Category: CAGR Insights – weekly newsletter curated by Kshitiz

CAGR Insights is a weekly newsletter full of insights from around the world of web.

Index	17-Feb-23	10-Feb-23	Change (%)
Nifty 50	17,944	17,856	0.49
Nifty 500	15,003	15,015	-0.08
Nifty Midcap 50	8,658	8,771	-1.29
Nifty Smallcap 100	9,417	9,526	-1.14

Gyaan of the week

What are Arbitrage Funds?

Arbitrage funds are the funds where fund manager buy and sell securities in different markets. The main objective of the fund manager is to exploit the price differences and generate the profit. The investor here can expect the returns same as short term debt returns. The taxation in arbitrage funds is treated same as Equity mutual funds. In Volatile market conditions, arbitrage funds can be a good fit as they can generate good returns by taking less risk. The time horizon for an investing in arbitrage funds should be minimum 3 months.

Here’s the list of curated readings for you this week:

Personal Finance

• Index Fund or ETF? –  In terms of cost (Expense Ratio), ETFs are cheaper than Index Funds (even after accounting for transaction costs that investors will have to bear if ETF units are bought on exchanges). However, an important point of distinction is the liquidity of ETFs on exchanges and thus, the resultant impact cost. Read here.

Investing

• AIA Engineering – Stocks in Baat – Our investment thesis on the world’sSecond Largest Hi-Chrome casting producer. Read here

• Factor Investing primer –DSP MF – Factors are the building blocks of investing. They are persistent drivers of long term excess returns that research has proven to be time tested across geographies and asset classes. Understanding how factors work can help investors to make more informed decisionsRead here

• When ‘Loss Aversion’ Meets ‘Time Horizons’ in Equity Investing – A short-term (sub-3-years) horizon-focused investor tends to be perennially unhappy despite her portfolio generating very healthy returns over longer time periods. In contrast, with the same portfolio and with the same returns, an investor with a longer time horizon experiences happiness. This extraordinary paradox lies at the heart of why so few investors succeed in achieving satisfactory results from investing in equity markets.  Read here

Economy

• Have investors frozen in the headlights of rising inflation and interest rates? – We think that even as inflation falls, the new normal is more like 4 percent than 2 percent. Rates will not fall back to anywhere near zero. A new era will bring new winners and losers in the market. Here are five of the ways we see tight money changing the world in 2023.  Read here

• Can India become a Lithium Superpower?– We aren’t sure if it’s an economically viable source of deposit yet. The 5.9 million tonnes is just a preliminary estimate. Read here.

• Emerging Market Insights – Global currencies started outshining the US dollar toward the end of last year, giving a boost to international equities. With the tide likely turning for emerging markets in 2023, one should look at the future outlook for emerging economies and the emerging key trends & developments for 2023. Read here.

• India’s economy and emissions primed for big jumps in 2023 – India’s electricity output scaled record highs in 2022 even though manufacturing output in key sectors remained below highs. Although the concern remains for recession likely to hit in 2023, positive expectations for India across the financial community suggest growth in businesses across all sectors leading to increased energy consumption along with a commensurate rise in emissions. Read here

• The rise in CPI inflation and the data discrepancy – Overall inflation rose to a three-month high of 6.52%, above the central bank’s comfort band of 2%-6%, raising the prospects of further interest rate hikes. Part of the sharp rise in cereal inflation last month, say economists, was due to data discrepancies. Read here.

CAGR Speak

• The curious case of MCX struggle with its Tech vendor. Read the linkedin post here.

• Encouraging women to prioritize financial independence is my personal passion project.- Shruti. Read the linkedin post here.

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Check out CAGRwealth smallcase portfolios here.

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That’s it from our side. Have a great weekend ahead!

If you have any feedback that you’d like to share, simply reply to this email.

The content of this newsletter is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information outlined in this newsletter unless mentioned explicitly. The writer may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated in this newsletter.

CAGR Insights is a weekly newsletter full of insights from around the world of web.

Index	10-Feb-23	3-Feb-23	Change (%)
Nifty 50	17,856	17,854	0.01
Nifty 500	15,015	14,962	0.35
Nifty Midcap 50	8,771	8,604	1.94
Nifty Smallcap 100	9,526	9,415	1.18

Gyaan of the week

Here’s the list of curated readings for you this week:

Personal Finance

• 10 major changes for salaries person in Budget 2023– Read here.

• No proposal on raising overseas limit for MFs yet– “Mutual funds and some of the market players have approached the RBI, and we have examined their requests, and as of now, we have not taken any positive decision on it… if we take a decision then we will inform. But as of now, no proposal has been made to increase the overseas limit,” Das said while delivering the monetary policy statement. Read here.

• Where do millionaires keep their money?–  When it comes to how millionaires pick securities within an asset class, the answer is—diversification. If you look at the investment product choices that affluent households make, you will see that the vast majority use mutual funds (which tend to be diversified), with only one third of them owning any individual securities (i.e. individual stocks) Read here.

