Beyond Markets by blinkX

Edition #2

A Feast for Thought!

Welcome back! We’re glad to present second edition of Beyond Markets! We’re going to cover India’s consumption potential and stocks that can benefit from it, an intelligent pivot by the likes of PVR INOX and Netflix. SEBI’s bold move, India's foray into blockchain and who eats chocolates the most...

Topics:

1.??? FMCG gains momentum with rural revival and urban premiumization

2.??? From flicks to feasts: How PVR INOX and Netflix are munching their way to success?

3.??? SEBI's new rule: A win for investors and market efficiency

4.??? Is India gearing-up for blockchain?

5.??? InfoTrend: Trending infographic for the day

• 27th June: Durable Goods Order, Real GDP (Third Estimate) (United States) - Central Bank Policy Rate (Mexico, Philippines, Turkey)
• 28th June: Inflation (Preliminary) (Italy, France)
• 30th June: Non-Food Credit, Central Government Expenditure, Central Government Gross Tax Revenue, Non-Cash Payments (India)
• 1st July: GST Collections (India)
• 3rd July: Power Generation (India)

FMCG gains momentum with rural revival and urban premiumization

As India’s fast-moving consumer goods (FMCG) sector navigates a mixed market, rural demand has outpaced urban demand for the first time in over a year.

Despite a sluggish start to 2024, with the Nifty FMCG index lagging behind the Nifty. Rural areas saw a 7.6% rise in demand compared to urban’s 5.7%, driven by factors like improved farm incomes and a positive monsoon outlook. Notable companies like Dabur and Nestle have expanded their rural reach significantly, boosting their village coverage and tailoring products to local needs. In contrast, urban markets witnessed a trend towards premiumization, with Hindustan Unilever (HUL) and Nestle focusing on high-end products like premium beauty and specialized nutrition drinks.

The return of rural volume growth and urban premiumization, coupled with easing inflation, sets a hopeful tone for the FMCG sector's future. Experts note, the improving macro-economic indicators and better wage opportunities signal a promising recovery.

Our research team at JM Financial had also initiated the India Consumption Basket on 8th June to benefit from the bullish outlook on India’s consumption. We released the basket on our Twitter on the 12th along with a video where Nirav Vora (Sr. VP Research Advisory JM Financial) took general questions about the basket. Watch Here

Feel free to ask any more questions you may have and we will get them answered by the experts!

From flicks to feasts: How PVR INOX and Netflix are munching their way to success

I remember when ordering popcorn outside a movie theatre seemed absurd? Well, that's changing fast. A year ago, I found myself at a friend's house, all of us huddled around our phones, eagerly ordering food on Swiggy and Zomato. To my surprise, one friend ordered caramel popcorn from PVR INOX. It seemed ridiculous at first—why pay multiplex prices at home? But one bite, and I was sold. It was delicious, and enjoying it at home felt like a steal.

PVR INOX: Munchies > Movies PVR INOX has recognized this shift. They've already closed 85 underperforming screens this year and plan to shutter 70 more next year. Meanwhile, their F&B revenue is outpacing ticket sales, leading to innovative ventures like food malls with Devyani International. The trend shows that PVR INOX isn't just a multiplex giant anymore; they're becoming a serious player in the fast-food industry.

This pivot isn't unique to PVR INOX. Netflix is diving into the F&B segment too. Starting June 2024, you can buy "Netflix Now Popping" popcorn in stores, with flavors like "Cult Classic Cheddar Kettle Corn" and "Swoonworthy Cinnamon Kettle Corn." This isn't Netflix's first foray into food—they've previously launched "Netflix & Chilll'd" ice cream with Ben & Jerry's and have a Witcher-themed popcorn bowl.

Why are these companies pivoting to food? It's simple: revenue diversification. For Netflix, a $4.50 bag of popcorn costs more than half of their cheapest monthly plan. For PVR INOX, leveraging their brand in F&B offers a buffer against fluctuating box office revenues. With India’s consumption trends on the rise, these strategies make perfect sense. These companies are making sure that whether you're at home or in a theatre, they've got a piece of your snacking pie.

