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EXCLUSIVE


HOW RBI CAN DESIGN INDIA'S UPCOMING CBDC

There are several options for the central bank to choose such as centralised or
distributed ledger, and account-based or token-based to meet its several goals
from financial inclusion to faster cross-border transactions.

 * ETBFSI Research
 * ETBFSI
 * October 31, 2022, 08:00 IST

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The Reserve Bank of India is readying to launch India's own central bank digital
currency (CBDC), which would be backed by the government and would be a legal
tender.

While the CBDC would help meet certain goals such as minimising the cost of
curency, spurring finacial inclusion and making cross-border transactions faster
and efficient, it is not clear how the central bank will go about it.

Here are the potential design constructs the RBI can use to deploy CBDC.



Direct versus indirect against hybrid

In the direct CBDC construct, the central bank maintains a ledger of all
transactions and carries out retail transactions, given that CBDC is a direct
claim on the central bank. The indirect or synthetic CBDC approach entails a
payment system operated by intermediaries that mirror narrow payment banks.
Consumers have claims on these intermediaries who operate retail payments. They
need to completely honour all liabilities to retail clients with claims on the
central bank.

In a hybrid CBDC approach, intermediaries maintain the accounts and utilise
money deposited for various purposes, while the CBDC remains a direct claim on
the central bank. The central bank also maintains a central ledger of all
transactions and operates a backup technical infrastructure allowing it to
restart the payment system if intermediaries fail. With this approach, central
banks can disseminate CBDC to commercial banks like they do with cash presently,
while commercial banks would distribute these to individuals and businesses by
setting up and managing digital wallets.

Another advantage of this model is that it minimises disruption to the prevalent
banking system since it can leverage existing processes such as customer
onboarding, identity checking and AML monitoring by commercial banks.



Privacy and transparency

Currently, for transactions involving commercial bank accounts, details of the
customer’s identity and transactions are visible to the account-holding
institution and participants involved. For cash currency-based transactions,
details of currency movements are not visible to either the central bank or the
intermediary financial institutions involved.

In the CBDC context, with a distributed ledger, the account and transaction
data, encrypted and digitally signed, may be shared with multiple intermediaries
participating in the financial system. In addition, the movement of token-based
CBDC from one to another customer’s digital wallet may provide traceability for
individual currency tokens.

The issue of privacy has been addressed to some extent with PSD2 and open
banking. GDPR protects the confidentiality of identity and sensitive
information. These two complementary and balanced regulations can also be
extended to address CBDCs.

Centralised ledger versus distributed ledger

The centralised approach is used for settlement of physical currencies and is
the easiest one to build a CBDC ecosystem on. Centralised ledgers can lead to
bottlenecks and are vulnerable to cyber-attacks. The distributed ledger is much
less vulnerable to unauthorised or malicious tampering. With this approach, the
nature of the financial industry encourages consideration of permissioned
ledgers, passing on some amount of control to the regulator while still offering
its advantages.

Account-based versus token-based

In account-based CBDC, ownership is linked to an identity such as an account,
and transactions are authorised based on identification. This approach is simple
and easy to implement on a mass scale. With token-based CBDC, transaction
authorisation happens solely on the basis of a digital signature, which may
provide advanced security. Another approach is a combination where ownership of
the CBDC can be token-based and consumers can be account-based.

Interest-bearing versus non-interest-bearing

As in the case of physical currency, interest disbursal by the bank for holding
digital currency may be similar but with additional considerations. With an
account-based approach, depositing digital currency with a holding institution
(such as a commercial bank) may entail an interest pay-out. With a purely
token-based approach, the currency cannot be made interest-bearing since it
resides in the consumer’s wallet. With a combined approach, CBDC deposited in an
account with an intermediary bank may earn interest, while CBDC residing as
tokens in the consumer’s wallet will not earn interest.

Digital identity verification and authorisation

Another aspect to consider from a regulatory compliance perspective is digital
verification of the customer’s identity. While verification through various KYC
processes is applicable for CBDC holders too, newer approaches for creating
digital identity authentication are available now. These are based on a
permissioned distributed ledger technology, supported on the blockchain
platform. One example of implementing digital identity verification and
authorisation is the Finacle Blockchain Identity Solution. For transaction
authorisations, either hardware-based or software-based authorisation tokens,
certificates or OTPs (one-time passwords) would need to be implemented for
customers to be able to digitally sign transactions.

