Markets Sailing Away, Six More Trading Sessions
When the markets are very sure of the outcomes, the focus is back on companies and sectoral performance. At this point, after a bout of jitteriness, the markets are once again betting on political continuity.
On Episode 302 of The Core Report, financial journalist Govindraj Ethiraj talks to Manisha Kapoor, CEO and Secretary General at the Advertising Standards Council of India (ASCI) as well as Captain Amit Singh, an active Airbus A320 pilot and also founder of Delhi-based Safety Matters Foundation.
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SHOW NOTES
(00:00) Stories Of The Day
(01:00) Markets sailing away, six more trading sessions
(05:08) The man who predicted Dow hitting 40,000 in 2016 and India’s own Rakesh Jhunjhunwala predicting Nifty at 100,000 in 2030
(07:29) Betting apps, the new breed of misleading advertisements going for your wallet
(16:01) Singapore Airlines Incident: Could Climate Change Increase Chances of Air Turbulence? An Active Pilot’s View
NOTE: This transcript contains only the host's monologue and does not include any interviews or discussions that might be within the podcast. Please refer to the episode audio if you wish to quote the people interviewed. Email [email protected] for any queries.
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The Stock Markets
June 4 is just 6 trading sessions away, being the point the results of India’s 2024 general elections will be declared and the present stress levels around where the stock market might or might not go will hopefully end and fresh ones will take over.
Because that is the nature of the markets, which tend to swing from macro worries to micro ones quite swiftly. If quarterly results are steady, as they mostly have been, then the focus is on political outcomes.
When the markets are very sure of the outcomes as they were a few weeks ago, then the focus is back on companies and sectoral performance.
At this point, after a bout of jitteriness, the markets are once again betting on political continuity.
There are of course questions on what one should do if the markets go one way or the other on June 4, for whatever reason. Remember, markets can fall even if there is a BJP victory if for some reason the absolute number of seats clinched is seen as below expectations, which of course have been set by the BJP itself.
Actually, you have to see what FIIs are doing, which is selling right now and going by the general wisdom ascribed to them, take profits off the table right now and then come back on June 4 or after to buy.
Because they do believe in the long term story and are okay to take the chance of buying a little more expensively were the markets to shoot up.
Once again, Indian markets are at record highs and I will come to the latest numbers in a moment which means quite logically that if you have been invested in the market for a year, for example, then you would most likely have earned good profits.
Anyway, we only have 6 trading sessions to go.
On Friday, equities hit fresh record highs for a second straight day. The BSE Sensex touched a new high of 75,636.5 in the intraday trade, while the Nifty50 surpassed the 23,000-mark to hit an all-time high of 23,026.
The Sensex closed at 75,410, down 8 points while the Nifty slipped 11 points, or to end at 22,957.
To come back to foreign portfolio investors, if you want to look at their strategy more closely. In 2024, they net sold Rs 19,824 crore in equities but invested Rs 46,917 crore in debt market.
FIIs have been selling quite heavily in the last three months, including Rs 22,000 crore in May so far, after investing aggressively in the months before that.
In general and in specific I can tell you or rather remind you since we talk about it here quite often that leading foreign institutional investors, including the likes of brokerages like Goldman Sachs, Morgan Stanley and JP Morgan among many others have all indicated that they are bullish on India in the medium and long term.
Meanwhile, don’t forget Wall Street because that is setting the global equity market sentiment.
The Nasdaq closed Friday at a fresh record high as gains in chipmaker Nvidia outweighed worries that the Federal Reserve will delay interest rate cuts. The S&P rose too while the Dow Jones was at 39,000, below the historic 40,000 mark it hit last week. The Dow lost 2.33%, marking its first negative week in five.
Chipmaker Nvidia, whose blockbuster results we spoke of last week, rose 15% in just the last week thanks to a better than expected quarter earnings report. CNBC reported that shares topped $1,000 for the first time this week on the earnings.
Meanwhile, a stock you may not have heard of in a while though its brand or product you must have seen in India, Dell Technologies hit a record high on Friday.
The reason, it was lifted in a rally in companies working on generative artificial intelligence applications.
Meanwhile, A Small Story Of Optimism And Hope
David Elias, now 79 years old, predicted in a 1999 book, “Dow 40,000: Strategies for Profiting from the Greatest Bull Market in History,” that the index would cross the milestone by 2016.
