Welcome to Daily Banking Digest, your premier source for the latest news and insights on March 03, 2024, focusing on banking, the economy, and finance. Our platform offers a comprehensive overview of the day’s most critical financial stories, market trends, and economic developments. Whether you’re a professional in the financial sector, an investor monitoring market movement, or someone interested in staying informed about the economic landscape, Daily Banking Digest provides reliable, up-to-date information.
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Table of Contents
5 statistical tools for stock market investing
Statistical measures provide valuable insights into market behavior and risk management for equity investors. Key measures include arithmetic mean, standard deviation, beta, alpha, and correlation. These tools help assess stock performance, volatility, systematic risk, risk-adjusted returns, and portfolio diversification.
Key Points
Arithmetic Mean – Represents the average of all analyst estimates for a company’s earnings. – Provides a snapshot of the central tendency of a set of values. – Limitations: Treats all data points equally, can be influenced by outliers.
Standard Deviation – Measures the volatility of a stock’s price movements. – A high standard deviation indicates high volatility, while a low standard deviation indicates stable price behavior. – The three-sigma rule states that 95% of data falls within two standard deviations from the mean. – Limitations: Considers only historical data, may not reflect future performance.
Beta – Assesses the systematic risk of a stock compared to the broader market. – A beta greater than 1 indicates higher volatility than the market, while a beta below 1 indicates lower volatility. – Limitations: Based on past data, may not accurately reflect future performance.
Alpha – Measures a stock’s risk-adjusted returns. – A positive alpha indicates excess returns beyond market returns, while a negative alpha indicates underperformance. – Limitations: Relies on model assumptions, sensitive to data quality, short-term focus.
Correlation – Measures the relationship between the returns of two stocks or assets. – A positive correlation indicates that prices move in tandem, while a negative correlation indicates that prices move in opposite directions. – Limitations: Does not imply causation, can be influenced by coincidental factors.
WTO MC13 in Abu Dhabi collapses with no deals in agriculture, fisheries
The 13th WTO Ministerial Conference (MC13) in Abu Dhabi ended without an agreement on fisheries or agriculture. However, countries agreed to extend the e-commerce moratorium on customs duties for two years. India expressed satisfaction with the outcome, as it protected its policy space for farmers and fishers.
Key Points
Fisheries – Negotiations collapsed, leaving Indian fishers with their subsidies intact. – Rich nations and China, with large-scale distant water fishing fleets, also retained their subsidies.
Agriculture – India failed to secure a permanent solution for public stockholding for food security. – Other issues, such as domestic subsidy and market access, were not brought back to the negotiating table.
E-commerce – The e-commerce moratorium on customs duties was extended for two years. – India was not fully opposed to the extension, but developing countries need to prevent further extensions.
Investment Facilitation for Development – India successfully defeated attempts to bring the China-led pact into the WTO framework.
Public Stockholding for Food Security – India and other developing countries failed to secure a permanent solution. – India has a peace clause protecting it from legal action, but it has onerous conditions.
Special Safeguard Measures and Cotton Subsidies – Decisions on these issues were not delivered.
Global South Farmers – The WTO failed to address the demands of farmers in the Global South for more policy space.
Byju’s founder, Raveendran, has expressed concern over the company’s inability to pay salaries due to a dispute with investors. The funds raised through a rights issue are currently locked in a separate account at the behest of key investors, preventing Byju’s from accessing the funds. The National Company Law Tribunal (NCLT) has directed Byju’s to keep the proceeds from the rights issue in a separate account until the disposal of the case with investors.
Key Points:
Financial Situation: – Byju’s is unable to pay salaries due to a dispute with investors. – Funds raised through a rights issue are locked in a separate account.
Investor Dispute: – A select few investors have prevented Byju’s from utilizing the funds raised. – Investors have alleged mismanagement and failures by the founder and CEO. – Shareholders have voted to remove the founder and his family from the board.
NCLT Order: – NCLT has directed Byju’s to keep the proceeds from the rights issue in a separate account. – NCLT has asked Byju’s to consider extending the closing date of the rights issue.
Rights Issue: – The rights issue is scheduled to close on Wednesday. – Investors have sought a stay on the rights issue, calling it illegal. – Byju’s management has indicated that the rights issue will close as scheduled.
Shareholders vs Founder: – Shareholders have voted to remove the founder and his family from the board. – Byju’s has called the voting invalid and ineffective. – Investors have alleged financial mismanagement and compliance issues.
Give up Moody & Poor standards: Nilesh Shah
India’s engagement with global rating agencies has been unsuccessful in improving its sovereign credit rating, despite strong economic indicators. However, India has made significant progress in engaging with bond and equity index agencies, resulting in inclusion in benchmark indices and increased foreign investment.
Key Points:
Sovereign Credit Rating:
- India’s sovereign credit rating remains a notch above speculative grade, despite having more forex reserves than net forex debt.
