry has to get prepared, and they are already preparing in many ways. So this change that you see, which will happen, what is the kind of roadmap that you have in the next five years?    Ans: >Adoption of EVs – driven by regulation and customer demand – is increasing everyday >Two and three-wheeler industry is transitioning from internal combustion engine (ICE) vehicles to electric vehicles (EVs) faster   >From supply perspective, EVs have opened up a new market segment for companies  >Around 60% of Automotive Component Manufacturers Association of India (ACMA) members are ready to supply to EVs. The rest will be prepared by 2023 >75 companies eligible for the auto components production-linked incentive (PLI) scheme have to invest Rs 250 crore each in five years to get the incentive, and most of this investment will go into supply to EVs >To justify the investment, the auto components companies in India will have to explore the global market  Q2 What is the rough number for investment for next five years you (ACMA members) are looking at?  Ans:  >Auto components companies will have to make a minimum investment of Rs 18,600 crore in five years to build future technologies in the automobile industry >Market opportunities for EVs exist in the US and Europe >Bulk of the investment will be used for EVs, some will go towards building technology that is currently imported Q3: What is the size do you think the Indian market would be in about 3-5 years down the line?  Ans: >Indian auto components sector is the fourth largest in the world and likely to cross $5 million >Exports of Indian auto components industry grew 76% last year >The industry would benefit from China+1 strategy and global tech giants looking at India for production  >Business would come to India because of superior technology and not because of cost-efficiency alone Q4: You have to look at a global market for electric vehicle components. Are there areas where we have the strength where we could be the export hub to the world?  Ans: >R&D spend increasing in technologies around steering, drivetrain, motors etc  >The choke point in auto components is electronics. It calls for heavy investment  >Need alliance between automotive and electronics industry to explore building auto-electronics in India and reduce dependence on imports Q5: Is ACMA trying to do something on that front?  Ans: >ACMA is working in collaboration of IIT Delhi (Sonipat campus) and IIT Bombay on electrification of vehicles   >Working with member companies to help them move towards electrification >In conversation with electronics industry to explore localisation of electronics in India >A scalable market is essential for investment in auto-electrification and future tech Q6: Do you see this whole move, within the next five six years, auto components will turn to global company, with something like Bosch coming from India? Ans: >Aims to build the next Bosch from India  >It needs continued investment in technology and talents, and work towards building products that are future ready >Companies like Bosch are successful because of their innovations >Average R&D spends of auto components industry is 0.5%. -This needs to be more than 3%  >Investments will depend on the opportunity coming to auto component companies  Q7: A lot of companies are also looking at acquisitions from the point of view of acquiring R&D which already exists. It’s not just creating a manufacturing…   Ans: >Telematics, connectivity, software, KPIT etc are changing the competitive landscape of the auto component space  >ACMA member companies are working with (and often incubating) startups on future technologies.

Equities fought volatility and surged last week, as stocks danced to the tunes of global cues, domestic news flow and corporate earnings.  Among indices, financials lead from the front, while a steep cut in excise duty on fuel prices and capping of sugar exports, saw stocks from these sectors react negatively. Eventually, the BSE Sensex moved in a band of 1,500 points, and finally ended the week with 1 per cent gain. The NSE Nifty, on the other hand, was up 0.5 per cent, while the Bank Nifty surged nearly 4 per cent. However, despite last week’s gains, the benchmark indices may end the current month on a negative note, marking their biggest declines in May since 2012. The BSE benchmark Sensex and the Nifty were down close to 4 per cent so far this month, primarily dragged down by the persistent FII selling.  Foreign investors have, now, been net sellers for eight straight months and have net sold stocks worth more than 52,000 crore rupees so far this month. According to VK Vijayakumar of Geojit Financial Services, FPI selling is showing mild signs of exhaustion. DII and retail buying together with overwhelming FPI selling along with short covering can trigger a near-term rally. High quality large-caps can stage a rally, says Vijayakumar, adding that leading banks are safe bets.  Against this backdrop, Business Standard’s Avdhut Bagkar shares how the banking stock is placed on the charts. Going ahead, markets will look at Q1CY22 GDP number, slated to be announced on Tuesday, for fresh cues on the economic recovery. As per a Reuters poll of economists, India’s economic recovery from the Covid-19 pandemic likely stumbled again in the first quarter of this year primarily due to Omicron-related restrictions and higher inflation. ‘Growth in Asia’s third-largest economy was pencilled in at 4.0% for the January-March quarter from the same period a year ago, down from 5.4% in Q4 2021. If realised, that would be the slowest in a year and a third consecutive quarter of weaker growth’. Amid these triggers, technical charts suggest that the NSE Nifty managed to close above its 20-DMA for the first time since April 13, 2022. The Nifty may look to target the trendline resistance around 16,750 in the near term.  On the downside, the index can expect support around 16,200-level. As we draw curtains on the Q4 earnings season, stocks like Aurobindo Pharma, Delhivery, IRCTC, Jindal Steel and Sun Pharma could see some action ahead of earnings on Monday.