Investing

• First-principles approach to building Quant Framework in Indian Public Equities–This is a wonderful watch, so many ideas resonate here from our own experience of building a quant model. Watch here

• ITC — The Budget Stock – Duty hike for cigarettes not a big deal. While on average, people across the world smoke 800 cigarettes a year, India’s consumption of the legal variety is just 89 cigarettes. Most folks in India still prefer other tobacco products such as beedis and ghutkas. But if the tax regime remains more or less stable and as per capita incomes rise, we might see a gradual shift to cigarettes. It’s a long shot but it’s possible. Read here

• MSCI probes free float of Adani companies – India’s Adani Group faced fresh concerns on Thursday after financial index provider MSCI said it was reviewing the free float designation of some group company securities. Read here

• Time to go overweight duration– An interesting insight from DSP MF converse – when FX reserves dip, RBI hikes. And FX reserves have been on an uptrend. Read here

• Gilt market gets rate hike right, not rest of the policy– Some sections of the market had bet heavily on the RBI hitting the brakes on its rate hike cycle. Chatter before the outcome centred on a less severe monetary policy stance to ‘neutral’ from ‘withdrawal of accommodation’. Read here.

Economy

• Tepid growth in government’s revenue expenses may not spur demand– The budget does not provide any boost to the GDP growth through the government’s revenue expenditure. Its thrust is solely on the capital expenditure. Read here.

• Robust government capex may not crowd-in private investment-   In 2020-21, the last year for which such data is available, while central and state governments together accounted for about 16 per cent of total GFCF, public sector enterprises accounted for nearly 11 per cent and private enterprises accounted for 35 percent. The largest share is held by the household sector which includes several small enterprises. Read here.

CAGR Speak

• RBI gave the Indian bond market a boost.. Read the linkedin post here.

• Some people have recently reached out asking what should they be doing as investors in the context of the Adani fiasco. Read the linkedin post here.

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Check out CAGRwealth smallcase portfolios here.

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That’s it from our side. Have a great weekend ahead!

If you have any feedback that you’d like to share, simply reply to this email.

The content of this newsletter is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information outlined in this newsletter unless mentioned explicitly. The writer may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated in this newsletter.

CAGR Insights is a weekly newsletter full of insights from around the world of web.

Index	3-Feb-23	27-Jan-23	Change (%)
Nifty 50	17,854	17,604	1.42
Nifty 500	14,962	14,874	0.59
Nifty Midcap 50	8,604	8,463	1.67
Nifty Smallcap 100	9,415	9,242	1.87

Bazaar Ki Baat

In this month’s edition of “Bazaar ki baat”, our Founders discussed in brief about the various topics related to Market, Sectors, Budget impact on Sectors and Personal Finance and New Tax Regime vs Old Tax Regime. Watch here

Gyaan of the week

Equity-linked savings scheme

Equity-linked savings scheme (ELSS) is a kind of mutual fund that offers tax deduction of up to INR 1.5 lacs a year under Section 80C provision. It has a lock-in period of 3 years, which is the shortest among other tax saving instruments and there are no provisions to make a premature exit.

One can invest any amount in ELSS, there is no upper capping, while the minimum investable amount varies across different fund houses.

Investing in ELSS funds gives you dual benefits of tax deductions and wealth creation. The portfolio of an ELSS fund mostly consists of equities, while they have some exposure towards fixed-income securities as well.

Here’s the list of curated readings for you this week:

Personal Finance

• Tax exemption removed in insurance policies with premium over Rs 5 lakh– The proposal intends to limit income tax exemption from proceeds of insurance policies with very high value Read here.

• What is Mahila Samman Savings Certificate – It’s a one-time small saving scheme for women, providing an assured return of 7.5 per cent annum. Read here.

• Capital gains cap at Rs 10 crore to hit luxury home sales – Up until now there was no such limit and typically, HNI will utilize this avenue to reduce capital gains tax liability Read here.

Investing

• MCX – Largest Commodity derivative exchange – The 4^th edition of our Stocks ki Baat series talks about India’s largest commodity derivatives exchange. The exchange has been gaining market share over the years despite some challenges. Read here

• Adani bonds hit distress levels, FPO withdrawn amid pressure over Hindenburg report– The aftermath of Adani-Hindenburg Saga continues Read here

• Hindenburg bet against India’s Adani puzzles rival U.S. short sellers– Some U.S. investors said they were intrigued about the actual mechanics of its trade, because Indian securities rules make it hard for foreigners to bet against companies there. Read here

• A shocker for the bond markets: Withholding tax to apply on listed bonds, without grandfathering – Budget changes hit the nascent corporate bond market Read here.

Economy

• India sticks to the fiscal deficit glidepath. – The government’s budget gap, which hit a high of 9.5% of GDP in 2020/21 as the spread of COVID-19 infections brought the economy to a halt, has narrowed since Read here.

