Reserve Bank of India's (RBI) rate hike spree has seen the repo rate jump from 4% at the beginning of FY23 to 6.50% now (post the February rate hike). But despite six successive rate hikes affected by the country's apex bank so far beginning May 2022, consumer prices continue to be above the regulator's upper tolerance level of 6%. As per the latest data, retail inflation based on consumer price index (CPI) jumped to 6.52% in January, breaching the central bank's comfort zone once again after remaining below the threshold of 6% over the past two months before spiking again. Does this mean more rate hikes could be in the offing? N Janardhan Rao, Deputy Editor, The Global ANALYST, spoke to Anagha Deodhar, Senior Economist (India), ICICI Bank, Mumbai, to find out what to make out of the central bank's current rate rise spree, what is driving it, what could be the apex bank's likely move when the Monetary Policy Commitee (MPC) meets next, i.e., in April, and when she foresees the current spate of rate hikes finally ending, etc., amongst a range of other related issues. Read on>>>

How do you view the latest rate hike announced by the Reserve Bank of India?

The Covid-19 crisis was a black swan event, and it caused major disruption in the global economy and financial markets. One of the most significant disruptions was the sharp spike in inflation globally. Early on, when successive prints of inflation made central bankers nervous, within the economists' community there were two divergent views on inflation: one that it was mainly driven by supply constraints and hence was transitory; and two, the longer inflation stays elevated it    Full Article ...

ChatGPT-Microsoft combine threatens to end Google's long-held dominance of online search, and also possibly of web browser market, if the latter doesn't act quickly.
- By Rob Enderle, President and Principal Analyst, The Enderle Group, Bend, Oregon, USA

Bing finally gets the zing it needed so badly to stay relevant, to stay in the game, courtesy Microsoft's alliance with OpenAI, the maker of ChatGPT, a chabot that has taken online search market by storm, thanks to its ability to interact in a conversational way (human-like response to queries) and is being touted as the future of search. While the Redmond software giant is basking in AI glory, its archrival Alphabet, the parent company of Google, is still smarting from the Bard fiasco, even before it could be formally launched. Bard is Google's AI-powered chatbot, whose launch was aborted recently after it threw an erroneous search result.

A lot of folks are wondering how Microsoft's ChatGPT was able to blindside Google. I expect it's because ChatGPT offers a significantly improved search experience that puts Google's leadership in both browsers and search at great risk. Well, you only have to look back a couple of decades to when Google took browser leadership from Microsoft or how Microsoft took that leadership away from Netscape to see a similar pattern. In all three cases, the entrenched, dominant company didn't invest enough in the technology to protect its leadership, probably because the revenue connected to the technology wasn't the responsibility of the team that owned it.    Full Article ...

While only time will tell about the credibility of its accusations against the Adani Group, Hindenburg did achieve its objective as the target stocks fell between 30% and 80% and that is a juicy outcome for any short seller.

- By M R Raghu, CFA, FRM, FCMA, CEO - MARMORE MENA Intelligence

Indian capital market, probably for the first time, is getting a taste of the global short-selling bite through the Hindenburg- Adani short- selling saga that wiped out more than $125 bn in market capitalization. Adani Group's listed stocks tumbled across the board after a scathing research report from Hindenburg, a New York-based short seller, which was published on January 24, 2023. Post the publication of the report, the market capitalization of Adani Group stocks plummeted from nearly 19 lakh cr to 8.7 lakh cr, all in just 15 trading sessions. While a lot has been said about this drama that is still playing out, my focus is to look at this from the standpoint of four key stakeholders, viz., the Adani Group (the target), Hindenburg (the short seller), Securities and Exchange Board of India (SEBI) (the regulator) and Investors (both retail and institutional).

Before we get into that, it will be instructive to explain short selling as an instrument employed by famed short sellers to call foul on companies that they deem flush with bad news. Most of the celebrated short sellers come from the US financial system that provides several legal and regulatory protections, which makes it difficult to pursue damages. Though long-term stock market investing is all about making money, in the short-term, there are as many companies falling as rising. In    Full Article ...

The recent discovery of massive reserves of Lithium, which find application in a range of modern machines-from computers to smartphones to electric vehicles-could prove to be a game changer for India.
- By Rajat Kapoor, Managing Director, Synergy Consulting, Inc., New Delhi
Lithium has been rightfully called the "new oil" (or white gold, as against black gold for oil) as companies and countries scramble to get their hands on this scarce and much sought-after resource. The fame and adulation that this element now commands stem from its uniqueness and versatility as a vital component in the production of lithium-ion (Li-ion) batteries, which are today found in practically every facet of our everyday lives. Since smartphones, tablets, and laptops are now almost universally used, and with it comes the incessant need to keep these devices fully juiced up, there has been a staggering increase in demand for Li-ion batteries to power all of these gadgets and keep our lives humming. Along with handheld devices, the rapid growth of the electric vehicle (EV) industry is further anticipated to add to Lithium (Li) demand in the coming years as governments across the world strive for clean energy regulations.