Equities fought volatility and surged last week, as stocks danced to the tunes of global cues, domestic news flow and corporate earnings.  Among indices, financials lead from the front, while a steep cut in excise duty on fuel prices and capping of sugar exports, saw stocks from these sectors react negatively. Eventually, the BSE Sensex moved in a band of 1,500 points, and finally ended the week with 1 per cent gain. The NSE Nifty, on the other hand, was up 0.5 per cent, while the Bank Nifty surged nearly 4 per cent. However, despite last week’s gains, the benchmark indices may end the current month on a negative note, marking their biggest declines in May since 2012. The BSE benchmark Sensex and the Nifty were down close to 4 per cent so far this month, primarily dragged down by the persistent FII selling.  Foreign investors have, now, been net sellers for eight straight months and have net sold stocks worth more than 52,000 crore rupees so far this month. According to VK Vijayakumar of Geojit Financial Services, FPI selling is showing mild signs of exhaustion. DII and retail buying together with overwhelming FPI selling along with short covering can trigger a near-term rally. High quality large-caps can stage a rally, says Vijayakumar, adding that leading banks are safe bets.  Against this backdrop, Business Standard’s Avdhut Bagkar shares how the banking stock is placed on the charts. Going ahead, markets will look at Q1CY22 GDP number, slated to be announced on Tuesday, for fresh cues on the economic recovery. As per a Reuters poll of economists, India’s economic recovery from the Covid-19 pandemic likely stumbled again in the first quarter of this year primarily due to Omicron-related restrictions and higher inflation. ‘Growth in Asia’s third-largest economy was pencilled in at 4.0% for the January-March quarter from the same period a year ago, down from 5.4% in Q4 2021. If realised, that would be the slowest in a year and a third consecutive quarter of weaker growth’. Amid these triggers, technical charts suggest that the NSE Nifty managed to close above its 20-DMA for the first time since April 13, 2022. The Nifty may look to target the trendline resistance around 16,750 in the near term.  On the downside, the index can expect support around 16,200-level. As we draw curtains on the Q4 earnings season, stocks like Aurobindo Pharma, Delhivery, IRCTC, Jindal Steel and Sun Pharma could see some action ahead of earnings on Monday.

With a flurry of initial public offers hitting the markets, it’s important for investors to pick and choose issues of fundamentally strong companies. It involves determining the economic value of a company, and assigning a value to it. This process is known as ‘valuation’ of a company. It includes an analysis of the company’s management, its capital structure, its future earnings prospects or the market value of its assets.  While there may be a number of valuation related terms that one can encounter, there are two terms that investors usually confuse. These are embedded value and enterprise value. Let’s decipher both of these. Simply put, enterprise value is the entire value of the business, without giving consideration to its capital structure. Also known as firm value or asset value, enterprise value is the total value of the assets of the business, excluding cash. So, if you know a firm’s equity value, as well as its total debt and cash balances, you can calculate the enterprise value via this formula. Enterprise value is equal to equity value of a firm, plus debt, less cash component. Here, equity value is number of outstanding shares multiplied by market price of one share. EV is the price that a buyer would typically pay for buying a company.  During the valuation process, EV helps to enable business entity to find out the worth of a company, and also find out the economic value of the business. Besides, it helps investors to easily compare different companies with different capital structures. Enterprise Value also helps neutralize the stock market risk and helps to compare expected returns more effectively. Now, let us understand what is an embedded value and if it is any different from an Enterprise Value? Unlike Enterprise Value, which can be used across sectors, Embedded Value is mostly used for life insurance companies. The metric is used to estimate the consolidated value of shareholders' interest in an insurance company.  The generic formula to calculate an embedded value is to add the present value of future profits of a firm to the net asset value of the firm's capital and surplus. It sometimes known as market consistent embedded value (MCEV). The present value of future profits captures projected future profits from in-force policies, while net asset value of capital and surplus represents the funds belonging to shareholders that have been accumulated in the past.  So, why do insurance companies use embedded value as its metric and not enterprise value? According to valuation experts, life insurance business is very different from any other business due to the long-term mutual commitment of the customer and life insurers to each other. Therefore, the use of traditional ratios like Price-to-Earnings or Price-to-Book Value would always make life insurance companies look overvalued. The correct way to value a life insurance player is to value the committed business from each policyholder over the lifetime.