Cloud deployment of the ledger

Across all design constructs for CBDCs, especially with options involving
availability of a centralised full-copy ledger of transactional movements with
the central bank, or with permissioned distributed full-copy ledgers with
multiple intermediary financial institutions, the size of the ledger would grow
at a tremendous pace. Leveraging cloud infrastructure to deploy the account
management and ledger platforms would be a good way to ensure scalability, high
performance, and support possible consensus-mechanism-based reconciliations.


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EXCLUSIVE


CASH WITH PUBLIC 75% HIGHER THAN ON NOTE BAN DAY

Currency with the public has jumped to a new high of Rs 30.9 lakh crore as of
October 21, showing that cash usage is still robust even six years after the
demonetisation move. At Rs 30.

 * Agencies

Click Here to Read This Story
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MUMBAI: Currency with the public has jumped to a new high of Rs 30.9 lakh crore
as of October 21, showing that cash usage is still robust even six years after
the demonetisation move.

At Rs 30.9 lakh crore, the currency with the public is about 75% higher than the
level for the fortnight ended November 4, 2016. On November 8, 2016, PM Narendra
Modi had announced the decision to withdraw Rs 500 and Rs 1,000 denomination
notes with the aim of reducing corruption and black money.

The intent of the move, which was criticised by many experts for poor planning
and execution, was to make India a “less cash” economy.



According to the fortnightly data on money supply released by the RBI on Friday,
the currency with the public increased to Rs 30.9 lakh crore as on October 21.
The data had put the currency in circulation at Rs 17.7 lakh crore on November
4, 2016.

Currency with public refers to notes and coins used by people to transact,
settle trades, and for buying goods and services. The figure is arrived at after
deducting cash with banks from the currency in circulation.

Cash usage has been steadily rising in the economy, even as newer and far
convenient digital alternatives of payments have become popular. The pandemic,
which laid an emphasis on contactless transactions, also gave a fillip to such
digital modes.

A 2019 RBI study on digital payments had partly addressed the issue. “Although
digital payments have been growing gradually in recent years, both in value and
volume terms across countries, data also suggests that during the same time,
currency in circulation to GDP ratio has also increased in consonance with the
overall economic growth,” it had said.

“An increase in digital payments-to-GDP ratio over a period does not seem to
automatically imply a fall in the currency to GDP ratio of the country,” it had
added.



It had said that after demonetisation, India has witnessed a significant
increase in digital transactions, although the digital payments-to-GDP ratio in
the country has been traditionally low.

In a recent note, economists at SBI had said the currency in circulation (CIC)
declined by Rs 7,600 crore in the Diwali week, which was the first such decline
in nearly two decades if one were to exclude the 2009 festivities, which saw a
marginal dip due to the global financial crisis.


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EXCLUSIVE


HOW WILL RBI'S CBDC DIGITAL RUPEE WORK, HOW IS IT DIFFERENT FROM DIGITAL MONEY?

RBI believes that the digital rupee system will "bolster India’s digital
economy, enhance financial inclusion, and make the monetary and payment systems
more efficient."

 * Anulekha Ray
 * ET Online

Click Here to Read This Story
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The Reserve Bank of India (RBI) is all set to commence the pilot project of
India's very own digital currency —Digital Rupee — for the wholesale segment
from November 1, 2022.

"The use case for this pilot is the settlement of secondary market transactions
in government securities," the regulator mentioned in a notification on October
31, 2022. The RBI has identified nine banks including State Bank of India, Bank
of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, YES
Bank, IDFC First Bank and HSBC to participate in the pilot project of wholesale
Digital Rupee.

The central bank added that the the pilot project for a retail version of the
Digital Rupee will be launched in a month.



Explaining the features and purpose of Digital Rupee, the regulator on October
7, 2022 released a concept note on the Central Bank Digital Currency (CBDC). RBI
will soon start the pilot launch of the digital rupee for specific use cases.
The concept note explains the objectives, choices, benefits, and risks of
issuing a Central Bank Digital Currency in India.

What is Digital Rupee?