- Global loan and bond markets have historically priced India’s risk lower than its assigned ratings.
- India has failed to convince rating agencies to improve its ratings.
Bond Index Inclusion:
- India has been included in benchmark bond indices on its own terms, including a fully accessible route for gilts.
- This inclusion is expected to bring significant active and passive flows into India’s debt market.
- It sets a precedent for inclusion in other bond indices.
Equity Index Inclusion:
- India’s weight in the EM Index has increased from 8.2% to 18.2%, while China’s weight has decreased from 30.3% to 25.4%.
- This is due to active engagement with index agencies and investors, as well as India’s market outperformance.
- India has protected FPI funds invested in India and ensured higher allocation from future FPI flows.
Future Engagement:
- India should continue to engage with index agencies to upgrade South Korea from an EM to DM in the index.
- India should also ensure HDFC Bank is included in the index at a full weight.
Indian expatriates in the tech sector are increasingly exploring job opportunities back home due to India’s resilience to the global tech slowdown. Recruitment firms report a surge in inquiries from Indian expats seeking employment in India.
Key Points:
1. Increased Queries from Indian Expats: – Sharp increase in inquiries from Indian expats in the last couple of months. – Over 38,000 “accessible active Indian expatriate talent” currently seeking options with Indian employers.
2. Market Uncertainties and Layoffs: – Continuing market uncertainties, layoffs, and reduced recruitment by large global companies are driving the trend. – High cost of living in western countries also a factor.
3. Focus on Senior Professionals: – Active jobseekers primarily from IT services, consulting, and engineering sectors. – Senior professionals, such as heads of product, engineering, and CTOs, are actively considering relocation to India.
4. Surge from Multiple Countries: – Inquiries not only from the US but also from European countries and Singapore. – However, expats are not in a rush to return.
5. Junior and Mid-Level Employees: – Many employees seeking to return are in the junior to mid-level. – IT slowdown in other countries pushing this talent pool back to India.
6. Global Roles in India: – India becoming a base for global roles at MNCs. – Pay difference between local and US locations becoming negligible, making India an attractive option.
Viacom18-Star merger may face intense CCI scrutiny
The proposed merger between Viacom18 and Star India is likely to face intense scrutiny from the Competition Commission of India (CCI) due to its potential impact on the media and entertainment sector. The combined entity’s dominance in TV broadcasting and streaming could raise concerns about market concentration and competition.
Key Points:
Market Share: – Star-Viacom18 has over 40% viewership share in TV broadcasting, with a strong presence in Hindi, Marathi, Bengali, and Kannada markets. – Disney+ Hotstar is India’s largest streaming platform with 38 million subscribers.
Competition Concerns: – The CCI may investigate the combined entity’s ability to increase advertising rates and bargaining power with distribution platforms. – The merger could lead to divestment of assets, particularly TV channels, to address concerns about market dominance.
CCI Scrutiny: – The CCI typically conducts detailed investigations when combined market shares exceed 40-50%. – The Sony-Zee merger precedent suggests that the CCI may impose conditions or require divestments to mitigate competition concerns.
Investment and Valuation: – Reliance Industries will invest Rs 11,500 crore in the joint venture. – The JV is valued at Rs 70,352 crore post-money, excluding synergies.
Ownership Structure: – RIL will own 16.34% of the JV. – Viacom18 will own 46.82% of the JV. – Disney will own 36.84% of the JV.
India-Nepal enhance financial cooperation; digital payment to be inaugurated soon
Nepal’s Ambassador to India, Shankar Sharma, has welcomed the Reserve Bank of India’s (RBI) new guidelines that facilitate financial transactions between India and Nepal. These guidelines allow Nepali account holders to send up to Rs 2 lakh per transaction to Nepal under Indo Nepal Remittance Scheme, while walk-in customers can remit Rs 50,000 per transaction. Additionally, the upcoming Unified Payment Interface-Nepal Clearing House Ltd (UPI/NCHL) mechanism will further simplify cross-border payments.
Key Points:
- Transaction Limits:
- Nepali account holders can send up to Rs 2 lakh per transaction to Nepal.
- Walk-in customers can remit up to Rs 50,000 per transaction (with a limit of 12 transactions per year).
- UPI/NCHL Mechanism:
- The upcoming UPI/NCHL mechanism will eliminate the inconvenience of carrying cash for cross-border payments.
- Cross-Border Digital Payments:
- In June 2023, NPCI International Payments Limited (NIPL) and Nepal Clearing House Limited (NCHL) partnered to facilitate cross-border digital payments between India and Nepal.
- The initial focus is on inward and outward transfers between banks in both countries.
- The partnership will eventually extend to other merchant payments.
- Nepal Clearing House Limited (NCHL):
- NCHL is designated by the Nepal government to facilitate cross-border payments.