Lithium, the rare earth metal that is aiding the EV revolution
EVs are increasingly being championed as the primary tool for decarbonizing the road transportation industry, one which generates 16% of all emissions worldwide. Their sales have thus surged exponentially in recent years, with governments across the globe providing subsidies and encouragement for citizens to adopt EVs as their primar    Full Article ...

Asia's third-largest economy grew at a subpar 4.4% in the third quarter ended December 31, 2022, of the ongoing fiscal year, as weak manufacturing data coupled with waning consumer demand weighed on; besides, upward revisions in previous quarters' data too had a bearing. However, a subdued performance in Q3 notwithstanding, the Indian economy, also the world's fifth-largest, is set for a solid rebound, with the country's central bank forecasting it to notch up a healthy growth of 7% in FY23.

The worst fears of skeptics have come true as the Indian economy-now Asia's third and also the world's fifth-largest- has hit a speed bump with gross domestic product (GDP) growth falling below 5% for the first time since the March quarter of FY2021-22. As per the latest government data, India's GDP, after clocking growth of 13.5% and 6.3% respectively in the first two quarters of the ongoing fiscal year (FY 2022-23), helped by favorable base effect in the wake of the Covid-19-induced slowdown as well as seasonal festival demand, grew at a paltry 4.4% year-on-year in the three months through December, hit by high inflation that has continued to be a major cause of concern for the central bank which has raised its key policy rates six times in less than a year so far (RBI effected its first repo rate hike in May 2022 after a gap of two years or since May 2020 when it turned its stance dovish in the wake of the virus outbreak-induced factory lockdowns and mobility curbs that brought economic activity to a near standstill), while weak consumer demand too played spoilsport. "GDP at constant (2011-12) prices in Q3 2022-23 is estimated at 40.19 lakh cr, as against 38.51 lakh cr in Q3 2021-22, showing a growth of 4.4%," a press release from the National Statistical Office (NSO), which is a part of the Ministry of Statistics and Programme Implementation (MOSPI), GoI, stated. The GDP    Full Article ...

In his recent annual State of the Union speech to Congress, US President Joe Biden called for a range of policies that would "boost opportunity and reduce poverty, improve health and well-being, and advance widely shared prosperity." He also criticized oil companies for making high profits and other firms for benefiting at the expense of consumers, and he challenged the opposition Republicans, who now control the lower House of Representatives, to lift what is called the "debt ceiling", to allow the administration to borrow more to finance its budget plans. Biden said that the administration would "fully pay" for his expansive policies and so reduce the federal government deficit by $1 tn by requiring well-off households and profitable corporations to pay a "fairer amount of taxes." This promise was to be achieved over the next decade. In the immediate period, the government deficit and the public sector debt are set to rise.
Rising debts and fears of a default
The Congressional Budget Office (CBO) reported that the US federal government deficit had already reached $459 bn in the first four months of the budget year that started in October 2022    Full Article ...

The world continues to pay the price for Russia's ongoing military misadventure in neighboring Ukraine.

It is more than a year now since Russia invaded its neighbor Ukraine. And its ripple effects on the global economy have continued to be felt amid a massive blow to an already crippled global supply chains and shortages of food, fertilizers and fuel. Needless to say, the yearlong Russian-Ukraine war has greatly compounded numerous pre-existing adverse global economic trends, including rising inflation, increasing food insecurity, extreme poverty, de-globalization, and more importantly waning environmental degradation. Amidst the long-lasting economic shock of war, the world economy is facing the effects of fewer supplies of grain, fertilizer, energy, and more significantly higher inflation, and more economic uncertainty. While the developed world has been able to survive the hitches, the pain has been worse in developing economies. Nevertheless, in the United States and other wealthy nations, there has been a rise in consumer prices, caused in part by the war's effect on oil prices. However, of late, the price increase has eased and has raised hopes that the US Federal Reserve will not raise interest rates further as higher interest rates could lead to a recession. China, which dropped its severe zero-Covid restrictions that slowed growth in the second-largest economy, too has not been that badly affected. On the other hand, some good luck has helped Europe, warmer-than-usual-winter has helped lower natural gas prices and limit the damage from an energy crisis after Russia largely cut off gas to Europe. Nonetheless, the war is causing pain in the region as    Full Article ...

All is not well at the once high-flying US investment bank, which has just posted its worst quarterly profit data in over a decade. Worse, to quote its CEO, the worst may still not be behind!

