Posted on

CAGR Insights – 5 July 2024

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

Image

Chart Ki Baat
Image

Gyaan Ki Baat for this week:

What are Small Finance Banks?

Small finance banks are a special category banks in India which aim to promote financial inclusion by serving underserved segments like small businesses and low-income households.

Regulated by the RBI, they offer basic banking services, loans, and use technology for efficiency. Their mission is to provide accessible banking solutions, including savings accounts, fixed deposits, and remittance services, with a focus on rural and remote areas.

These banks must meet RBI’s capital requirements and operate under stringent regulatory frameworks, playing a vital role in economic development by extending financial services to marginalized communities.

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

Personal Finance

  • How long you may live is one of retirement planning’s biggest unknowns. How experts say to get the best estimate: Retirement planning needs to consider not just your savings but also how long you might live. Financial advisors typically use 95 as the life expectancy for planning, but this might not be enough. Generally, the better your health, the longer you might live and the bigger your nest egg should be. Read here
  • Finding the right international market for your investments: In India, few people use financial instruments like stocks and bonds for retirement savings, with only 3% investing in the stock market. Diversification across sectors and geographies is essential for reducing volatility and achieving long-term success. Investors compare international markets based on liquidity, efficiency, protection, and currency risks. Developed markets, particularly the US, are preferred for their stability and returns. Interest in European markets and residency-linked investments is growing, driven by desires for better opportunities and quality of life. Read here
  • 72% of women making final decisions on their investments, survey reveals: Women are investing 37% more in mutual funds, showing strong dedication to wealth accumulation. This trend may be due to long-term financial planning or higher risk tolerance. The report indicates women prefer long-term investment strategies, aligning with mutual funds for retirement planning and wealth creation, benefiting from the compounding effect over time. Read here
  • How Does Inflation Impact Retirement? This article explores the impact of inflation on retirees. It asks how inflation affects retirees, whether it’s better for high inflation to occur early or late in retirement, and what strategies retirees can use to manage rising prices. Read here

Investing

  • FPI inflows poised to surge after a modest H1 2024; June sees strong recovery: In the first half of 2024, foreign portfolio investor (FPI) inflows into Indian equities were modest at ₹3,201 crore, following a strong 2023 with over ₹17,000 crore inflows. Despite market highs, FPIs were cautious due to election uncertainties, high valuations, and global factors. However, after election concerns settled, FPIs returned as buyers in June, purchasing ₹26,565 crore in Indian equities, the second-highest monthly inflow in 2024 after March’s ₹35,098 crore. Read here
  • How Bull Markets Work: The stock market is currently in a bull market, which means prices are generally going up. This year has been a bit unusual for a bull market because there haven’t been many days with large price swings, either up or down. Historically, bull markets tend to be slow and steady, while bear markets (when prices are going down) are more volatile with big swings in both directions. This is because investors tend to overreact to good and bad news during bear markets. The article explains what a long-term investor should looking for in a market. Read here
  •  Finding the right international market for your investments: In India, few people use financial instruments like stocks and bonds for retirement savings, with only 3% investing in the stock market. Diversification across sectors and geographies is essential for reducing volatility and achieving long-term success. Investors compare international markets based on liquidity, efficiency, protection, and currency risks. Developed markets, particularly the US, are preferred for their stability and returns. Interest in European markets and residency-linked investments is growing, driven by desires for better opportunities and quality of life. Read here

Economy

  • From “Bottle of Lies” to Global Leader: India’s Pharma Compliance Climbs: “Bottle of Lies” exposed quality issues in Indian generic drugs for a decade (2004-2014). Recent data shows significant improvement since then. India now has the most USFDA-approved facilities globally, surpassing the US. The percentage of inspections with warnings has dropped from 15-16% to 11%. While compliance improved, the author believes further progress is necessary for patient safety. Read Here
  • Indian government bonds join JP Morgan EM Bond Index: The EMBI is a benchmark index for emerging market bonds, launched in the 1990s. It’s including Indian government bonds (IGBs) starting June 2024, which is expected to bring significant investment (estimated at $21 billion) to India by March 2025. This inclusion is likely to increase foreign investment in Indian bonds, particularly in longer-term maturities (6Y to 10Y). The short-term bond market might become more attractive in the future if interest rates behave a certain way (bull steepening). Read here

****

Check out CAGRwealth smallcase portfolios

Both our smallcase portfolios are ranking well in the smallcase universe in terms of 1 year returns.


• CFF (launched in June 2022) – Ranked among Top 20 smallcase with medium volatility.

• CVM (launched in May 2022) – Ranked among Top 40 across the smallcase universe.

Do check it out here

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

If you have any feedback that you would 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.

