SUNDAY WEEKLY ISSUE #27

Hello EveryFinions,

There are times when I check google trends to find out what is the in-thing in India right now – just so I don’t miss out. This week, on the 31st of March, the top 3 google searches from India were – “Good Friday” (totally makes sense), “April Fool Jokes” (Really, we rely on google for April fool jokes?) and wait for it…"Aadhar PAN Link”. It wasn’t on that list on the 29th, not on the 28th, not on the 27th, not on the 26th…I could go on. But you get the point. The 31st of March happened to be the last day for linking Aadhar and PAN! And we, as a country, waited for the very last day to find out how to sort this out.

In managing our personal finances and retirement funding however, waiting for the last day to figure out is not a great idea. By then, it is usually too late. I hope you would give your friends and family a nudge to get them started on this journey sooner, rather than later. Reading our Sunday newsletters is a good place to start, won’t you agree? 🙂

IN TODAY'S NEWSLETTER

• News in brief
• Quiz, thought for the day, crypto news
• Soundbites - That's what they said

• Cover story - Rs.10,000 Crores in Funding, Rs.4,500 Crores in Revenue

• In case you missed it - Equity Trading Strategy - Systematic Sector-Rotation

MARKET UPDATE (WEEK ON WEEK CHANGE)

NEWS IN BRIEF

• The Indian government asked state owned refiners IOC, BPCL and HPCL to look for oil supplies outside the middle east region. India has been asking Saudi Arabia to increase oil production while the de facto OPEC leader has paid no heeds. Over 60% of India’s oil needs are currently met by the middle east. The country is the third largest consumer of oil behind US and China and hopes that its collective buying power should make it possible to get better deals. We hope so too!

• The finance minister ‘withdrew’ a decision to reduce interest rates on small savings accounts pretty much overnight sighting ‘oversight’. While bank FD interest rates have fallen in line with RBI’s rate reductions, interest rates on small savings accounts have remained higher and stable since April 2020. On Wednesday this week, the finance minister announced that these interest rates will go down by as much as 1.1%. Only 12 hours later, this was withdrawn.

• In a similar vein, Pakistan, which on Wednesday announced that it will resume trade with India, ‘withdrew’ the decision on Thursday. Trade between India and Pakistan came to a stop when the Indian government unilaterally decided to scrap Article 370 (giving special status to J&K) from the constitution. Foreign minister Qureshi said, ‘it will not be possible to normalise relations with India till India reviews the unilateral steps it had taken on August 5, 2019’.

• Data released by the CMIE (Centre for monitoring Indian economy) this week suggests that overall unemployment rate in the country fell from 6.9% in February to 6.52% in March 2020. While urban unemployment rose to 7.24% from 6.99% in Feb, rural unemployment rate fell from 6.86% to 6.19%.

• Hindustan Aeronautics Limited (HAL) announced results for the quarter and year ending March 2021. Revenue for the year was at its all-time high of Rs.22,700 crores (What pandemic?). Its cash balance swelled to Rs.6,700 crores against its total borrowings of about Rs.5,775 crores. HAL’s stock price gained by about 4.5% on Thursday’s closing.

SOUNDBITES - THAT'S WHAT THEY SAID

• "Unlike a year ago, there are several voices that suggest that a lockdown is not a solution. Efficient administration of inoculations along with sustained discipline in maintaining physical distance is a better strategy than a draconian lockdown. The livelihood cost of a lockdown is too high," – Mahesh Vyas, CEO, CMIE (Centre for monitoring Indian economy)

• “We have no plans to exit our India business. Any speculation suggesting otherwise, or any rumours around sale of business in India are incorrect and simply that-rumours”. – Sanjay Sapre, President, Franklin Templeton India, in a letter to investors.

• “This 2-Hour Delivery service will let customers order fashion late in the evening and wear it to office next day or order a new dining set in the afternoon and serve on it to guests at dinner get-together. At Big Bazaar we wanted our customers to enjoy instant home delivery for almost every product.” Kishore Biyani, Founder & CEO, Future Group said in a statement about the company’s new 2-hour home delivery policy.

QUIZ

Name the country with the highest gross national highest rate (personal savings, business savings & government savings) as measured by % of GDP?

COVER STORY

Rs.10,000 crores in VC Funding, Rs.4,500 crores in revenues

You know all of those discounts that Swiggy has been offering – 50% off momos, 60% off for new users and others? Well turns out, the wealthy private equity investors have been footing the bill. Swiggy had to raise Rs.10,000 crores in the last 5 years just so they can clock in Rs.4,500 crores in revenues. 

This week, we were busy analysing Swiggy's financial statements submitted to the Ministry of Corporate Affairs in India. And the numbers, are mind-numbing. Take a look at it yourself.

IN CASE YOU MISSED IT...

Equity Trading Strategy - Systematic Sector-Rotation

Heuristic (rule-based) based equity trading strategies have existed for well over 50 years. The advent of powerful computation tools and the availability of data has only accelerated research on these criteria-based trading models. Large hedge funds like Renaissance Technologies generate several terabytes of data each day and run advanced quantitative models to select stocks.

One such approach is the systematic sector-rotation strategy published by two Italian academics - Paolo Sassetti and Massimiliano Tani. The paper was originally published in 2003 and has been quoted in various subsequent research on this subject. At its heart, the ideas comprised in it are quite simple.

• At different points on the economic cycle, different sectors (and their stocks) tend to perform well.
• Momentum based trading strategies make higher returns than the benchmark.

We apply this trading strategy to the Indian context and find exceedingly positive backtest results. Hit the link to read more.

IN CRYPTO NEWS

• Coinbase, US’ largest Cryptocurrency exchange, received approval from the SEC this week to list in NASDAQ.

• Visa announced that it would allow the use of Cryptocurrency called “USD Coin” for payments. USDC is a stable coin which is backed by the US dollar. It maintains its price at 1 USDC per USD. Some say that stable coins are the future.

ANSWER TO QUIZ

Republic of Ireland

Is the country with the highest gross national savings rate as measured by % of GDP (56%). Gross national savings is defined as gross national disposable income minus final consumption expenditure. India is 39th on that list of highest savers with a savings rate of about 30% as of 2017. On the other hand, the top 3 countries with the highest personal savings are Luxembourg, Switzerland and Sweden.

THOUGHT FOR THE DAY

Like the COVID crisis, Carlos?

READ/WATCH/LISTEN

• Where to invest $100,000 right now. Here is a take. Bloomberg

• The meteorite that killed the dinosaurs created the Amazon rain forest. Who would have known! Scientific American

From the writer in me, to the reader in you ♥

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