SEBI Says 1-Hour Trade Settlements Could Come By March 2024
Markets regulator SEBI will introduce one-hour trade settlements by the end of this fiscal which means March 2024, in the run up to making such processes instantaneous, a top official told Reuters on Tuesday.
Our Top Reports For Today
- [00:50] SEBI says 1-hour trade settlements could come by March 2024.
- [04:28] Nominate heirs to your fortune and your bank deposits, says the finance minister
- [05:54] SUVs push car sales to a record high in August with Manish Raj Singhania
- [15:43] Delayed monsoons are now increasing anxiety levels with DK Joshi
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1-Hour Trades
Day traders will love this and possibly they will soon be called Hour Traders or some such, new term.
Markets regulator Sebi will introduce one-hour trade settlements by the end of this fiscal which means March 2024, in the run up to making such processes instantaneous, a top official told Reuters on Tuesday.
The official also said that faster settlements are optional and investors can opt out.
What it should mean is that if I sell some shares at say 1 pm, by 2 pm I should be able to use the proceeds of the sale to buy other shares.
The money itself should hit the account the next day is my understanding.
And at some point it will all be instantaneous.
All this is of course fast and it would be some credit to the regulatory authority, Sebi in this case, for putting the foot on the accelerator.
"From one day to one hour to instantaneous is the roadmap," the official said, adding one hour settlements are much quicker to implement than instantaneous.
The official said technology for one hour trade settlements already exists and the regulator is confident about the same, while the instantaneous settlements need more technology development.
At present, Sebi is thinking of rolling out the one hour trade settlement for all investors by March next year, and is looking at a time frame of 6-8 months more for the instantaneous settlements, the official said.
Speaking of settlements and markets, the S&P BSE Sensex ended 152 points up at 65,780 and has now gained 949 points or close to 1,000 points in the last three straight sessions.
The NSE Nifty, meanwhile closed with a gain of 46 points at 19,575.
You may recall Vinod Karki of ICICI Securities telling The Core Report in August that the NIFTY50 index was consolidating just below the 20,000 mark after rallying 14% from Mar’23 lows (a modest 7% YTD return)..
This according to Isec was rational behaviour and is not technically a bull market either.
On the other hand, they said a bull market frenzy was clearly visible in the mid, small and micro-cap indices, which have risen 25%, 29% and 42% respectively from Mar’23 lows.
Technically, a more than 20% upside indicates a bull market.
Now, the Nifty Midcap 100 index has shot past the 40,000 mark for the first time and the Nifty SmallCap index hit an all-time high on September 5.
The indices have advanced 27 percent and 30 percent so far this year, according to research from Moneycontrol.
The reason of course is that the real money is always made in small caps and today’s small caps are tomorrow’s multi-baggers.
History does bear this out though.
A Goldman Sachs report we profiled in The Core Report on June 6 said India had produced the largest proportion of multi bagger stocks among 10 major emerging and developing markets.
Goldman identified some 269 stocks which fit this 10-bagger definition over 20 years after studying some 6,700 stocks.
More importantly and relevant to today’s theme is that at least half of these multi-baggers had a market capitalisation of $50 million or less than Rs 400 crore going by current rates.
So yes, this is where the temptation lies. And also the danger. Invest carefully is all I can say !
A Finance Minister’s Public Service Message
We often come across cases of family members or friends who are not able to access bank accounts of their loved ones.
The reasons may of course vary but usually it is the male earning member of the household who passes on oftentimes suddenly without leaving much by way of clues for the family members.
This is as much as a lesson in financial planning within a family as it is in the message that is coming up.
Union Finance Minister Nirmala Sitharaman on Tuesday asked banks and financial institutions to ensure that their customers nominate heirs, which can help reduce the quantum of unclaimed money.
"I want the banking system, the financial ecosystem (including) the mutual funds, stock markets... everybody to keep in mind that when someone deals with his (customer's) money, the organisations will have to think about the future and ensure that they (customers) nominate their heir, give the name and address," Sitharaman said at the Global Fintech Fest (GFF) here.