The Central Bank Digital Currency (CBDC) can be defined as the legal tender
issued by the Reserve Bank of India, according to the concept note. Touted as
Digital Rupee or e-Rupee, RBI's CBDC is the same as a sovereign currency and is
exchangeable one-to-one at par with the fiat currency, the regulator mentioned

Features of Digital Rupee

1) CBDC is a sovereign currency issued by central banks in alignment with their
monetary policy.

2) It appears as a liability on the central bank’s balance sheet.

3) It must be accepted as a medium of payment, legal tender, and a safe store of
value by all citizens, enterprises, and government agencies.

4) CBDC is freely convertible against commercial bank money and cash.

5) CBDC is a fungible legal tender for which holders need not have a bank
account.

6) CBDC is expected to lower the cost of issuance of money and transactions.



Types of CBDC that could be introduced

The Central Bank Digital Currency can be classified into two types — general
purpose or retail (CBDC-R) and wholesale (CBDC-W). Retail CBDC can be used by
all including the private sector, non-financial consumers, and businesses.
Wholesale CBDC is designed for restricted access to select financial
institutions.

While retail CBDC is an electronic version of cash primarily meant for retail
transactions, the wholesale CBDC is designed for the settlement of interbank
transfers and related wholesale transactions.

"It is believed that retail CBDC can provide access to safe money for payment
and settlement as it is a direct liability of the central bank. Wholesale CBDC
has the potential to transform settlement systems for financial transactions and
make them more efficient and secure. Going by the potential offered by each of
them, there may be merit in introducing both CBDC-W and CBDC-R," RBI said in the
concept note.

How is Digital Rupee different from money in digital form?

Explaining the difference between CBDC and money in digital form, RBI said, "A
CBDC would differ from existing digital money available to the public because a
CBDC would be a liability of the Reserve Bank, and not of a commercial bank."

Why is RBI introducing CBDC?

"CBDC is aimed to complement, rather than replace, current forms of money and is
envisaged to provide an additional payment avenue to users, not to replace the
existing payment systems," the regulator said.

RBI believes that the digital rupee system will "bolster India’s digital
economy, enhance financial inclusion, and make the monetary and payment systems
more efficient."

Pointing out the motivations for India to consider issuing CBDC, RBI mentioned
these reasons:

a) Reduction in cost associated with physical cash management

b) To further the cause of digitisation to achieve a less cash economy.

c) Supporting competition, efficiency, and innovation in payments

d) To explore the use of CBDC for improvement in cross-border transactions

e) Support financial inclusion

f) Safeguard the trust of the common man in the national currency vis-à-vis
proliferation of crypto assets

Digital rupee vs cryptocurrency

RBI also expressed concern about the popularity of cryptocurrency in recent
years. "The proliferation of crypto assets can pose significant risks related to
money laundering and financing of terrorism. Further, the unabated use of crypto
assets can be a threat to the monetary policy objectives as it may lead to the
creation of a parallel economy and will likely undermine the monetary policy
transmission and stability of the domestic currency. It will also adversely
affect the enforcement of foreign exchange regulations, especially, the
circumvention of capital flow measures," it said.

"Further, developing CBDC could provide the public with a risk-free virtual
currency that will provide them with legitimate benefits without the risks of
dealing in private virtual currencies. It may, therefore, fulfill the demand for
secured digital currency besides protecting the public from the abnormal level
of volatility that some of these virtual digital assets experience. Thus,
safeguarding the trust of the common man in the Indian Rupee vis-à-vis
proliferation of crypto assets is another important motivation for introducing
CBDC," the regulator further mentioned.


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EXCLUSIVE


SGX NIFTY UP 90 POINTS; HERE'S WHAT CHANGED FOR MARKET WHILE YOU WERE SLEEPING

Major Asian stocks opened higher on Monday as global market sentiment improved
on solid US jobs data and hopes for an economic reopening in China. MSCI's index
of Asia-Pacific shares outside Japan was trading 0.63 per cent higher.

 * ETMarkets.com

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Domestic equities markets are set to kick off the new week on a positive note on
Monday thanks to strong buoyancy in Asian markets and a rally in US stocks over
the weekend. Here's breaking down the pre-market actions:

STATE OF THE MARKETS

SGX Nifty signals a positive start
Nifty futures on the Singapore Exchange traded 86.5 points, or 0.48 per cent,
per cent higher at 18,289.5, signaling that Dalal Street was headed for a
positive start on Monday.