- It has a 10% investment from Nepal Rastra Bank and 90% from commercial banks.
MP strives to double its share in GDP with Rs 1 trn investment drive
Madhya Pradesh aims to double its contribution to India’s GDP through favorable policies and comprehensive development. The state’s agriculture sector has witnessed significant growth, and the government now seeks to accelerate manufacturing and industry. The Regional Investor Conclave in Ujjain attracted investment commitments of nearly Rs 1 trillion, including a substantial investment from the Adani Group. The state government is committed to fostering a conducive business environment while ensuring socio-economic progress for all.
Key Points:
1. GDP Contribution: – Madhya Pradesh aims to double its contribution to India’s GDP. – The state’s current contribution stands at around 4%.
2. Industrial Growth: – Agriculture has been a strong growth driver for Madhya Pradesh. – The government now seeks to accelerate manufacturing and industry.
3. Investment Commitments: – The Regional Investor Conclave attracted investment commitments of almost Rs 1 trillion. – The largest investment came from the Adani Group, totaling Rs 75,000 crore.
4. Adani Group Investments: – The Adani Group plans to invest Rs 75,000 crore in Madhya Pradesh. – The investment will focus on infrastructure, clinker production, cement grinding, and other sectors.
5. Government Support: – The state government is committed to creating a conducive business ecosystem. – It is open to tweaking policies based on stakeholder consultation.
6. Land Allotments: – The Chief Minister issued land allotment letters for 508 hectares of land to 283 industrial groups. – These investments are expected to create over 26,000 new jobs.
7. Unit Inaugurations: – The Chief Minister inaugurated 61 industrial units remotely. – These units will create over 17,000 new jobs in the state.
Protection for Indian farmers, fishermen ensured at WTO MC 13: Piyush Goyal
At the 13th World Trade Organisation (WTO) Ministerial Conference, India’s Union Minister Piyush Goyal emphasized the nation’s successful navigation of critical issues, safeguarding the interests of farmers and fishermen. India’s primary objective was to shield these sectors from adverse consequences, and it successfully prevented any decisions that could harm them. The conference welcomed two new member countries and made progress on several contentious issues, including the importance of restoring the appellate body for dispute resolution. India stressed the need for policy space for its farmers and fishermen and highlighted the digital divide between developed and developing countries in e-commerce.
Key Points:
India’s Success at WTO Ministerial Conference: – India successfully navigated critical issues, safeguarding the interests of farmers and fishermen. – India prevented any decisions that could harm these sectors.
Outcomes of the Conference: – Two new member countries were welcomed. – Progress was made on several contentious issues. – India retains full policy space for the benefit of its farmers and fishermen.
Importance of Appellate Body: – Goyal emphasized the need to restore the appellate body for dispute resolution. – Without an appellate body, disputes cannot be taken to completion.
India’s Stance on E-commerce: – India stressed the need for policy options to promote digital industrialization. – India highlighted the digital chasm between developed and developing countries in e-commerce. – India called for a re-examination of the moratorium on customs duties on electronic transmissions.
India’s Digital Transformation: – India’s digital transformation is powered by innovation and speedy implementation. – India is promoting innovation and democratizing technology through the Digital Public Infrastructure (DPI) approach.
WTO Membership: – WTO now has 166 member countries, including India. – Timor-Leste and Comoros have been added as members.
Less than 3% of India’s population now living under extreme poverty: World Poverty Clock
India has achieved a significant milestone in its fight against poverty, with the World Poverty Clock indicating that extreme poverty has fallen below 3% of the population. This aligns with the United Nations’ Sustainable Development Goal of eradicating extreme poverty by 2030.
Key Points:
Extreme Poverty Reduction: – India’s extreme poverty rate has dropped to less than 3%, according to the World Poverty Clock. – This is a major step towards achieving the UN’s first Sustainable Development Goal.
Validation of NITI Aayog’s Findings: – The World Poverty Clock’s data supports NITI Aayog’s estimate that less than 5% of Indians are now below the poverty line.
World Poverty Clock Methodology: – The World Poverty Clock uses a $2.15 per day income threshold to define extreme poverty. – It provides real-time poverty estimates for nearly every country in the world.
Multidimensional Poverty Decline: – A NITI Aayog study shows that multidimensional poverty in India has declined from 29.17% in 2013-14 to 11.28% in 2022-23.
International Poverty Line: – The $2.15 per day poverty line is used to track progress towards the World Bank’s goal of reducing extreme poverty to less than 3% by 2030. – The UN’s SDG target 1.1 aims to eliminate poverty at this level by 2030.
Google reinstates popular Indian apps in Play Store, government says delisting cannot be permitted
Google has reinstated several Indian apps on its Play Store after they complied with the company’s billing policy. However, some apps remain delisted, prompting the Indian government to intervene and call for a meeting with stakeholders.
