Put-Call ratio (PCR) indicates the mood of the market.
The increasing PCR, or being higher than 0.7 or surpassing 1, means traders are selling more Put options than Call options, which generally indicates the firming up of a bullish sentiment in the market. If the ratio falls below 0.7 or moves towards 0.5, then it indicates selling in Calls is higher than selling in Puts, reflecting a bearish mood in the market.
Over the last few years, the Indian capital markets have seen a surge in retail activity through direct trading in markets through their accounts and indirect trading through mutual fund channels.
According to Economic Survey 2023-24, retail investors' share in the equity cash segment turnover was at 35.9% in 2023-24 (FY24). The number of demat accounts with both the depositories rose to 1,514 lakh in FY24 from 1,145 lakh in FY23.
The impact of this influx of the investors in the market is also reflected in new investor registrations with the exchanges, their share in total traded value, net investments, and ownership in the listed companies.
The registered investor base at NSE has nearly tripled from March 2020 to 9.2 crore as of March 31, 2024, potentially translating into 20% of the Indian households now channelling their household savings into financial markets.
"The significant increase in retail investors in the stock market calls for careful consideration. This is crucial because the possibility of overconfidence leading to speculation and the expectation of even greater returns, which might not align with the real market conditions, is a serious concern," said the document tabled by Finance Minister Nirmala Sitharaman in Parliament.
The survey noted that a rise in retail participation was more substantial and steadier through the indirect channel — mutual funds. The FY24 has been a spectacular year for mutual funds as their Assets Under Management (AUM) increased by ₹14 lakh crore or 35% year-over-year to ₹53.4 lakh crore at the end of FY24, boosted by mark-to-market (MTM) gains and expansion of the industry.
The total number of folios increased to 17.8 crore at the end of FY24 from 14.6 crore at FY23-end.
Some of the factors that facilitated the entry of investors included seamless technological integration, government measures towards financial inclusion, growth of digital infrastructure, rapid smartphone penetration, a rise of low-cost brokerages, the pursuit of generating income from alternative sources and lower returns generated by traditional asset classes such as real estate and gold.
The survey said that the enhanced participation of retail investors in the Indian capital market is hugely welcome and lends stability to the capital market. Also, it has enabled retail investors to earn higher returns on their savings.
Noting the interest of retail investors in the derivative market, the survey said," the derivatives are hedging instruments, they are mostly used as speculative instruments by investors worldwide. India is likely no exception".
"Derivatives trading holds the potential for outsized gains. Thus, it caters to humans' gambling instincts and can augment income if profitable. These considerations are likely driving active retail participation in derivatives trading," the Survey said.
The survey calls for raising investor awareness and continuous financial education to warn them of the low or negative expected returns from derivatives trading.
It, further, said that a significant stock correction could see losses that are more considerable for retail investors participating in capital markets through derivatives.
"Investors’ behavioural response would be to feel 'cheated' by unseen more considerable forces. They may not return to capital markets for a long time. That is a loss to them and the economy," it added.
Source: The Hindu
An OFS in an IPO is seen as a double-edged sword, where on one
hand, it provides an opportunity for existing shareholders to cash in on the
early investments. On the other hand, it doesn't bring any new funds to the
company for strategic growth initiatives, unlike a fresh equity sale that could
be used to fund growth opportunities.
An uptick in manufacturing activity a decade since the launch of the Make in India initiative notwithstanding, India's integration with global value chains faces some challenges.
Global value chain (GVO-related rade, a measure of a country's participation in the multi-stage trade process, accounts for more than half of the gross trade in India's manufacturing sector. And despite an uptick in the ratio in other sectors as well, India's total GVC-related trade lags behind Vietnam and Russia (Charts 1, 2).
One of the stated objectives of the Make in india initiative was to boost manufacturing activity and improve investments in the sector. Manufacturing contributes less than a fifth of india's gross domestic product, a ratio that has remained unchanged since 2013-14. In the decade ending in 2022, India's manufacturing output per capita grew at a compound annual growth rate of 5 per cent.
However, Bangladesh, Vietnam, and China grew at a faster pace (Chort 3). But manufacturing activity, which has picked up after the pandemic, remains robust compared to many peers from the Brics (Brazil, Russia, China, and South Africa) grouping (Chort 4). The initiative also aimed to strengthen self-reliance and boost exports.
However, India's share in the world's merchandise exports has remained stagnant despite exceeding $400 billion in the decade since the initiative was launched (Chart 5). India has taken its share of high-technology exports in total manufactured goods exported up by over 3 percentage points between 2014 and 2022, while in the same period, China has seen a drop of over 6 percentage points.
The share of India's overall high-technology exports, though, remains small compared to China,Vietnam, and the global average (Chart 6).
Source Sameer Want/Statsguru
Two wheeler segment witnessed YoY decline of 8.51%, driven by weak consumer sentiment, low inquiries, and delayed purchases due to heavy rains and seasonal factors like Shraddh
Passenger Vehicles like cars, SUVs witnessed Steep YoY decline of 18.81%.
Commercial vehicle witnessed YoY decline of 10.45%, with only marginal Month on month growth of 1.46%, reflecting subdued market conditions and weak government spending
Three wheelers and tractor segments reported Marginal growth of 0.66% YoY and 14.69% YoY respectively, attributed to positive customer engagement and increasing demand for e-rickshaw options
Passenger Vehicles (PV) Dealers are facing all time high inventory levels of 80-85 days, equivalent to 7.9 lakh vehicles worth ₹79,000 crore due to aggressive OEM dispatches. Dealers are under financial pressure, with increased cash flow challenges
FADA urges the RBI to issue stricter guidelines on channel funding policies to mitigate the financial risk faced by dealers.