As per a report, the banking system alone has over Rs 35,000 crore of unclaimed deposits, while the overall quantum of the unclaimed money is said to be more than Rs 100,000 crore.
The quantum of funds of course does not reflect the individual pain that families have to go through when there is a sudden death. The warning is timely and worth repeating.
SUVs power passenger vehicle sales to record highs
Every second car sold in India is actually not a car, it’s either a utility vehicle, sports utility vehicle or a multi purpose vehicle, all ways of describing four wheelers that generally look more sturdy, boxy, higher above the ground and seemingly safer to drive.
The Indian craze for SUVs, to use that as a general describer, is so strong that it is powering overall car sales in the country.
So much so that August was a record month for overall passenger vehicle sales.
This is as much driven by demand as supply.
Manufacturers are rolling out newer and more, well improved versions and variations of their SUVs, giving customers a wide choice, even within a single model.
Maruti, Mahindra and Mahindra and Hyundai are among the many companies that have a range of SUVs to suit all budgets and tastes. Even Honda, somewhat dormant for some time, is bouncing back into the market with a SUV called Elevate. The Hyundai Creta is the biggest selling SUV in India, by the way.
Total car sales for August - including of course SUVs - stood at 315,153 units, up around 6.5% from 295,842 on August 22. Month on month or over July, the rise was almost 11%.
These numbers are from the Federation of Automobile Dealers Association (FADA) which represents 15,000 auto dealers with 26,500 dealerships across India.
To understand the SUV craze a little more and why consumers are rushing to them, I reached out to Manish Raj Singhania, President of the FADA and based in Raipur, Chhattisgarh.
I began by asking him how SUVs are doing in the context of overall passenger car sales.
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Meanwhile, FADA also released its August 2023 vehicle retail data which of course highlights the high car sales numbers that we spoke of.
It also highlights the fact that inventory levels with dealers have crossed the 60-day threshold, an all time high, before the onset of the 42 day festive season.
FADAs member survey says the average inventory for passenger vehicles ranges from 58 to 63 days as compared to a normal inventory range of 21 days, making it three times the holding.
Singhania told me that this is because dealers are stocking up for the festive season and Onam sales, as we spoke of yesterday as well, have been strong, giving dealers and thus manufacturers this festive season is going to go well.
By the way, three wheeler sales are also rising, hitting another all time high, at 99,907 units in August, up 66% YOY and 6% MOM.
Monsoons Play Truant
The rains recovered in July but the southwest monsoon saw its driest spell in 123 years in August, taking the cumulative deficiency for the season to 11% by September 4.
Rating agency Crisil has what it calls the DRIP study or deficient rainfall impact parameter which highlights states like Jharkhand, Karnataka, Maharashtra, Bihar and West Bengal as vulnerable.
It also highlights pulses, coarse cereals, rice and oilseeds as vulnerable crops due to deficient rains and low irrigation.
Crisil’s DRIP, the name was coined by the late Subir Gokaran, who worked then in Crisil and later was Reserve Bank Deputy Governor, looks at both the impact of rains as well as irrigation cover.
Crisil has also pointed out that six crops, tur, jowar, bajra and soybean, maize and rice are vulnerable. The CRisil DRIP scores of these crops are worse than their past five year average.
Just to put everything in context, inflation levels for rice is at 13%, Tur dal at 34% and Jowar at 16.8%.
To understand where we are on the monsoon run this season and the impact we were looking at, I reached out to Crisil Chief Economist DK Joshi.
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Elsewhere, the Reserve Bank Governor Shaktikanta Das tried to assure everyone that the central bank was alert to inflation levels and keeping them down.
He said the RBI has been mandated by the government to keep inflation at 4 percent with a margin of 2 per cent on either side.
"The frequent incidences of recurring food price shocks pose a risk to the anchoring of inflation expectations, which has been underway since February 2022. We will remain watchful of this aspect also. The role of continued and timely supply side interventions as is being undertaken by the government assumes criticality in limiting the severity and duration of such food price shocks," he said.
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That’s it from me for today. Have a great day ahead, do hop across to www.thecore.in for our detailed reports and interviews and also links to our podcast.
Bye for now.