Key Points:
Google Reinstates Apps: – Google has reinstated several Indian apps, including those from Info Edge and Shaadi.com, after they complied with the Play Store billing policy.
Apps Remain Delisted: – Apps such as QuackQuack, TrulyMadly, and Stage continue to be delisted and unavailable on the Play Store.
Government Intervention: – IT and Telecom Minister Ashwini Vaishnaw has asserted that delisting of Indian apps cannot be permitted and has called for a meeting with stakeholders on Monday.
Stakeholder Reactions: – Anupam Mittal of Shaadi.com expressed concern that apps are back without billing, which could harm the consumer side of the business. – Sanjeev Bikhchandani of Info Edge confirmed that the company’s apps are back on the “consumption model.” – Lal Chand Bisu of Kuku FM requested the government to include both parties in the discussion. – Vinay Singhal of STAGE confirmed that the app remains delisted on the Play Store.
Google’s Billing Policy: – Google’s Payment Policy requires developers to use one of three billing options: consumption-only basis, Google Play’s Billing System, or an alternative billing system.
Navy to commission a new base INS Jatayu on Minicoy Island on March 6
The Indian Navy will establish a new base, INS Jatayu, on Minicoy Island in the Lakshadweep Islands on March 6th. This move aims to enhance security infrastructure in the strategically important region, which lies along vital Sea Lines of Communications (SLOCs). The base will be expanded over time to accommodate aircraft carriers and support anti-piracy and anti-narcotics operations in the Western Arabian Sea.
Key Points:
1. Establishment of INS Jatayu: – New naval base to be commissioned on Minicoy Island on March 6th. – Named INS Jatayu.
2. Strategic Importance: – Minicoy Island is the southernmost island of Lakshadweep, straddling vital SLOCs. – The base will enhance security infrastructure in the region.
3. Expansion Plans: – The base will be expanded over time to accommodate aircraft carriers.
4. Operational Capabilities: – The base will enhance the Indian Navy’s operational reach and capabilities in the islands. – It will support anti-piracy and anti-narcotics operations in the Western Arabian Sea.
5. Government Focus: – The establishment of the base aligns with the government’s focus on comprehensive development of islands.
6. Second Naval Base in Lakshadweep: – INS Jatayu will be the second naval base in Lakshadweep, after INS Dweeprakshak in Kavaratti.
7. Capacity Building and Development: – The base will contribute to capacity building and comprehensive development of the island territories.
New PRP Act 2023 comes into effect, registration of periodicals goes online.
The Press & Registration of Periodicals Act, 2023, and its Rules have replaced the Press & Registration of Books Act, 1867, effective March 1, 2023. The new Act introduces an online system for registering newspapers and periodicals through the Press Sewa Portal, eliminating manual processes and reducing hardships for publishers.
Key Points:
Press Sewa Portal:
- Online system for registering newspapers and periodicals.
- Replaces manual processes and multiple approvals.
- Offers e-sign facility, digital payment gateway, and QR code-based digital certificates.
New PRP Act:
- Removes books and journals from the purview of registration.
- Defines periodical as a publication containing public news or comments on public news.
- Requires all applications for registration to be made online through the Press Sewa Portal.
Benefits of Online Registration:
- Paperless processing.
- Reduced discrepancies in applications.
- Faster processing times.
- Transparent and timely updates on application status.
Amit Shah inaugurates National Urban Cooperative Finance and Development Corporation
Cooperation Minister Amit Shah inaugurated the National Urban Cooperative Finance and Development Corporation Limited (NUCFDC), emphasizing the importance of inclusive development and the need for an apex body for Urban Cooperative Banks (UCBs). NUCFDC aims to enhance the professionalism and adherence to regulations within the UCB sector, with a focus on expanding access to banking services and reducing net NPA rates.
Key Points:
1. Importance of Inclusive Development: – Development should not be measured solely by numbers but by the participation of all citizens.
2. Establishment of NUCFDC: – NUCFDC is the apex body for UCBs, formed after nearly 20 years of efforts. – It has received RBI approval as a non-banking finance company and self-regulatory organization.
3. Objectives of NUCFDC: – Help UCBs comply with Banking Regulations Act and enhance professionalism. – Expand access to banking services in unrepresented areas. – Upgrade UCBs with ATM facilities, credit/debit cards, and other modern banking practices.
4. Current Status of UCBs: – Over 1,500 UCBs with 11,000 branches nationwide. – Deposit base of ₹5 lakh crore and credit base of ₹3.50 lakh crore. – Net NPA rate of 2.10%, with potential for further reduction.
5. Funding and Support: – NUCFDC aims to achieve its paid-up capital target within a year. – National Cooperative Development Corporation (NCDC) has committed ₹200 crore. – RBI’s confidence in UCBs depends on their ability to meet paid-up capital requirements.
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