After missing disinvestment target for three years running, will the government be able to nail it this financial year. Well it has a good headstart as LIC stake sale added over Rs 20,500 crore to the exchequer. So will the just-approved sale of the government’s remaining stake in Hindustan Zinc help it meet its disinvestment target of Rs 65,000 crore? And how are things progressing for the Centre’s overall divestment and privatisation plans?  The war is indeed putting governments in a tight spot by continuously feeding into inflation. And if it doesn’t end soon, we may witness food crises in parts of the world. Those with a large population are more at risk. So do we need another green revolution to boost food production and save us from Thomas Malthus’s prophesy?     Markets too are bleeding due to the war. Despite several attempts, the indices have failed to cling on to the gains and have succumbed to global and domestic cues. Should you use the current market fall to buy for the long term? Are the markets fully discounting the rate hikes by the RBI over the next few months?  Not just the government and markets, people too are hit by rising inflation. And like the FMCG companies which resorted to shrinkflation, a set of consumers are now shifting to cheaper products due to soaring prices. It is called downtrading. Listen to this episode of the podcast to know more.  Watch Video

The Cabinet Committee on Economic Affairs has approved the sale of the government’s entire remaining stake in Hindustan Zinc Ltd, or HZL. According to the closing price of the company’s shares on Thursday, the sale of the entire 29.5 per cent stake would fetch around Rs 37,400 crore. As reported by Business Standard, an official has said that the government might sell its HZL stake in tranches through an offer for sale, or OFS.   So far, in the current financial year, the Centre has collected 23,575 crore rupees in divestment proceeds through the Life Insurance Corporation of India IPO and the offer for sale of Oil and Natural Gas Corporation. If the Centre successfully carries out the divestment of HZL, it will find itself in striking distance of its Rs 65,000-crore divestment target for financial year 2022-23. This is good news. Especially given the uncertainty surrounding the government's plans due to Russia's invasion of Ukraine. But we need to dive a little deeper. After setting ambitious divestment targets in the last three years, the Centre, in Budget 2022, pegged the FY23 target at a conservative Rs 65,000 crore.  The pandemic and the Ukraine war have hampered the Centre’s divestment and privatisation plans in recent months. In April, the Centre missed its revised divestment target for the second time in three years even after slashing it by 55 per cent to Rs 78,000 crore in the Union Budget.  Compared to the target, the FY22 divestment mop-up was Rs 13,530 crore, which included the Rs 2,700 crore received by the Centre from Air India's privatisation. So, what does the relatively better performance this year mean for the government? Madan Sabnavis, Chief Economist, Bank of Baroda expects govt might exceed target, and more divestment is in the pipeline. This will help with fiscal math, he says, adding that it will help govt in light of projected revenue slippages. However, the government has had a bumpy ride as far as privatisation is concerned.  In the case of Central Electronics and Pawan Hans, the nearly-completed privatisation transactions have hit a roadblock because of the winning bidders having pending legal cases against them. Then there is the big-ticket privatisation of Bharat Petroleum Corporation Ltd, which has fallen through with just one bidder remaining in the fray. At present, the government is working on a new strategy for selling its stake in the oil PSU. And, according to news agency PTI, the government is on course with the privatisation of two public sector banks (PSBs) -- Central Bank of India and Indian Overseas Bank. It is also planning to sell indirectly held stakes in ITC and Axis Bank. And it is also trying to complete the sale of Shipping Corporation of India. Strategic disinvestment of Container Corporation of India is also lined up. Madan Sabnavis says the govt will go slow on privatisation. No clear cut case like Air India at present. So, it looks like the government has decided to follow Infosys' philosophy of 'under-promise, over-deliver'? Watch Video