Obviously he missed the mark by eight years, but the forecast was better late than never, he said in an interview to the WSJ.
The 30-stock index crossed 40000 in intraday trading for the first time May 16—and then closed above the mark the following day.
Elias’s prediction failed to account for the 2000 dot-com bust and the 2008 financial crisis both of which pulverised Wall Street.
The WSJ says Elias is already out with a new hot take: He expects the Dow to hit 67000 in the next 10 years.
“I’m 100% confident,” he said. “And artificial intelligence is one of the reasons why I feel that way.”
To return home, the late and legendary investor Rakesh Jhunjhunwala had predicted in 2021 that the Nifty would touch 90,000 to 100,000 by 2030 or 6 years from now.
"India will surprise on the upside. I can't tell you the depth or direction as it depends on so many factors."
Who knows ?
Meanwhile, the Rupee is on a strong wicket.
It strengthened by the most in five months, even as equities hit record high and amid a larger-than-expected dividend payout to the government.
The rupee rose as much as 0.3% to Rs 83.03 against the dollar on Friday, the most since December 15, as markets reopened after being shut on Thursday, Bloomberg reported.
The Reserve Bank of India’s $25 billion payout to the government, which is almost double than what was budgeted, is also boosting sentiment as the funds could be used to finance more spending.
Oil meanwhile is holding near three month lows as the markets are seeing lower geopolitical risks even as supply levels seem strong.
Brent crude was quoting a shade over $82 a barrel over the weekend.
Brent is still up about 7% up this year though it has fallen since mid-April, reported Bloomberg.
Betting Ads
Now, to move on to advertising and how a good part of it is not what it sounds or looks like and why that is important for businesses and consumers.
The Advertising Standards Council of India (ASCI) last week published its Annual Complaints Report, looking at advertisements that were considered objectionable in the fiscal year 2023–24.
ASCI says they looked at 10,093 complaints and investigated 8299 advertisements.
Interestingly, almost 50% of the advertisements picked up by ASCI were not contested by the advertisers.
A total of 98% of cases eventually required modification as they violated the ASCII Code.
The majority of violations were on account of misleading claims at 81%, followed by ads that promoted harmful situations or products at 34% (the same ad can be processed for multiple objections).
Not surprisingly, digital ads accounted for 85% of ads processed, and had a lower compliance rate of 75%, compared to 97% for print and TV.
ASCI says this raises serious questions about the online safety of consumers, as was highlighted last year as well. 94% of the ads that were processed were picked up suo moto by ASCI.
We have in the past spoken of healthcare being the most violative sector, contributing to 19% of cases but the sector that follows closely after is illegal offshore betting at 17%.
This was a surprise and suggests a larger problem which obviously goes beyond advertising.
To get a general sense on what ASCI had been picking up in the last year and how they were geared for the workload ahead, I reached out to Manisha Kapoor, CEO of ASCI and a frequent guest on our show.
I began by asking her about the illegal betting ads and what their rise signified ?
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Could Climate Change Increase Cases of Air Turbulence?
There is not enough data on the impact of climate change on air turbulence except that climatic conditions are changing, even at 37,000 feet above sea level and that will impact aircraft flying at that altitude if they encounter sudden bursts of unexpected turbulence.
Passengers on Singapore AIrlines flight SQ321 faced a nightmarish situation on May 21 or last week when their flight was hit by severe turbulence on the way from London to Singapore.
The aircraft encountered turbulence much closer to its destination and then diverted to Bangkok.
A 73-year-old British man died in the incident and reports suggest some 71 were injured, many quite severely including spinal cord injuries arising from most likely hitting the top of the aircraft.
There is much literature on why turbulence can occur but if you are a frequent flyer you might want to listen to what is coming up. Equally, you will find which routes are more likely to face them, around Japan and parts of Latin America for instance.
Because while turbulence can be sudden, the latest generation commercial airlines may be better equipped to see it coming and of course it also depends on how pilots interpret the weather radar screens in front of them.
As a passenger you can only ensure that you are wearing belts at most times.
But to come back to climate change and why perhaps it is more important to be belted up, I reached out to Captain Amit Singh, an active Airbus A320 pilot and also Founder of Delhi-based Safety Matters Foundation and began by asking him how he was looking at the Singapore AIrlines incident, now that a few days had passed and there was more information and insights at hand.