• Railways get a highest ever outlay : After the push on highways for the last few years, the government is focussing on railways. Read here.

• Fed slows rate hikes even as Powell says There’s more work to do – “We think we’ve covered a lot of ground,” Powell told reporters after the meeting. “Even so, we have more work to do.” Read here.

• India defence budget disappoints –   The total Indian defence budget, estimated at about 2% of GDP, is still lower than China’s 1.45 trillion yuan ($230 billion) in allocations for 2022, which New Delhi sees as posing a threat to neighbours including India and Japan.. Read here.

CAGR Speak

• Two big tax loop-holes plugged in budget. Read the linkedin post here.

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Check out CAGRwealth smallcase portfolios here.

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That’s it from our side. Have a great weekend ahead!

If you have any feedback that you’d like to share, simply reply to this email.

The content of this newsletter is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information outlined in this newsletter unless mentioned explicitly. The writer may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated in this newsletter.

CAGR Insights is a weekly newsletter full of insights from around the world of web.

Index	27-Jan-23	20-Jan-23	Change (%)
Nifty 50	17,604	18,027	-2.35
Nifty 500	14,874	15,347	-3.08
Nifty Midcap 50	8,463	8,755	-3.34
Nifty Smallcap 100	9,242	9,569	-3.42

Gyaan of the week

Most ETFs or Exchange traded funds track indices, meaning they aim to match the performance of a list of stocks or bonds such as the Nifty 50 Index or the Bharat Bond ETF. ETFs are similar to stocks which can be bought and sold at a price prevailing at the time of transaction. There are different types of ETFs like Index ETFs, Fixed Income ETFs, Commodity ETFs, Foreign market ETFs, etc.           

ETFs are cost- efficient as ETFs have a lower expense ratio compared to actively managed funds. ETFs are passively managed so they tend to reduce the managerial risk involved in active mutual funds.  Further, ETFs are only available on stock exchanges, so you need to have a demat account to trade them, while for index mutual funds you don’t need a demat account.

Here’s the list of curated readings for you this week:

Personal Finance

• Nine out of 10 equity F&O traders lose money – Data for the study has been collated from the top 10 brokers in the country. The total number of traders in the sample witnessed a 500 percent increase between FY19 and FY22. In FY19, 7.1 lakh traders were included in the sample which ballooned to 45.2 lakhs in FY22.

• IFAs help investors to remain patient and disciplined – The data further reveals that 25% of regular AUM stayed invested for over 5 years, as against only 13% of direct AUM. Read here.

• FOMO: the worst financial trait – Afunny thing about money is that it’s a negative art. You often have a better chance of accumulating more of it by getting rid of bad traits vs. acquiring good ones Read here.

• Are we becoming Information Obese? – By limiting the amount of things that want their attention, they are able to conserve their precious attention to the few tasks that really matter. And once they decide what they wish to do, they are able to attend to the task with full force. All their eyes, mind, intellect and efforts are devoted to the task at hand. Read here.

• Have Yes Bank’s AT1 Bondholders Truly Won? The high court’s decision in the Yes Bank matter could very well be characterised as a success for a group of motley investors winning over a bank backed by the RBI. But will it matter? Read here.

Investing

• Adani Group: How The World’s 3rd Richest Man Is Pulling The Largest Con In Corporate History – Today we reveal the findings of our 2-year investigation, presenting evidence that the INR 17.8 trillion (U.S. $218 billion) Indian conglomerate Adani Group has engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades. – Hindenburg Research Read here

• Adani Group provides a rebuttal – Adani Group responded to the 88-questions raised by Hindenburg Research in its Jan. 24 research report on Adani Group. Read here

• How Many Stocks Should You Own?  In order to avoid significant potential shortfalls in terminal wealth, long-term investors should hold at least 200 stocks in their portfolio to more reliably achieve the full potential of the stock market. Read the research paper here

• Why are investors now convinced that a tail event is unlikely despite the obvious headwinds? Because so far, it hasn’t happened. Recency bias also explains why tail protection was so expensive in the midst of the QE-fueled bull market.  Read here.

Economy

• Private Sector Capex growth unlikely – While the announcement of new projects by the private sector is rising, completion of projects by them is falling. Read here.

• Investors are allocating cash back to European equities and cutting exposure to Wall Street, where pricey tech stocks are getting hammered by rising rates. Read here.

• The impact of China reopening – From Oct. 31, 2022 (recent market trough), to Jan. 17, 2023, the MSCI China Index was up 51.7%. Read here.

CAGR Speak

• More than 10% of clients sourced through Social media influencers for a listed company. Says DHRP of a listed broking house. Read the linkedin post here.

• Why are people not thinking about financial planning. Read the linkedin post here.

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Check out CAGRwealth smallcase portfolios here.

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That’s it from our side. Have a great weekend ahead!

If you have any feedback that you’d like to share, simply reply to this email.

The content of this newsletter is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information outlined in this newsletter unless mentioned explicitly. The writer may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated in this newsletter.