 * Tech View: Domestic headline equity index Nifty today formed a bullish candle
   on the daily scale and a long bull candle on the weekly charts, indicating
   that the bulls may get stronger going forward.
 * India VIX: Despite the risk-off mood in the market, the volatility index fell
   amid closure of positions in the Nifty50 options ahead of the weekly expiry.
   The ‘fear gauge’ ended 1.8% lower at 15.66.


Asian stocks gain in the early trade
Major Asian stocks opened higher on Monday as global market sentiment improved
on solid US jobs data and hopes for an economic reopening in China. MSCI's index
of Asia-Pacific shares outside Japan was trading 0.63 per cent higher.



 * Japan's Nikkei jumped 1.29%
 * Australia's ASX 200 gaied 0.36%
 * New Zealand's DJ added 0.19%
 * South Korea's Kospi surged 0.70%
 * China's Shanghai dropped 0.30%
 * Hong Kong's Hang Seng rally 1.13%


US stocks rally on Friday
US stocks advanced in volatile trade on Friday as investors digested a mixed
jobs report and comments from Federal Reserve officials on the pace of interest
rate hikes and the odds of a recession.


 * Dow Jones jumped 1.26% to 32,403.22
 * S&P 500 soared 1.36% to 3,770.55
 * Nasdaq advanced 1.28% to 10,475.25


Dollar gains over China's COVID policy
The dollar climbed on Monday as sentiment soured after China said it is sticking
with its strict COVID restrictions, quashing hopes of an imminent reopening in
the world's second-largest economy which had earlier fired a broad rally in
riskier assets.


 * Dollar index was firm at 111.09
 * Euro was little changed to $0.9930
 * Pound edged lower to $1.1324
 * Yen was struggling at 147.05 per dollar
 * Yuan exchanged hands at 7.2056 against the greenback


Crude oil prices drop
Oil fell after China signaled no relaxation of its Covid Zero stance, setting
back the outlook for consumption in the largest crude importer. West Texas
Intermediate sank toward $91 a barrel.

FII/DII action
Foreign portfolio investors (FPIs) net bought stocks worth Rs 1,436.25 crore on
Friday, provisional data showed. DIIs net sold shares to the tune of Rs 548.59
crore.



Stocks in F&O ban today
Only one stock- LIC Housing Finance- is in the ban period under the F&O segment
including companies in which the security has crossed 95% of the market-wide
position limit.

Rupee: The rupee appreciated by 53 paise to close at 82.35 against the US dollar
on Friday, boosted by persistent foreign fund inflows and a weakening greenback
overseas.

MACRO NEWS
India's foreign exchange reserves rose to $531.081 billion for the week ended
October 28, a jump of $6.561 billion over the previous week. According to the
Reserve Bank of India (RBI), the overall reserves had dropped by $3.847 billion
to $524.52 billion in the previous week.

Earnings Monday
Coal India, Divi's Laboratories, Bharat Petroleum, One97 Communication, Aditya
Birla Capital, Sundaram Finance, Tata Teleservices (Maharashtra), Vinati
Organics, KRP Mill, Endurance Technologies, PB Fintech and Affle (India) are
among the companies that will announce their results for September 2022 quarter
today.

(Disclaimer: Recommendations, suggestions, views and opinions given by the
experts are their own. These do not represent the views of Economic Times)



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EXCLUSIVE


CASH WITH PUBLIC 75% HIGHER THAN ON NOTE BAN DAY

At Rs 30. 9 lakh crore, the currency with the public is about 75% higher than
the level for the fortnight ended November 4, 2016.

 * Agencies

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MUMBAI: Currency with the public has jumped to a new high of Rs 30. 9 lakh crore
as of October 21, showing that cash usage is still robust even six years after
the demonetisation move.

At Rs 30. 9 lakh crore, the currency with the public is about 75% higher than
the level for the fortnight ended November 4, 2016. On November 8, 2016, PM
Narendra Modi had announced the decision to withdraw Rs 500 and Rs 1,000
denomination notes with the aim of reducing corruption and black money.

The intent of the move, which was criticised by many experts for poor planning
and execution, was to make India a “less cash” economy.



According to the fortnightly data on money supply released by the RBI on Friday,
the currency with the public increased to Rs 30. 9 lakh crore as on October 21.
The data had put the currency in circulation at Rs 17. 7 lakh crore on November
4, 2016.