Open the newsletter in the browser here

Posted on

CAGR Insights – 3rd Jan 2025

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

Image

Chart Ki Baat

Image

Gyaan Ki Baat 

Understanding Operation Twist in Monetary Policy

Operation Twist is an innovative monetary policy tool used by the Reserve Bank of India (RBI) to influence interest rates and stimulate economic growth. This approach involves the simultaneous buying of long-term government securities while selling short-term securities.

The primary goal is to lower the yields on long-term bonds, making borrowing cheaper for consumers and businesses. The concept originated in the United States in 1961 and was later adopted by the RBI during challenging economic times, particularly in 2019 and 2020. By purchasing long-term securities, the RBI increases their demand, which in turn raises their prices and lowers their yields. Conversely, selling short-term securities increases their supply, leading to a rise in their yields. This “twist” in the yield curve helps to flatten it, encouraging investments by reducing the cost of long-term borrowing.

The necessity for Operation Twist arose from the limitations of traditional monetary policy tools. For instance, even after significant cuts to the repo rate, banks were slow to pass on these benefits to consumers, resulting in sluggish credit growth. By implementing Operation Twist, the RBI aims to enhance liquidity in the market and stimulate economic activity through more accessible financing options.

Personal Finance

  • Don’t bet against biology: In 2024, the big takeaway was not to bet against biology. Just as physical decline accelerates with age, neglecting health can impact long-term financial goals. Prioritizing health ensures the wealth you build remains valuable throughout your life. Read here
  • New EPS Rule From January 1: Pensioners Can Now Withdraw Monthly Pension from Any Bank Branch: Pensioners under the (EPS), 1995, can withdraw their pensions from any bank branch across India from 1st Jan 2025. This transformative move aims to make pension disbursement more convenient and accessible for over 70 million beneficiaries. Read here
  • Taxes 2025: How to reduce tax liability in FY25; check these investment options: It is January 2025, and taxpayers have nearly three months to review their tax payments and obligations. It is crucial for taxpayers to assess their financial situation and proactively reduce their tax liabilities. Read here

Investing

  • F&O Trading Is India’s Largest Casino, Focus On Businesses Surviving Tough Periods: Sanjay Bakshi: What sets great investors apart? Sanjay Bakshi shares insights on patience, market understanding, and the principles that guide his investment journey in this rare and thoughtful conversation. Watch here

  • No One To Blame: Investing is brutally personal—sell winners too soon, hold losers too long, or chase bad stocks. But blaming others—markets, management, or luck—only masks your mistakes. Own them. Growth comes when you face the mirror, not excuses. Read here
  • RBI seen loosening stranglehold on rupee in 2025: The Reserve Bank of India will need to rethink its foreign exchange strategy and loosen its hold on the rupee in 2025, economists said, with the currency at its strongest against peers in at least two decades in trade-weighted terms. Read here

Economy & Sectors

  • India’s electronics manufacturing set to hit $140 billion in FY25, exports drive growth: India’s electronics manufacturing sector is expected to grow 15% in FY25, reaching $135-140 billion, up from $115 billion in FY24, according to industry sources. While robust exports are fuelling this expansion, stagnant domestic demand presents challenges to sustaining overall growth momentum. Read here
  • India’s Economy in 2024: GDP Growth and Global Ranking: In 2024, India continued with economic expansion, ensuring its status as an emerging global economic powerhouse. With a 6.6 percent gross domestic product (GDP) growth rate, the country retained its position as the world’s fifth-largest economy, steadily narrowing the gap with Germany, which ranks fourth at present. This performance showed India’s consistent trajectory of growth, marked by strategic initiatives and focused economic policies. Read here
  • 2025 Forecast: What’s coming for the Indian economy in 2025 as it seeks more purple patches?
    India will have to navigate geopolitical headwinds, tame domestic inflation and nudge the private sector to further loosen their purse strings as the world’s fastest-growing major economy seeks more purple patches in 2025, leaving behind September quarter growth blues. Read here

Check out CAGRwealth smallcase portfolios

Our smallcase portfolios are ranking well in the smallcase universe in terms of 1-year returns.


• CFF (launched in June 2022) – Ranked 1st amongst smallcase with medium volatility.

• CVM (launched in May 2022) – Ranked among Top 20 across the Momentum smallcase universe.

Do check it out here

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

If you have any feedback that you would 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.