FADA said it is “Cautiously Optimistic” on the overall outlook. “While the festive season presents an opportunity for recovery, the high stakes in October make it crucial for dealers and OEMs to clear existing inventory. Strategic inventory management and targeted festive promotions are key to capitalizing on the expected surge in demand and stabilizing market conditions,” it said.
Source: The Hindu
Nearly a quarter century after investors formed a private corporation to build and manage a hillside resort four hours from Mumbai, just 5,000 people linger in the derelict shadow of what was meant to be the first of several picturesque enclaves, housing 300,000 in total.
For the hapless residents — and the homebuyers waiting to move in — more bad news came last week. The bankruptcy court sent packing the only rescuer of Lavasa Corp. to have kindled some hope in six years of insolvency. Creditors will start their hunt for a white knight all over again.
Situated in the Sahyadri mountain range along the country’s western coast, Lavasa was supposed to be India’s answer to Portofino, the popular tourist destination on the Italian Riviera. Other such capitalist oases were to follow suit, for the well-heeled to circumvent the poor state planning and administrative apathy that plague urban living in India.
Yet for all its promise, the project bombed after completing a fifth of its first phase. It is mired in about $1 billion in liabilities, most of which are to financial institutions. The homeowners who never got the keys lost $63 million in lease advances. Those who did make Lavasa their home live in a crumbling ghost town: In landslides during this year’s rains, three villas vanished. Two electricians were trapped inside one of them.
Lavasa is a cautionary tale. The Indian state has little money and even less executive capacity and political will to give the people of its polluted, overpopulated megalopolises the breathing spaces and retirement communities they yearn for. Mumbai has 22 million inhabitants; Delhi is home to 34 million. The tech hub of Bengaluru has a population of 14 million and is growing a lot faster than Silicon Valley.
But the private sector has no magic wand, either. An entire city built and managed by investment capital was ambitious when it was conceived. It remains an impossible dream even now. India’s bankruptcy law, brought in with much fanfare in 2016 to salvage the precious capital trapped in grandiose, debt-fueled undertakings like Lavasa, is failing to make headway even with state-run creditors accepting 80% haircuts.
Mumbai builder Ajit Gulabchand’s HCC Real Estate Ltd., or HREL, was the original 69% owner. HREL, as well as other large shareholders, had raised debt for the venture by offering guarantees and share pledges. By May 2018, however, Lavasa had defaulted. A Bloomberg News article from the time paints a picture of decay and defeat: crumbling sidewalks; garbage rotting in the lake; a shell of a hotel in construction for seven years; and a resigned Gulabchand estimating the cost of revival at $1.5 billion.
That he wasn’t going to be a part of the solution became clear soon. In August 2018, the project slipped into bankruptcy. Gulabchand lost control of the township to an administrator. The banks played along, preferring to recover 60 billion rupees ($700 million) of claims via the sale of Lavasa. They didn’t enforce the guarantees. In July 2023, the insolvency tribunal cleared the sale to a new owner while releasing all securities and pledges, allowing more than $900 million of HREL’s assurances to just disappear. In March this year, Guabchand’s Hindustan Construction Co. divested its shareholding in HREL for $12,000. The guarantee had already gone, and now the guarantor, too, had left the building.
Hindustan Construction shares have jumped nearly 12-fold since March 2020. Other stakeholders weren’t as lucky. Few had ever heard of Darwin Platform Infrastructure Ltd., the savior chosen by the lenders. The new-owner-in-waiting lost no time in getting into trouble with India’s anti-money-laundering sleuths. It never completed the insolvency resolution from which the creditors were hoping for $137 million over nine years — a fraction of what they were owed.
Eventually, the lenders soured on Darwin, which, in turn, accused them of illegally pocketing the surety it had put up against concluding the purchase. Last week, the tribunal came down on the creditors’ side. The sale process will begin afresh. More years will be added to the decade-long wait for the hundreds of fully constructed new houses the suitor had promised.
The owners of mansions and apartments, some of whom are former ministers, movie stars, judges, businessmen and top bureaucrats, no longer dream of living alongside golf courses, amusement parks, a NASA research center, and a campus of Oxford University’s Said Business School. It’s only because of a desolate old-age home, and a college — Christ University of Bengaluru, not Oxford — that the town has a population. In a cruel twist on Danny Boyle’s Oscar-winning Slumdog Millionaire, Lavasa has taken rich people’s retirement savings and given them a shantytown to slum it out. A resident told me his wife had to carry an umbrella to the bathroom during this year’s monsoon.
The arc of the bankruptcy law in India bends toward power, not justice. And here, there is a power vacuum. The deadline for putting farmland to commercial use has come and gone. The environmental clearance has expired. Politicians have lost interest. Capturing power in crucial state polls later this year is their priority, not a project that has no more contracts to award.
So creditors could consider liquidating Lavasa Corp., and handing over management to the municipal authority of Pune, the nearest large city. Or, with a little imagination, they could turn their dying investment in 10,000 acres of land acquired from farmers — plus the manmade lake leased from a government agency— into a community of rain-swept idylls. Let individuals construct their cottages, with the infrastructure supplied by a people’s collective, rather than by a company or the government.
Lavasa won’t be among the 100 “smart cities” promised by Prime Minister Narendra Modi. Does it even need to be? A smart village is a better destiny, and a superior alternative to a bankrupt, half-finished city where only a forlorn street is named after Portofino.