Currency with public refers to notes and coins used by people to transact,
settle trades, and for buying goods and services. The figure is arri-ved at
after deducting cash with banks from the currency in circulation.

Cash usage has been steadily rising in the economy, even as newer and far
convenient digital alternatives of payments have become popular. The pandemic,
which laid an emphasis on contactless transactions, also gave a fillip to such
digital modes.

A 2019 RBI study on digital payments had partly addressed the issue. “Although
digital payments have been growing gradually in recent years, both in value and
volume terms across countries, data also suggests that during the same time,
currency in circulation to GDP ratio has also increased in consonance with the
overall economicgrowth,” it had said.

“An increase in digital payments-to-GDP ratio over a period does not seem to
automatically imply a fall in the currency to GDP ratio of the country,” it had
added.



It had said that after demonetisation, India has witnessed a significant
increase in digital transactions, although the digital payments-toGDP ratio in
the country has been traditionally low.

In a recent note, economists at SBI had said the currency in circulation (CIC)
declined by Rs 7,600 crore in the Diwali week, which was the first such decline
in nearly two decades if one were to exclude the 2009 festivities, which saw a
marginal dip due to the global financial crisis.

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EXCLUSIVE


BANKBAZAAR.COM TO TURN PROFITABLE IN FY23; TO GO FOR IPO BY NEXT CALENDAR:
FOUNDER CEO ADHIL SHETTY

"We are happy that we are growing profitably and we have delivered 85 per cent
year-on-year top line growth in Q2FY23. We had annualised revenue of Rs 170
crore (up by 85 per cent from a year ago) in Q2 and in August and September,
both the months, we were EBITDA positive.

 * PTI

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BankBazaar.com, which eyes to become the most profitable co-branded credit card
platform, expects to turn profitable this fiscal and plans to file for an IPO by
the end of next year, founder and CEO Adhil Shetty said. The company which
started off as a loan comparing platform in 2008 is now majorly into co-branded
credit card space, issuing two such cards in association with Yes Bank and RBL
Bank.

In the second quarter of FY23, the company registered 85 per cent year-on-year
growth in its top line, clocking a revenue of Rs 170 crore. Company's credit
card sales were up by 115 per cent in Q2.

"We are happy that we are growing profitably and we have delivered 85 per cent
year-on-year top line growth in Q2FY23. We had annualised revenue of Rs 170
crore (up by 85 per cent from a year ago) in Q2 and in August and September,
both the months, we were EBITDA positive.



"So we are projecting that whatever we have delivered in Q2, that will continue
and that's the kind of growth we would like to deliver for the full year. And we
would like to deliver like we have delivered in August and September. We would
like to aim and deliver a full year profit for FY23," Shetty told PTI in an
interview.

EBITDA (earnings before interest, taxes, depreciation, and amortization) is the
measure of a company's overall financial performance.

In fiscal year 2021-22, BankBazaar.com had a top line of Rs 150 crore on an
annualised basis.

Shetty said that the growth trend will continue in Q3 and Q4 of this fiscal
because of the growth in its co-branded credit card segment.

"We believe this puts in a unique position, when investors reach out to us and
talk to us, they are like this is very-very exciting, you are building a
long-term company which fits in with the regulatory regime because we are not
trying to replay some bank kind of thing but trying to partner with a bank," he
said.

BankBazaar is relying on the banks to provide the balance sheet and compliance
on KYC (know your customer).

"We believe we are in a sweet spot. Our vision for the company is to build
India's most profitable co-branded credit card platform...with the kind of
conversations that are happening now, we remain committed to our goal that we
would like as a profitable company to go for an IPO (Initial Public Offer) and
file for it by the end of next (calendar) year," he said.



In August, the official had said that the company is mulling to raise about USD
100 million over the next three years. However, there is no any immediate need
of capital for the current fiscal.

"In terms of what we feel is whenever an investor reaches out to us and talks,
is that we are growing profitably. We don't need the capital to grow, but
obviously if capital is available from a good strategic investment to accelerate
growth...I think we are happy to engage with the conversations that are
happening," he said further.

BankBazaar.com claims to be the largest fintech co-branded credit card issuer
and online platform for free credit score with over 5 crore registered users. It
is backed by global investors such as WSV, Experian, Eight Roads, Sequoia India,
Walden International and Amazon.