 The Russia-Ukraine war has sent commodity prices soaring across the world. While some countries are halting exports to bring down the inflation, others are mulling rethinking their agricultural strategies.   India put a ban on wheat export to contain domestic prices, just a few days after Indonesia placed a similar ban on palm oil, only to relax it later. Some even call it “de-globalisation”, as food protectionism has been rising across the world. And it may further fuel global inflation.   So, is the world’s food production keeping pace with the rising population?   Let us begin with a 1798 essay by Englishman Thomas Malthus. Malthus had said that population growth would outpace food production to cause shortages and famine.   Though not the first grim theory on population, “Malthusian catastrophe” was widely debated, and criticised too. Two years later, in 1801, the UK government went on to conduct the first census.   Malthus was proven wrong. But the theory again found resonance during the 1960s when newly independent countries wanted to be self-sufficient in food.   Their reason was not as much population sustenance but freedom from the shackles of dependence. India’s green revolution was a step in that direction.   But times changed. Decades of peace and globalisation prompted most countries to liberalise trade rules for food commodities.   For instance, the rice trade increased 22 per cent between 2014 and 2022. Trade in wheat is expected to increase between 2017-18 and 2021-22 (July-June period), without any change in production over these years.   As the old world order is challenged, countries again fear running out of food grains. Europe is being criticised for its farm-to-fork strategy promoting sustainable farming.   A Business Standard analysis found food insecurity -- the number of people with insufficient access to food-- is a problem that was piling up for years when the Russia-Ukraine crisis accentuated it.   Data from Food and Agriculture Organisation’s ‘The state of food security and nutrition in the world’ report shows that worldwide, the number of moderat

It has been a choppy ride for the markets over the past few weeks. Despite several attempts, the indices have failed to cling to the gains, and succumbed to global and domestic cues. Analysts expect the markets to remain choppy in 2022. But there would be ample stock-specific opportunities all through the year, they suggest. However, analysts caution that timing the markets will not be a wise strategy at the current levels given the slew of domestic and global developments over the next few weeks. For instance, geopolitical developments related to the Russia-Ukraine war and its implications in commodity markets, especially oil and gas, will keep the global markets volatile. At home, the Reserve Bank of India’s plans to hike rates may not have been fully discounted yet by the markets.   Sonal Varma of Nomura, meanwhile, says she expects a 50bp hike in June, and 35bp in August; and a terminal rate of 6.25 per cent by April 2023. However, rising fiscal risks will likely complicate the RBI’s liquidity withdrawal strategy. Thus far in 2022, the S&P BSE Sensex and the Nifty50 have lost around 7 per cent each. The correction in the mid-and small-caps has been even sharper, with both the indices slipping 10 per cent and 11 per cent, respectively, on the BSE during this period. In the past week, however, there has been some pullback as the S&P BSE Sensex and the Nifty50 moved up nearly 2.5 per cent each amid volatility. Analysts believe, the recent pullback may still have some steam left.   According to ICICI Securities, the current recovery for the Nifty may extend towards 17,000 levels. However, 15,600 will remain a very crucial level to watch out for. As regards inflation, analysts believe the government’s measures to cut excise duty on petrol and diesel and measures to bring down the cost of cement and steel will be beneficial. Yet, inflation could remain substantially above the RBI’s target range of 2 to 6 per cent. On the contrary, any correction in oil and commodity prices might allay the inflation fears to some extent and present the trigger for an up move in the markets. Sunil Singhania of Abakkus Asset Manager, on his part, believes the inflation has peaked.   If our view on oil, commodity and inflation does come true, then there might be a surprise of interest rising less than expected, says Singhania. Any such possibility can be a key catalyst for a risk-on and positive for equity markets, he says.   With fundamentals continuing to be strong for India and now valuations also in line with 10-year averages, Singhania believes the risk-reward for investors is only getting better. The asset manager continues to remain constructive on the markets.   On Friday, the markets are likely to remain choppy in a range as they track domestic and global cues. Stock-specific action, however, will continue.