Posted on

CAGR Insights – 6 Dec 2024

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

Image

Chart Ki Baat

Image

Gyaan Ki Baat 

The Reserve Bank of India (RBI) held its Monetary Policy Committee (MPC) meeting on December 6, 2024, where several significant decisions were made:

  1. Repo Rate Maintained: The RBI decided to keep the repo rate unchanged at 6.50%. This decision comes amid rising inflation and slowing GDP growth, reflecting a cautious approach to monetary policy in light of economic challenges.
  2. Cash Reserve Ratio (CRR) Cut: The RBI announced a 50 basis points cut in the Cash Reserve Ratio (CRR), reducing it to 4%. This move is expected to release approximately ₹1.16 lakh crore into the banking system, aimed at enhancing liquidity and stimulating credit growth.
  3. Inflation Concerns: Inflation for FY25 is projected at 4.8%. For Q3, it is expected to rise to 5.7%, but it is anticipated to decline to 4.5% in Q4. The RBI’s mandate is to keep inflation within a target range of 2-6%, and the current figures are above this threshold.
  4. GDP Growth Outlook: India’s GDP growth for the July-September quarter fell to 5.4%, the lowest in seven quarters, prompting discussions about potential rate cuts in future meetings if economic conditions do not improve.
  5. Governor’s Term Conclusion: This MPC meeting is particularly notable as it may be the last chaired by Governor Shaktikanta Das, whose term ends on December 10, 2024. Speculation surrounds his potential extension, which could influence future policy directions.

These highlights underscore the RBI’s balancing act between managing inflation and supporting economic growth amid challenging conditions.

Personal Finance

  • How To Build a Robust Retirement Portfolio: A Data-Driven Approach: Retirement planning becomes more critical as you near the end of your career, with risks higher in retirement. Monte Carlo simulations offer a way to explore various financial outcomes, helping you adjust your strategy based on uncertainty and assumptions. Read here
  • Retirees, a Rich Life Does Not Require Spending More Money: Retirement isn’t about spending more money but finding contentment in life’s simpler pleasures. While financial advisors emphasize higher withdrawal rates, true fulfilment comes from enjoying time, peace, and personal satisfaction. Read here
  • EPFO Changes Provident Fund Rules, Aadhaar No Longer Mandatory for PF Claim: EPFO has removed the mandatory Aadhaar linking for PF claims. Employees without Aadhaar can use alternative documents like passports or PAN cards for verification. Claims above Rs 5 lakh will require employer verification, and UAN consistency is advised for faster processing. Read here

Investing

  • Silver Buying Opportunity: Gold’s higher price compared to silver is driven by central banks hoarding gold as a monetary asset, giving it unmatched demand. Silver, though abundant and industrially essential, lacks this prestige, making it a hidden gem—ready to shine when financial chaos sparks a rush for precious metals. Read here

  • Factor Analysis: A Hands-On Introductory Workshop Using Indian Market Data: Dive into the world of quantitative fund analysis with Rajan Raju, visiting faculty at IIM Ahmedabad and a veteran banker. In this insightful workshop, Rajan explores key models such as the CAPM and Fama-French Model, using live examples from Indian funds to provide practical understanding. Perfect for finance enthusiasts and professionals looking to sharpen their analytical skills. Watch here
  • Nifty 50 after US Elections: Historical trends indicate a bullish 2025 for the Indian stock market: The Nifty 50 is poised for a bullish outlook in 2025, supported by historical trends showing strong performance following US elections and in odd-numbered years. A favorable technical setup, including a bullish head-and-shoulders pattern, further boosts optimism for significant gains. Read here

Economy & Sectors

  • Services sector growth drops; inflation at 12-year high: India’s services sector growth slowed in November, with the Purchasing Managers’ Index (PMI) dropping to 58.4 from 58.5 in October. Despite weaker new orders and output growth, employment surged to its highest pace since the survey began in 2005, driven by increased hiring of both permanent and temporary staff. Read here
  • India has miles to cover before cashing in on China’s big loss: India has struggled to capitalize on the “China Plus One” strategy compared to countries like Vietnam and Thailand, due to factors like labor costs and tax laws. However, it has opportunities to enhance manufacturing, particularly in high-tech industries, amid global shifts away from China. Read here
  • Karnataka to soon have circular economy policy: Karnataka is developing India’s first circular economic policy, mandating 20% sustainable construction materials. Minister Priyank Kharge emphasized Karnataka’s potential in proptech and real estate, aiming for sustainable growth with collaboration between industry, government, and the realty sector. Read here

Check out CAGRwealth smallcase portfolios

Our smallcase portfolios are ranking well in the smallcase universe in terms of 1-year returns.


• CFF (launched in June 2022) – Ranked 1st amongst smallcase with medium volatility.

• CVM (launched in May 2022) – Ranked among Top 20 across the Momentum smallcase universe.

Do check it out here

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

If you have any feedback that you would 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.