Talking about the credit card spend behaviour of the customers, he said a lot of
spend is now moving to online mode.

"At BankBazaar, all our co-branded credit cards, we are seeing that the online
ticket size is increasing and currently our online ticket size is about Rs
25,000. What we are seeing that more and more people are spending online.

The online ticket size per transaction is significantly higher than the offline
transactions of about Rs 13,000-14,000, Shetty said.

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EXCLUSIVE


DRINIK: HOW THIS MALWARE TARGETS INCOME TAX PAYERS

According to analysts, the Drinik malware has evolved into an Android Trojan
capable of stealing sensitive information such as banking passwords and personal
information.

 * Sneha Kulkarni
 * ET Online

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Bank customers should be aware of the Drinik malware. Analysts claim that the
malware has transformed into an Android Trojan that may steal sensitive
information such as banking passwords and personal information. Originally used
as an SMS thief, it has since acquired banking Trojan functionality. The new
version can perform overlay assaults, keylogging, screen recording, and
accessibility service abuse.

Many banks are creating awareness of this Drinik malware.

What is Drinik?According to the SBI tweet, “Drinik is a malware which is
targeting Indian taxpayers to steal customer Personal Identifiable Information
(PII) and banking credentials through Phishing attacks.




> Download applications/software from trusted sources only. Stay alert &
> #SafeWithSBI#SBI #AmritMahotsav… https://t.co/Qx6uDa7V03
> 
> — State Bank of India (@TheOfficialSBI) 1667449999000


Drinik targeting banks
According to the Punjab and Sindh Bank, “Drinik Trojan malware targets banks
using the Accessibility Service for events related to the targeted banking apps,
such as their apps. Drinik abuses the “CallScreeningService" to disable incoming
calls to interrupt the login and steal data.”

How does the Drinik Android trojan target customers?
As per the Punjab and Sindh Bank, the latest version of Drinik malware comes in
the form of an APK named iAssist. The iAssist is the official tax management
tool of the India Tax department. Once installed on a device, the APK file will
ask for permission to read, receive and send SMS in addition to reading the
user’s call log. It also requests permission to read and write to external
storage. Similar to other banking Trojans, Drinik relies on Accessibility
Service. After launching, the malware prompts the victim to grant permissions,
followed by a request to enable Accessibility Service. It then disables Google
Play Protect and starts executing autogestures and capturing key presses.



Next, it loads the genuine Indian income tax site, instead of displaying fake
phishing pages. Before showing the login page to the victim, the malware will
display an authentication screen for biometric verification. When the victim
enters a PIN, the malware steals the biometric PIN by recording the screen using
MediaProjection and also captures keystrokes. The stolen details are then sent
to the C&C server. What is worrisome is that in the latest version of Drinik,
the TA only targets victims with legitimate income tax site accounts. Once the
victim logs into the account successfully, it shows a fake dialogue box on the
screen mentioning the below message: Our database indicates that you are
eligible for an instant tax refund of Rs 57,100 – from your previous tax
miscalculations till date. Click Apply to apply for instant refund and receive
your refund in your registered bank account in minutes. It is here when the user
is redirected to a phishing website when he clicks on the Apply button. The
malware now prompts the victim to submit personal details such as full name,
Aadhar number, PAN number, and other details along with financial information,
which includes Account number, Credit card number, CVV, and PIN. The stolen data
is again sent to the C&C servers.

How to stay safe from Drinik malware?
Step 1: Download and install apps from Play Store only.
Step 2: Enable biometric authentication security on apps and for the lock
screen.
Step 3: Never click on a link you receive from a random number or source.
Step 4: Use Google Play Protect to check your apps and devices for harmful
behaviour.
Google Play Protect is on by default, but you can turn it off. For security, we
recommend that you always keep Google Play Protect on. I. Open the Google Play
Store app Google Play. II. At the top right, tap the profile icon. III. Tap Play
Protect and then Settings. IV. Turn Scan apps with Play Protect on or off.
Step 5: Change app permissions on your Android phone: You can allow some apps to
use various features on your phone, such as your camera or contacts list. An app
will send a notification to ask for permission to use features on your phone,
which you can Allow or Deny. You can also change permissions for a single app or
by permission type in your phone's Settings.