- By Shail Apte, Founder & CEO, Airtham, Ahmedabad

Deals and market activ- ity boomed over the pre- vious two years, but good times had to come to an end. The Federal Reserve abruptly cut off the post-pandemic liquidity that had been supporting the boom to curb inflation that had begun to get out of control. Everyone in the financial services industry was affected, but Goldman Sachs (Goldman), one of the world's premier investment banks, was hurt more severely than anticipated. Recently, Goldman released its Q4 results. And they were not great. When compared to the same quarter last year, revenues were down 16% at $10.59 bn, while profits fell nearly a third (or 66%, to be precise) to $1.33 bn, or $3.32 per share, vis-A-vis analysts' estimate of a drop of 39%. As a result of this being far more severe than anticipated, Goldman's stock fell 7%. The CEO, David Solomon, described the result as 'disappointing' and cited the "challenging economic backdrop" as the cause. This was by far the widest miss in earnings for Goldman since 2011.

What went wrong?
Goldman's business can be broken down into three broad segments, viz., Global Banking & Markets; Asset and wealth management; and Platform Solutions (Retail services). The largest contributor to Goldman's revenue is its Global Banking & Markets division.

Investment banking heavily relies on market activity to generate revenues, and as the investment climate has deteriorated, there are fewer underwriting deals, which in turn have meant lower revenues. A drop in fees in this segment was largely expected for Goldman, although the scale of the drop was    Full Article ...

Unlike the existing "incurred loss approach", wherein banks provide for losses only after they occur, RBI's proposed "Expected Credit Loss-Based Provisioning" framework would require banks to make provisions considering the probability of default on a "forward-looking basis" so as to ensure early provisioning and a front-ended capital cushion.

- By Ajay Chandra Pandey, AGM, and Faculty, State Bank Academy, Gurugram

As the recent NPA saga, which hit the Indian banking sector hard, showed the biggest risk facing the banks today is none but the credit risk. Just to brush up, the Reserve Bank of India (RBI) defines credit risk as the risk that the loans given by a bank will not be paid in full, i.e., the bank is likely to suffer some level of losses on its exposures. In this context, it is important to first talk about things such as credit assessment, credit impairment, and credit losses, which are natural corollaries of the lending business. Credit assessment, a forward-looking process, done before lending to determine the quality of credit assets, should be supported by loan loss provision along with the pricing and disbursement of loan as loan loss provision is made to cover the losses arising from the default of loans. But loan loss provisioning currently being done by Indian banks is based on the "Incurred loss" methodology which used to be the global standard till recently, in which provisioning is made after the credit has remained in default over 90 days and provision is decided as per regulatory definition and prescription. Credit default is a lagging risk indicator, therefore, loan loss provisioning based on it happens after credit default recognition. Credit risk increases much earlier to default, but provisioning is done much later, creating a gap between the    Full Article ...

Ethanol will be key to India's green energy transition.

- By Manish Vaid, Junior Fellow, Observer Research Foundation, New Delhi

India's green mobility vision aims to reduce the country's carbon foot- print and dependence on fossil fuels, improve air quality, and lower greenhouse gas emissions by promoting the use of alternative fuels and technologies. The government has set ambitious targets to increase the adoption of electric vehicles (EVs) and other green fuels such as hydrogen and biofuels. Ethanol-blended petrol is one of the major components of biofuels, others being biodiesel, compressed biogas, and bio-ATF.

Recently, at the India Energy Week 2023 in Bengaluru, Prime Minister Narendra Modi officially launched the ethanol-blended fuel E20 across 15 cities, two months ahead of the scheduled rollout in April 2023. E20, the next-generation fuel, is a blend of 20% ethanol and 80% petrol. Earlier, in June last year, the PM declared that India had achieved 10% of its ethanol blending target five months ahead of the schedule.

From April 1, 2023, India will gradually introduce a 20% bioethanol-blended fuel, which will accelerate the government's efforts to achieve a 20% ethanol blending target across the country by 2025-26, advanced from 2030. In 2018, the government notified the 'National Policy on Biofuels' to achieve a 20% blending of ethanol in petrol by the year 2030.    Full Article ...

Even the most talented women face challenges at workplaces but they get past those obstacles with sheer determination to prove themselves even in the toughest work environment.