In essence, businesses like PVR INOX and Netflix are adapting to changing consumer habits, showing just how dynamic and responsive the market can be. As India's consumption potential continues to grow, expect more innovative pivots from big names looking to capture every possible revenue stream.

So next time you're settling in for a movie, whether at home or in a theatre, remember: it's not just about what you're watching; it's also about what you're munching!

SEBI’s new rule: A win for investors and market efficiency

Starting October 14, 2024, SEBI is rolling out a game-changing rule: Clearing Corporations (CCs) will now directly credit securities to investors' demat accounts, ending the old practice of brokers pooling securities before distribution. This move is all about enhancing transparency, reducing risks, and protecting investors.

What’s the buzz about?

Think of it like ordering a pizza home instead and the Chef himself comes and gives it to you in-hand without having gone through multiple check points first. That's the essence of SEBI's new Direct Payout Mechanism. Previously, brokers pooled securities before crediting them to your account, which was like your pizza making unnecessary stops, risking delays and mix-ups. This had its risks—misuse, lack of transparency, and counterparty risk if a broker hit financial trouble.

Why it’s great for investors?

• No more mix-ups: Your securities go straight to your account, reducing the risk of them being mixed with broker-owned assets.
• Clear view: You’ll have direct visibility and control over your securities, just like tracking your pizza delivery in real-time.
• Safety first: This eliminates the risk of misuse, ensuring your investments are safe even if your broker faces financial issues.

What's changing?

• Direct payouts: CCs will credit securities directly to client accounts.
• Separate accounts for margin trading: Funded stocks under margin trading will be held in a dedicated demat account, enhancing clarity and security.
• No extra charges: Brokers can't slap on additional fees beyond what Clearing Corporations charge.

The timeline

• Implementation by October 14, 2024: Brokers and CCs need to comply with the new rules.
• Standards by August 5, 2024: Industry standards will be set for a smooth transition.

The big picture

This SEBI rule is a positive step towards a safer, more transparent market. It's like ensuring you get your pizza hot and fresh directly from the oven to your table, making your investment experience cleaner, clearer, and more secure.

Is India gearing-up for blockchain?

IBDIC...what? The Indian Banks' Digital Infrastructure Company (IBDIC), formerly known as IBBIC, is a ground-breaking consortium of 18 major public and private banks in India, established in 2022. With roots tracing back to the Indian government's push for blockchain adoption and a successful 2021 pilot by the Reserve Bank Innovation Hub (RBIH), IBDIC’s objective is to providing a common platform for Indian banks to explore, build, and implement digital solutions using blockchain technology.

Think of IBDIC like your ’Goa Trip’ of Indian banking, each of the 18 member banks chipping in ?5cr to assemble a ?75cr powerhouse. This serious investment shows how committed they are to using blockchain technology, not only has the WhatsApp group been made but the tickets have also been booked!

How does this benefit us? So, what is the key move in their playbook? Revolutionizing the issuance of domestic Letters of Credit (LCs) by putting them on a blockchain platform. It's like upgrading from sending important messages via pigeons to using instant messaging—faster, more transparent, and way more secure. They’ve teamed up with Infosys Finacle Connect to make this happen.

Right now, only a handful of banks in India are dabbling in blockchain on a small scale, but IBDIC is here to change the game. Their mission? To make blockchain as mainstream in banking as ordering groceries from your couch. The Minister of State for Finance believes that IBDIC's efforts will soon lead to a wider adoption of blockchain across India's banking sector, transforming how we handle trade finance and beyond.

InfoTrend: Life is sweeter with chocolate

Europe is home to some of the world's biggest chocolate enthusiasts. At the top of the list is Switzerland, where people consume 19.4 pounds per person each year. Following closely is Germany with 17.8 pounds, and Ireland with 17.4 pounds. The United Kingdom comes next, with each person eating 16.8 pounds annually. Finally, Sweden rounds out the top five with an annual per capita consumption of 14.6 pounds. These figures highlight the deep love for chocolate across these countries.

That's all for this edition of Beyond Markets by blinkX! Let us know in the comments what you think and what would you like us to cover in the next edition? Have a great week!