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EXCLUSIVE


2ND ROUND OF SEPT QUARTER RESULTS CAN HAVE SHORT-TERM EFFECT ON MARKET

Now, the market is close to an all-time high level. The first round of results
is mostly from high-calibre companies. About 2/3rd and 1/2nd of Nifty50 and
Nifty500 companies have revealed their results, which have been digested by the
market.

 * Vinod Nair
 * ET CONTRIBUTORS

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The market had muted expectations from the Q2 results season, which started in
October. Despite this, it was not expected to bother the market because the
broader market went down by about 7% (Nifty500 index) during the month of
September.

The downfall partially digested the disappointments to be caused by the weak
corporate earnings from the inflationary economy.

Secondly, the resilient domestic markets got upgraded because of improvements in
the US market in October.



Now, the market is close to an all-time high level. The first round of results
is mostly from high-calibre companies. About 2/3rd and 1/2nd of Nifty50 and
Nifty500 companies have revealed their results, which have been digested by the
market.

They had a negative bias but mostly in accordance with the expectations. Since
the global market continued to improve and these companies have a strong
long-term outlook, it did not affect the domestic market much.

Improvement in FIIs inflows, amid the assumption that inflation in the US has
peaked and FED policy will become less hawkish, aided the domestic trend.

However, the upcoming subdued Q2 results by tier 2 & 3 companies can have an
implication on the market in the short term. Q2 preview earnings analysis
forecasted a flattish earnings quarter for the Nifty50 index.

From that, about 32 results have been announced until the 1st of November, which
show that the total earnings are down by -2%, compared to about 7% growth
forecasted for these companies.

Now the market expects that the total earnings of Nifty50 will be down by -10%
compared to the 0% earnings growth expected a month ago. It indicates that the
next set of results will be weaker than anticipated.



A similar harsh outcome is foreseen for the broad market. Forecasts are
available for 427 equities out of the 501 stocks in the Nifty500 pack, of which
202 have already released their results.

The results were mostly in-line with expectations, with -5% earnings growth
compared to a -4% degrowth estimate.

However, the expectations for the next set of results to be announced are
weaker, with a total degrowth of -12%. This will lead to a downgrade in earnings
while the market is on an upswing.

The global market was hopeful that FED policy would allude to moderation in the
future stance. However, the hawkishness was sustained with a 75bps hike in
November. Another hike of a smaller magnitude of 50bps is expected in December.

Some uncertainty can grip the market during November & January as the actual
outcome and rate policy of 2023 pans out.

As a result, the domestic market can become volatile in the near term due to
both the factors of subdued upcoming Q2 numbers and a volatile global market.

However, we anticipate that this effect would be limited, testing investors'
tolerance in the short term, as India's medium to long-term outlook remains
positive.

We believe that the market is in the latter phase of consolidation. The US
market can bounce in the next 3-6 months if it realises that the worst of
monetary policy is over.

The sustenance of the rally will depend on the ability of the economy to
showcase a more than-forecasted fall in inflation, leading to a fall in interest
rates in the future, and reducing recessionary risk.

This could be the best-case scenario, though it is possible in the long-term as
supply constraints are removed from the War & Zero-Covid policies.

Hence, we continue to believe that buy-in-dip continues to be the best strategy
for Indian equities with a balanced portfolio approach.

(The author is Head of Research at Geojit Financial Services)

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EXCLUSIVE


KERALA BECOMES THE FIRST STATE TO INTRODUCE UNIFORM GOLD PRICE BASED ON BANK
RATE

Kozhikode, Kerala, India (NewsVoir) Kerala becomes the first state in India to
launch uniform gold price based on the bank rate.

 * PTI

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Kozhikode, Kerala, India (NewsVoir) Kerala becomes the first state in India to
launch uniform gold price based on the bank rate. The decision to introduce
uniform price on 916 purity 22 carat gold has been taken at a meeting between
officials of Malabar Gold and Diamonds, one of the largest gold and diamond
retail chains in the country and key members of All Kerala Gold and Silver
Merchants Association which sets the board rate for gold.

