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Sebi working on ASBA-like facility for secondary markets

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Sebi chairperson Madhabi Puri Buch on Wednesday said the regulator was engaging with various stakeholders to introduce ASBA-like facility for transactions in the secondary market. At present, applications supported by blocked amount (ASBA) is used for applying to initial public offerings wherein an applicant’s account doesn’t get debited until shares are allotted to them.

“The regulator is trying to facilitate direct movement of securities and money to the issuer or the exchange. If money is passed through many hands, there is a structural vulnerability that arises at different stages. The attempt is to eliminate the process of wrongdoing through technology and process re-engineering. As a regulator, we are setting the pace globally,” Buch said at the Global Fintech Fest held at Mumbai.

Also Read: SC junks Yash Birla’s plea against Sebi in GDR case

Buch asked entrepreneurs and startups to eschew business models built on anonymity and ones that come with exit barriers for customers. She goaded the fintech community to work towards financial inclusion and build infrastructure that is inclusive by lowering the cost of delivery and allowing businesses to afford financial inclusion.

“We follow a hybrid of rules- and principles-based regulations. Startups need to think about the principles that may guide the regulator. You will be ahead of the curve if you anticipate what the regulator will do”, said Buch.

She highlighted four guiding principles for entrepreneurs. “While on social media, I can call myself Sunflower 500, but in the fintech world anonymity is not something that the regulator is going to permit. If anonymity is going to be a key selling proposition, it is not okay,” said Buch.

The second principle is regarding transparency and ensuring investors or customers take informed decisions. “The business model cannot be woven around a black box. If the regulator senses there is inadequate disclosure, then is the investor being conned? If your claims cannot be validated and audited, then your business model is under threat”, she said.

The third principle is around financial inclusion. “If you can demonstrate that your business model supports financial inclusion, the regulator will be supportive and will make things easier for you,” she said.

Buch said businesses that build barriers for customers wanting to exit are unlikely to find favour with the regulator. “There are business models that work on the assumption that once the consumer is in, it will be hard for him to get out.” Sebi does not want ‘Abhimayus’ in the market. The principle of “ek baar bakra aa gaya toh usko bahar jaane nahin denge” won’t work, she said.

Buch said the infrastructure for innovation – such as Aadhaar, or UPI or account aggregator – is a public good, and private innovation needs to build on top of those rails. “If the idea is to own the infrastructure, let’s remember that’s not the path that India takes. Markets thrive on data. Every piece of data must be disclosed and has to be available free of cost and in a machine-readable format. For us, data is a public good. No private person can claim ownership on this,” she said.

Honor says its new Magic 6 phone will let you open apps with your eyes

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Generative AI has become a prominent topic of discussion, with continuous advancements emerging on a daily basis. Today, we witness new breakthroughs in this field regularly. Now, Honor is elevating this technology to a new level with its innovative Magic 6.

Honor CEO George Zhao at Qualcomm’s 2023 Snapdragon Summit announced that its Magic 6 smartphone will feature eye-tracking technology, which will allow users to open apps and perform other actions using only their eyes. The company calls this technology “Magic Capsule,” and it is described as an “eye-tracking based multimodal interaction” feature.

ALSO READ l Honor Magic VS2 with Snapdragon 8+ Gen 1 launched, shipping expected from Oct 17

The use of eye-tracking technology in smartphones is not entirely new. In 2018, Samsung released the Galaxy S9 with an eye-tracking feature called Iris Scanner, which allowed users to unlock their phone and authenticate payments with their eyes.

Honor is the first company to announce a smartphone with eye-tracking technology that is specifically designed for interacting with apps and features. If Magic Capsule is successful, it could change the way we interact with our smartphones. Magic 6 smartphone will also have a virtual assistant powered by Qualcomm’s on-device AI. It can help you find and edit videos on your device by selecting specific criteria.

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MCX crude oil Oct futures: Wait for crude to cross Rs 7,150/bbl; check key levels to watchout for next week

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By Bhavik Patel

US Fed’s commitment to keeping inflation under control was reiterated by the Fed chairman on the 21st Sept and the market was surprised by the bullish tone. Fed had predicted an interest rate of 4.4% by 2022 and 4.6% by 2023 which was more than what the market had anticipated. The market was looking at 4-4.25% by end of 2022 and this spooked the market with investors flocking to safe-haven US dollars. Oil prices in return slid as US Dollar got stronger. Oil prices were already trending down prior to the meeting. The rate hike sank them further. In this same week, before the FOMC meeting, crude got a boost after Russian President Vladimir Putin ordered a partial mobilization of troops that could signal an escalation of the war. This will be the first mobilization called since World War II.

Crude is hanging in the balance with negative and positive news on both sides. The interest rate hike is making the USD stronger and aggressive rate hikes will push the biggest economy into recession. US and China are the biggest consumers of oil and so prices are facing resistance. Until now it was the Chinese covid lockdown which was keeping prices checked but now recession fears are helping bears to control the price. On the other side, the positive news is that OPEC+ is already under-producing and the expected surplus this year will not be significant. Also, there is an increase in demand from China after the ease of lockdown. Chinese oil demand is on the mend, with several refiners planning to ramp up processing rates considerably. Europe is an obvious source of this higher demand after an embargo on Russian crude oil kicks into effect in December and an embargo on fuel imports follows in February. In anticipation of the higher demand, refiners in China expect the government to issue another fuel export quota batch for up to 15 million tons. With Natural gas prices at a record high, there are chances of crude replacing natural gas for electricity which will create additional demand.