Posted on

CAGR Insights – 14 Nov 2024

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

Image

Chart Ki Baat

Image

Gyaan Ki Baat 

Recently, the Indian stock market has experienced a significant correction, with major indices seeing declines of over 10% from their peaks. This shift has raised concerns among investors, especially after a strong bull run in the past few years. While it may seem alarming, market corrections are a natural part of the investing cycle and offer important lessons for investors.

Why Market Corrections Happen:

Overvaluation: Stocks or entire sectors sometimes become overvalued due to excessive optimism, and when the market corrects, it brings the valuations back to more sustainable levels.

Economic Factors: Changes in the global or domestic economic environment—such as inflation concerns, rising interest rates, or geopolitical tensions—can trigger corrections.

Investor Sentiment: A shift in investor sentiment, driven by fear or uncertainty, often leads to increased selling pressure, resulting in market declines.

The ongoing market correction in India, fueled by external economic factors and shifting investor sentiment, is a natural part of market cycles. While it might be unsettling, it is important to view it as an opportunity to reflect on your financial goals, review your investments, and stay focused on the long-term horizon. In the face of volatility, maintaining discipline and patience can help investors navigate corrections successfully and capitalize on opportunities that may arise.

Personal Finance

  • My $507.34 Ridiculous Mistake! A five-year mistake, silent price hikes, and hundreds lost on a service never used—could you be missing the same hidden cost? Read here

  • What NRIs need to know about investing via mutual funds in India: The NPCI now allows NRIs with NRE or NRO accounts to make UPI transactions linked to international mobile numbers. Available in countries like the US, UK, UAE, and Australia, the service enables NRIs to send money to family in India or make payments without traditional wire transfers, fee-free.Read here

  • How to make NPS contributions via the BHIM app: NPCI BHIM Services has just made retirement planning a whole lot easier. Now, you can directly contribute to your National Pension System (NPS) account right from the comfort of your smartphone. To know how to load the money through BHIM appRead here

Investing

  • Indian stock market: 8 key things that changed for market overnight – Gift Nifty, US inflation, to surging dollar: Sensex and Nifty 50 are set for a cautious start amid global market fluctuations and a strong US dollar. With US inflation spurring Fed rate cut, and relentless FII selling weighing on Indian stocks, the markets brace for continued volatility as key economic factors plays out. Read here

  • A New Dawn: Navigating Market Uncertainty and Seizing Opportunities: With inflation fears looming large and market volatility persisting, are investors taking the right steps to protect their portfolios? As interest rates rise, how will the bond market fare? Can the stock market weather the storm, especially in the tech sector? What strategies can investors employ to navigate these turbulent times? Watch here

  • Index Funds are the go-to choice for India’s young investors, shows survey: A recent survey reveals that index funds are highly favoured among Millennials and Gen Z, with nearly half of investors under 43 choosing them, compared to just 35% of Gen X and Boomers. Passive investing, particularly in sectoral indices, has seen rapid growth, pushing Assets Under Management to over Rs 11 trillion. Read here

  • RBI announces rules to reclassify FPI investment as FDI once it crosses 10% holding in Indian firms: RBI has streamlined the process for FPIs to reclassify their holdings as FDI if their stake in an Indian company exceeds 10 percent. Previously, FPIs exceeding this cap were required to either divest the surplus shares or reclassify them as FDI. To know more about the framework. Read here

Economy & Sectors

  • Indian banks to have steady growth in earning over next 3-4 years, fees from unsecured lending may dip, notes Jefferies report: Indian banks anticipate steady growth in loans and earnings, though risks in unsecured lending and uncertain rate cuts could affect margins. Will they thrive or falter? The next few months will reveal whether they can outpace the broader market’s momentum. Read here

  • Global Macro and Investment Implications of President Trump Win: Rees Chan outlines U.S. reindustrialization under Trump, emphasizing domestic growth, defense spending, and a lower dollar. He anticipates significant opportunities for India, particularly in manufacturing and defense, while U.S. tech giants may face heightened regulatory pressure and challenges.Watch here

  • India’s middle class tightens its belt, squeezed by food inflation: India’s urban spending is slowing, with middle-class budgets squeezed by persistent inflation. While top earners continue to spend, the middle segment shrinks, affecting major consumer goods firms. This shift raises questions about the long-term stability of India’s economic growth. Read here

Check out CAGRwealth smallcase portfolios

Both our smallcase portfolios are ranking well in the smallcase universe in terms of 1-year returns.


• CFF (launched in June 2022) – Ranked 1st amongst smallcase with medium volatility.

• CVM (launched in May 2022) – Ranked among Top 20 across the Momentum smallcase universe.

Do check it out here

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

If you have any feedback that you would 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.