Commenting on the development, Mr. MP Ahammed, Chairman, Malabar Group said, "We
are extremely happy to be a part of this momentous occasion. We would like to
thank all members of the jewellery trade in Kerala for coming together and
launching a standardized gold rate across the state to safeguard the interest of
the consumers and bring in price transparency to the trade. At Malabar Gold and
Diamonds, we have shown the way by launching uniform gold price across all our
stores in the country with our 'One India One Gold Rate' policy. Being a top
gold consuming state in the country, Kerala can set the stage for a countrywide
roll-out of uniform gold price."

MP Ahammed also demanded that the selling price of gold should be unified
everywhere in the country. The gold rate should be uniform across the country
based on bank rate. However, in most states, gold is priced Rs.150-300 per gram
extra over the bank rate. In Kerala, gold used to be sold at different prices on
a particular day.



Uniform gold price based on bank rate offers an opportunity to the consumers to
purchase gold at a reasonable and transparent price. According to Mr. Ahammed,
there should be a system to determine the price of gold based on the bank rate
on a specific day in the country. Bank rate on gold, GST and other taxes
including import duty are the same across India.

For example, on November 4, 2022, the bank spot rate of 916 (22 carat) gold was
Rs. 1,640 per ounce, the bank premium was Rs. 3.50, the import duty was Rs.
6,67,467 per kg and the bank cost per gram of gold was Rs. 5,008. Adding all
these, the bank rate of November 4, 2022 amounts to Rs. 4610 per gram of 916
gold. Thanks to the price standardization, jewellers in Kerala now charge the
same price as the bank rate for gold.

(Disclaimer: The above press release comes to you under an arrangement with
Newsvoir and PTI takes no editorial responsibility for the same.). PTI PWR PWR

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EXCLUSIVE


INDIA'S FOREX RESERVES POST BIGGEST WEEKLY GAIN IN MORE THAN A YEAR

They have decline around 16% this year so far due to the RBI's intervention in
the currency markets, as well as valuation changes owing to the dollar's
strength.

 * Reuters

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India's foreign exchange reserves rose to $531.08 billion in the week through
Oct. 28, marking their biggest weekly gain since September 2021, the Reserve
Bank of India's (RBI) weekly statistical supplement showed on Friday.

The country's reserves were $524.52 billion at the end of the previous week that
ended Oct. 21.

They have decline around 16% this year so far due to the RBI's intervention in
the currency markets, as well as valuation changes owing to the dollar's
strength.



In the holiday-shortened week that ended Oct. 28, the rupee rose to snap a run
of six weeks of declines. For the current week, it closed flat at 82.44 per
dollar. [INR/]


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EXCLUSIVE


FAMILIARITY WITH MARKET VOLATILITY DRIVING INVESTORS’ RISK APPETITE: MORNINGSTAR
SURVEY

In China and India, the assets that are invested in risk-bearing financial
securities are often put into higher-risk products with high return
expectations. Allocation of funds is generally more equity-heavy in these
markets, it said. In markets like the US, 60% in equities and 40% in bonds has
been the mainstay of financial advice for decades, and it continues to be so in
multi-asset funds, Morningstar said.

 * Vidya Sreedhar
 * ETMarkets.com

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When it comes to investing in equity and portfolio construction, “risk-taking”
is a key consideration, be it any investor of any category.

For many years, risk-taking has been synonymous with institutional investors
such as pension funds and insurance companies given their investment appetite.
But in the last few years since the pandemic, retail investors have broken the
conventional thought process and emerged big contributors to capital flows in
equities.

According to a study by Morningstar, there is a higher willingness among
investors across regions to take risks in markets where investing became a part
of life early.



Investors are getting familiar with financial market volatility and tend to
build more-aggressive portfolios with higher growth exposure such as equities,
the survey showed.

In particular, portfolios are more equity-heavy in markets where retirement
needs and other major life goals are funded by individual savings.

In China and India, the assets that are invested in risk-bearing financial
securities are often put into higher-risk products with high return
expectations. Allocation of funds is generally more equity-heavy in these
markets, it said.

In markets like the US, 60% in equities and 40% in bonds has been the mainstay
of financial advice for decades, and it continues to be so in multi-asset funds,
Morningstar said.

In Australia and Canada, half of the fund allocation is in equities, which is
relatively high compared with other markets, according to the financial services
firm.

(Disclaimer: Recommendations, suggestions, views and opinions given by the
experts are their own. These do not represent the views of the Economic Times)


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