It is a word that companies dread. Downtrading is a consumer behaviour where buyers switch from an expensive or bigger product to either low unit packs or lower-end brands. This can lead to a drop in volumes for FMCG companies. When high inflation puts the purchasing power of consumers under pressure, they resort to downtrading, be it in small-ticket items like packaged consumer goods and food or vehicles and durables. Customers can either go for smaller packs of the same brand or for a more affordable brand, in the same product category. Several major commodities such as crude oil, edible oils, wheat and steel have witnessed sharp inflation this year because of the Russia-Ukraine war. Faced with unprecedented raw material cost pressures, companies have hiked prices to the tune of 10-15% over the last six months, which include grammage reduction in items like soaps and snacks.  Some categories have started seeing downtrading by consumers. They are shifting to economy brands or smaller Stock Keeping Units (SKUs).  The rural market has been witnessing a slowing demand scenario, specifically in discretionary categories. In times like these, price-sensitive customers go for no-frills packs that satisfy their basic requirements.  Manufacturers, therefore, sell the same products at different price points as downtrading tests the brand loyalty of customers.  By staying at various price points, companies can sell products that suit the price demanded by different customer segments.  Products like soaps, snacks and biscuits are priced as low as 1 or 5 rupees even though profit margins of companies take a hit at that level. This is done to retain market share when there is downtrading. The expectation from companies is that when a customer down trades, he or she can choose the lower-priced pack of the same brand rather than shift to a different brand.   Customers opt for products with lower quality or fewer features to save some cash. But sometimes, they can switch to an entirely different product that fulfils the same need.  For example, one may switch from using a handwash liquid to soap for washing hands or switch to a different type of vegetable oil for daily cooking if it is available at a lower price for the same quantity.    With inflation compromising consumer wallet size, they are clearly giving more priority to essentials over discretionary items. Watch Video

As the economic activities shifted online, a dark industry of sophisticated hackers mushroomed around it. And as the nations and companies ramped up security to save their data, fraudsters too shifted the gears. It is an ongoing battle in which corporates are bleeding, and hackers flourishing. On Wednesday morning, flight operations of SpiceJet were hit after what it called an attempted ransomware attack.  India’s central bank too has been taking preventive steps to safeguard crucial consumer data. Last year, it directed merchants not to store customer card details on their servers starting January 1, 2022. Unique tokens were supposed to replace the card details, a process referred to as tokenization. But it was easier said than done. After the industry cried foul, the implementation date was pushed to June 30. It is drawing close now. So is India ready for this big payment system reform this time?  Experts believe that initial few months will be bumpy in India’s transition to tokenization. Meanwhile, Indian markets have outperformed even in the recent correction as flows from mutual funds and retail investors have remained robust. Our next story takes a dive into how retail investors are looking at macro-economic developments, and can their flows into the equities shrink going ahead? In the ongoing choppy market, knowing entry and exit points may turn fortunes in your favour. They are the most crucial factors for a successful trade. This episode of the podcast highlights a few easy trading strategies to identify entry and exit points.

Hundreds of fliers spent restless hours at Indian airports Wednesday morning after aircraft of Spicejet came to a standstill. Some took to social media platforms to register their ordeal, claiming that they were stranded for hours without a word from the private airline. Spicejet came out with a clarification later, and said that it had faced an “attempted ransomware attack”. It also said that services were resumed in a few hours after its IT team contained the situation. But not before it gave Spicejet brass some really scary moments. One of the tweets written in response to Spicejet’s announcement in a way highlighted most firm’s stand on cyber-security. It is more of defensive, than pre-emptive. What is ransomware? *Ransomware is a type of malware that hacks and prevents you from accessing your files or system *It demands that you pay a ransom in order to regain access *Ransomware employs encryption to hold the victim’s information at ransom *Your critical data gets encrypted so that you cannot access files, applications, and databases   Ransomware is a malicious software which blocks access to a computer system. The hackers give access or the inscription key in lieu of money. In April, Oil India reportedly suffered a cyber-attack that disrupted its operations in Assam. The PSU major had also received a ransom demand of over USD 75,000,00 from the  hackers – who had asked for the equivalent amount in bitcoins.  In the subsequent police complaint, an OIL official said that the company and the government exchequer had incurred a huge financial loss due to the ransomware. And this seems to be the tip of the iceberg. Cybersecurity firm Sophos said in a recent report that around 78 per cent of Indian organisations that were surveyed had been hit by ransomware in 2021. The survey examined the impact of ransomware on 5,600 mid-sized organisations in 31 countries. This included 300 organisations from India.  And it found that in 2021, 78 per cent of Indian organisations that had their data encrypted due to ransomware ended up paying the ransom. This was the highest rate of ransom payment reported across all 31 countries surveyed. According to the survey, 48 per cent of Indian companies paid less than 5,000 dollars as ransom in response to ransomware attacks.  Meanwhile, 10 per cent paid 1 million dollars or more. In fact, three companies in the survey admitted to paying a ransom of 10 million dollars or more to hackers to get their data back. According to research from Unit 42 by Palo Alto Networks, ransomware payments hit new records in 2021. India saw a 218 per cent jump in ransomware attacks in 2021. The 2022 Unit 42 Ransomware Threat Report found that India ranks 10th globally with regard to the number of ransomware attacks. In fact, the country ranks second in the Japan and Asia-Pacific region.   is well aware of the threat environment it is operating in. According to a survey by PwC, around 80 per cent of Indian organisations are likely to increase their cybersecurity budget in 2022. According to Gartner – a technological research and consulting firm based in the US– end-user spending on security and risk management in India is forecast to touch 2.6 billion dollars in 2022, which would amount to an increase of 9.4 per cent from 2021.  Gartner’s research has found that there is a significant shortage of skilled cybersecurity professionals in the country. As a result, end-user organisations in India often go to security service providers to meet their cybersecurity objectives. Therefore, spending on security services is forecast to be 1 billion dollars in 2022, which is the highest among all segments. This will be followed by spending on network security equipment and infrastructure protection. India Inc is going to become an even more target-rich environment for malicious actors owing to the digital leap many firms took due to the pandemic. At the end of the day, a c

