The R-EV-olution ??

NIFTY50: 17,531 (- 2%)

NIFTY 10Y Benchmark G-Sec Index: 2,037 (0%)

Greetings!

Fear-mongering has begun in the markets, and for good reason, as global decision-makers take the stand this week - China’s 1-year loan prime rate release, the US FOMC meeting to decide how much of a rate hike will give them their “soft landing”, Japan rate hikes, and eventually, India’s rate hike as well.

Guess the Person: Speaking of inflation, an ex-Fed Chairman of the 80s orchestrated recessions to stabilise the economy in a rather unorthodox fashion. What was their name?

Scroll to the bottom of the newsletter for the answer!

What’s Up, Market?

Painful Pride ??

If you’ve been on Twitter lately, you’ll notice a number of patriotic Indians, filled with pride, proclaiming how the Indian markets are impervious to the pain of global macroeconomic events, since the US markets fell by 5% and India barely budged.

Unfortunately, the Indian markets, like most Indian students, broke under pressure, with a 3% dip. What caused it?

• US CPI data wasn’t positive as inflation is still above the 8.1% goal of the Fed, signalling a possibility of a 100 bps rate hike this week
• This hike may cause some hindrances in the FII money flowing into India. With stronger rate hikes, the US will look more attractive than before - higher returns in a developed economy
• The Fed’s attempts to cool down the economy might be felt in India - especially in the IT sector, with the Nifty IT index already down 7% last week
• Fitch downgraded India’s GDP growth from 7.8% to 7% in 2022-23, owing to the increased inflation in India, which inched up from 6.7% in July to 7% in August 2022

India aims to bring inflation down to its 6% mark by raising rates, possibly by 50 bps, later this month, bringing the repo rate to 5.9%.

The notion of the Indian market being bulletproof is a grave misconception, hence caution is advised while buying the dips!

?? To know more: https://www.rupeeting.com/post/painful-pride

Market Stories

DreamFolks: Cleared for Take-off ??

Everyone knows at least one guy who can’t stop talking about how they sleep on recliners, watch movies and bask in the glory of a free buffet at the airport because their dad has a cool credit card.

While they scuffle at our peasantry, they are unaware that their so-called “free” stuff is actually making someone money, and they just got listed on the exchange!

DreamFolks, the company that acts as the intermediary between luxury (lounges, spas, restaurants, meet and assist facilities) and accessibility (credit and debit card companies), has recently been listed on the exchange at a 56% premium.

How Do They Make Money?

• If your credit card offers you lounge access as part of their facilities, the credit card company pays DreamFolks a commission every time a unique card is swiped
• DreamFolks pays the lounge from that commission and keeps the rest
• They get Rs. 800 per unique visitor, of which DreamFolks keeps Rs 130 (roughly 16%)
• Since they don’t engage in customer acquisition and don’t actually own the services, they have low costs and few people to split the money with - 60 to be exact!

Are They a Monopoly?

• They manage 54 lounges in India - that’s all the lounges (so yeah, its a monopoly)
• They have a 95% market share in an industry with very few players that offer this array of airport-related services

Cleared for Take Off

• With the launch of 200 new airports by 2025, there will be around 200+ lounges across the nation, and DreamFolks intends to retain the monopoly
• Since the DGCA removed the cap on ticket prices, the competitive pricing will fuel further air travel, leading to more usage of facilities
• Low Cost and Ultra Low-Cost Carrier are in the works of creating loyalty programs that offer lounge access as an add-on, carving out a chunk of growth potential
• At 3% India’s credit card penetration is among the lowest, yet this will pick up due to increased disposable income and new fintech players in the market

Roadblocks

• DreamFolks is dependent on the credit card industry, with 98% of its revenue being generated by those customers, and 85% of that being derived from its top 5 clients. This can cause issues if any of these companies incur a slowdown
• COVID caused serious damage to their revenue (71% drop), which entails yet another dependence on air travel growing

DreamFolks has surely shaken some leaves (and wallets) into making its presence felt. To think that they could be the reason that Indian airports get a better name for themselves, and we can finally eat something other than overpriced burgers!

?? To know more: https://www.rupeeting.com/post/dreamfolks-cleared-for-take-off

Personal Finance

3 Ways to Add Debt to Your Portfolio ??

Yes, this whole blog was an excuse to use this meme. Unfortunately, your portfolio is the only thing that is shaken today.

Equities seem to be betraying the everyday investor as markets have been volatile. Enter debt, the 4 letter word that doesn't bring about a good feeling. Rupeeting is here to change that with 3 ways in which you can use debt to amp your portfolios up:

Debt Mutual Funds

• These are mutual funds which invest in varied proportions of Government and Corporate debt instruments like bonds and debentures
• They have varying maturities, from as short as 3 months to as long as 5 years or more
• A unique combination of government and corporate debt instruments are mixed to form these funds

Creating Your Own Bond Portfolio

• Until recently, this may not have been possible, yet the Government has been making debt instruments more affordable and accessible for the public to invest in.
• Tax-Free Bonds are long-term bonds issued by Government-backed PSUs like the National Highway Association of India, National Thermal Power Corporation, etc. The interest income from these is tax-free if held till maturity
• RBI Retail Direct is a 2021 initiative that allows retail investors to invest in Government securities directly. You just need to link your Demat account to their portal and bid for T-Bills and SGBs like you would in an IPO

Alternative Debt Assets

• This is a fairly new concept in India and one of the companies spearheading this is Wint Wealth
• They scour the market for sound corporate bonds, buy their entire issue and sell it to retail investors in smaller units that go as low as Rs. 10,000. whereas corporate bonds are worth lakhs for a single unit
• These bonds are usually unlisted (not on the stock exchange) and mature within 3 years at the max

Click on the link below to see how they rate when pitted against each other in the ring, and our take on the best option for you!

?? To know more: https://www.rupeeting.com/post/3-ways-to-add-debt-to-your-portfolio

Chart of The Week

The R-EV-olution ??

China’s EV market is growing in leaps and bounds, with more than 80% of the players being domestic!

• More than 11% of the cars sold last year were EVs (1 in every 10)
• This number jumped when in just August this year, 3 out of every 10 were EVs

India is on a similar track, with the Government fuelling the industry with policy intervention, battery-swapping initiatives, and domestic players showing their worth.

Despite starting from a low base, overall EV sales increased from 1.3 lakh units to 4.3 lakh units in FY22 (more than 200% growth). For context, the entirety of FY17 had total EV sales of around 56,000 units!

• Tata Motors has a whopping 80% market share now in the four-wheeler segment
• Maruti Suzuki, the market leader in the combustion engine, has kick-started their journey as well, with a mega-factory for low-cost EV batteries, set to open by 2025

Petrol-heads beware - the EV revolution is here!

?? To know more: https://www.rupeeting.com/post/the-r-ev-olution

Answer: Paul Volcker

Read this article to learn more about what he did!

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