International days are essentially meant for educating the public on issues of concern and encouraging people to mobilize political will to address them. One such day is International Women's Day. It is celebrated on March 8 every year. It is the day meant for recalling the lives of brave women who trod new paths to create a world "that's diverse, equitable, and inclusive". For, such celebration of women's achievement sensitizes the public about discrimination and encourages them to act collectively "to drive gender parity". One such inspiring woman worth remembering on this day is Dr Kamala Sohonie, an Indian biochemist. She was born in 1912 in Indore. Her father, Dr Narayanarao Bhagvat, was a chemist. On graduating from Bombay University in 1933 with Chemistry as her main and physics as a subsidiary subject, she, driven by a desire to become a chemist like her father, applied to the Indian Institute of Science (IISc) for a research fellowship. Unsurprisingly, it was turned down by the then Director Prof C V Raman on the grounds that women were not competent enough to pursue research. This "extreme egotist"-who, as Prof Kameshwar Wali said, quoting Sivaraj Ramaseshan, the biographer of Prof Raman, "in private conversation ... showed such an unbelievable scientific humility as to make one wonder which was his true self"-on Ms Kamala sitting on Satyagraha outside his    Full Article ...

As the recent Chinese spy balloon incident shows, the use of spy balloons can contribute to an overall trend of increased militarization as countries develop and deploy advanced intelligence-gathering technologies to gain a strategic advantage over their rivals.

- By Surbhi Singhal, Senior Research Analyst, Advance ThinkTank, New Delhi

The news of the discovery of Chi- nese spy balloons by the United States military, which spread like wildfire, still remains fresh. The development is disturbing and has rightly raised serious concerns the world over. In this article, we'll delve into the history of spy balloons, reveal how they've been used by governments in the past, and explore the implications of such actions on a global scale.

What exactly are spy balloons and how do they work?
Essentially, spy balloons are just like regular balloons, but with a twist. These high-altitude balloons are equipped with sophisticated surveillance equipment, such as cameras and sensors that allow them to gather intelligence from a distance. They can be remotely controlled or fly autonomously, and they can stay aloft for days, even weeks at a time.

The use of spy balloons dates back to World War I when they were used for aerial reconnaissance. Over the years, the technology has improved significantly, making these balloons even more effective at gathering intelligence. Today, they are used for a wide range of purposes, from military surveillance to monitoring natural disasters and tracking wildlife.    Full Article ...

NSE launches India's First Municipal Bond Index

NSE Indices, a subsidiary of NSE India (National Stock Exchange of India Ltd.), recently launched the country's first ever Municipal Bond Index. Called 'Nifty India Municipal Bond Index', it tracks the performance of municipal bonds issued by Indian municipal corporations across maturities and having investment grade credit rating. The index includes municipal bonds issued as per the Securities Exchange Board of India (SEBI) Issue and Listing of Municipal Debt Securities Regulations, 2015. Presently, the index has 28 municipal bonds issued by 10 issuers all having credit rating in the AA rating category, a statement from the country's leading bourse read. According to the press release from the exchange, the index constituents are assigned weights based on their outstanding amount. Indian municipal bond market has seen a resurgence of issuances after the SEBI Issue and Listing of Municipal Debt Securities Regulations, 2015 came into effect and a renewed emphasis on municipal finance by policy-makers. Raising money from capital markets incentivizes municipal corporations to fund new projects and improve civic infrastructure while encouraging them to become financially disciplined and governance-oriented. Commenting on the occasion, Mukesh Agarwal, CEO, NSE Indices, said, "The municipal bond market has a potential to play a pivotal role in financing the borrowing requirements of different municipal corporations in India. The proceeds from bonds issued by municipal corporations can be utilized to finance the expansion of essential municipal services through growth-driven infrastructure projects and can contribute to bridging India's urban infrastructure financing gap." He added, "The launch of the Nifty India Municipal    Full Article ...

The purpose of this brief article is to remind readers that leaders, whilst necessary, will not necessarily be good for the organization and highlights counter-productive patterns of executive behavior to watch out for.

- By Michael Walton, Business Psychologist and Visiting Professor, UK

Executives-in differing ways and to differing degrees-will understandably seek to advance their own personal agendas when opportunities to do so arise or if such opportunities can be generated or manufactured. The drive to be successful can, however, for some result in dishonest, duplicitous, manipulative, and fraudulent behavior. Leadership misbehavior will be particularly prominent in organizations where internal competition is promoted and celebrated, where a culture of 'dog-eat-dog' is the norm, where blame is endemic, and where executive success is predicated on the basis of disabling or discrediting rivals. Recent years have seen increasing interest in so-called 'toxic leadership' and so the three patterns of such antisocial behavior highlighted illustrate behavioral patterns which damage the integrity and functioning of organizations and erode the well-being of those who work within them.

Whilst we should expect that most executives will work in ways which are ethical, considerate, and collegial, there will be some who believe that their route to power and success will necessarily require trickery, deceit, betrayal, manipulation, false reporting, and white-collar crime.    Full Article ...