Last week, Apple informed its customers in India that it will no longer store their card information on file and will not be accepting payments made by debit cards and credit cards for purchases or subscriptions on the App store or other Apple services in light of the upcoming RBI regulations.  It will still be accepting payments through UPI. The decision of the US giant surprised many. But not those who are scrambling to meet the RBI deadline on tokenisation of cards which is June 30, 2022. Come July 1, merchants, payment aggregators, payment gateways and acquiring banks can no longer store the card details of customers. Only card issuing banks and card networks can store the actual card data.  With businesses still reeling with the disruption caused by RBI’s rules for card-based recurring payments that came into effect January 1 this year, another storm is brewing for them. Businesses and other entities that have stored any such data will have to purge them and apply tokenisation. Tokenisation is the replacement of a card number with an alternative code called the “token”. Once created, the tokenised card details will be used in place of the actual card number for online purchases initiated or instructed by the cardholder. A tokenised card transaction is considered safer as the actual card details are not shared with the merchant during transaction processing. It will cut the chances of card information leakage. For transaction tracking and reconciliation purposes, entities can store the last four digits of card number and card issuer’s name. The customer’s consent and OTP-based authentication is required for creating a token. A customer can, however, still choose not to tokenise his or her card. In such a case, customers will have to enter complete card details everytime they make a payment. This could lead to a decline in revenues for merchants as a significant number of conversions happen through saved cards. First RBI deadline to tokenise the card details was June 30, 2021. But at the request of merchants and payment aggregators, as well as card companies and banks, it was extended to December 31, 2021. And the deadline was again extended by six months. Earlier this month, Paytm said it had tokenized 2.8 crore cards across Visa, Mastercard and Rupay, accounting for 80% of monthly active cards on the the app. Other businesses are also nudging users to tokenize their cards in order to enjoy a seamless experience from July 1.   For instance, everytime a user opens the Swiggy app, he is greeted with a message at the bottom of the screen to secure his cards before June 30.  PayU, Razorpay, PhonePe, Worldline, Cashfree Payments and Pine Labs are among the companies that have come up with tokenisation solutions to help businesses transition to the new framework. Khilan Haria, VP and Head of Payments Product, Razorpay told Business Standard said that Visa, Mastercard, Rupay and Diners Club have gone live on its tokenisation platform with American Expresses expected to go live soon. However, it is not just card networks, but card issuing banks too have to come onboard.  With just about five weeks to go, where does the payments ecosystem stand in terms of its preparedness? Speaking to Business Standard, Khilan Haria, VP and Head of Payments Product, Razorpay says, he doesn't expect any large scale disruptions from July 1. According to him, 100% of Razorpay merchants are live on its tokenisation solution, and post tokenisation, card networks are ready to process transactions at scale. Majority of the banks are also expected to be ready, he added. Meanwhile, a lack of compliance by banks with RBI’s rules on recurring payments is already leading to a large number of recurring transaction failures.   Razorpay’s Haria said it would take about 6-9 more months for reaching the stabilisation phase where coverage would be near complete. Several banks are yet to integrate with m