Also read: MCX gold may give 1% return next week, rally seems to continue; support seen at Rs 48800 per 10 gm

Crude is trying to make base around 6500 in MCX Oct Fut. Below $80, OPEC and Non-OPEC won’t let the price remain for a long time and would start cutting production. So it would be unwise to short at the current position but there isn’t any technical set-up which calls for taking a long position. Since 30th August, crude is unable to cross the 20-day moving average displaying inherent weakness. We would recommend waiting for crude to cross the level of 7150 which is a recent swing high for taking a fresh long position with an expected price till 7400 and stop loss of 6600. As long as crude is in a range of 6500-6900, one can take directional trade for intraday traders but positional traders should avoid and take only once it breaches above 7150 in the Oct contract.

(Bhavik Patel is a commodity and currency analyst at Tradebulls Securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)

Gold outlook remains bullish in 2021, but may not repeat 2020 performance this year; here’s why

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By Ravindra Rao

Gold has been on a rise for the last few years and the rally exacerbated this year owing to pandemic, which forced central banks and governments to undertake unprecedented monetary and fiscal measures to support their economies. Gold surged to a record high level of near $2080/oz in August 2020. However, it witnessed a correction of about 15% reaching a low of near $1770/oz in late November, before recovering back to currently traded $1880/oz. The recent sell-off has been mainly due to profit-taking amid hopes of a COVID -19 vaccine and year-end position squaring. Although it has slightly dented market sentiment overall outlook for gold is still upbeat.

In 2020, the Indian gold demand was severely impacted, by higher prices and slower economic activity. The sector has however seen some recovery with pick up in jewellery sales near festivals. Market players are now looking at the Budget to see if the government takes any measures to boost recovery in the jewellery sector. One of the long-standing expectations of the industry is to reduce the import duty to boost retail sales. A duty cut may make the domestic gold price cheaper and this may help boost demand. Another concern of the industry is KYC norms for jewellery purchases as it may dampen demand from small buyers. E-gold has become increasingly popular in urban India but more efforts are required to increase its appeal in the rural market in the form of digital literacy and awareness.

There are also talks of a Gold Amnesty scheme, as the move will help tap on unaccounted gold while government tax revenue may increase. In the last few years, there has been an increasing emphasis on boosting gold refining in India. The government may take further measures to incentivize domestic refining.

(Ravindra Rao is VP- Head Commodity Research at Kotak Securities. The views expressed are the author’s own. Please consult your financial advisor before investing.)

Mahindra and Mahindra Rating: Buy | Mahindra unveils five new e-SUVs

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BORN ELECTRIC VISION: Mahindra had recently unveiled its Born Electric Vision, under which it will launch five electric SUVs based on the state-of-the-art INGLO platform (using Volkswagen MEB platform components). The company will be launching its products under two brand names – XUV and BE – so that it can target a wider customer base. The company envisions 25% EV penetration for its SUVs by 2027.

XUV 400: The company also unveiled its first electric SUV, the XUV400 (link ) recently. It is a C-segment SUV of 4.2m length, and comes equipped with a 39.4 kWh battery pack and torque of 310NM. The company also revealed that the EV has a range of ~456km and has the fastest acceleration in the non-luxury segment at 0-100kmph in 8.3 seconds. It will be MM’s first SUV to feature the new bronze-coloured ‘Twin Peaks’ logo in the center. Test drives for the XUV400 will start in Dec-22, with price announcement and bookings/sales starting in Jan-23.

Localisation is high, with only the cells and motor to be imported. The battery was designed by AVL and is being manufactured in MM’s Chakan plant, eBluzent has done the integration of the control units, and Valeo has provided the motor and motor controller units. ABS and suspension technologies used in the vehicle are provided by Bosch, Mando, Tenneco.

Our viewGiven India’s current policy framework, we believe EV penetration has high potential for SUVs in particular. If similar policy support continues, we think the company’s vision of 25% EV penetration for SUVs could turn out to be conservative. Leveraging VW’s MEB platform will have its own advantages, but the company will need to crystallise a localisation plan.

We maintain our view that in the current taxation regime, the large SUV segment is the sweet spot to launch EVs due to the wide GST differential between EVs (5%) and ICEs (50%).

We expect the pricing for XUV400 to be attractive to drive penetration of EVs.

ValuationWe expect M&M to be a key beneficiary of the strong model cycle in utility vehicles (UVs). Thus, despite flattish tractor volumes over FY22-24F, based on our assumptions, we expect a ~33% EPS CAGR on a likely strong auto launch cycle. We reaffirm our Buy rating and TP of `1,505. We maintain MM as our top pick among OEMs.

Punjab CM Mann announces hike in sugarcane price to Rs 380 per quintal

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Punjab Chief Minister Bhagwant Mann on Monday announced increasing the price of sugarcane to Rs 380 per quintal from the existing Rs 360 per quintal.He announced a hike in SAP (state agreed price) of sugarcane on the floor of the Punjab Assembly on the concluding day of its brief session.

In August 2021, the then Congress government had announced a Rs 50 per quintal hike in SAP of sugarcane to Rs 360 per quintal. Mann said farmers will get an additional Rs 20 per quintal under SAP of sugarcane as compared to last year.With this decision, the state government will spend an additional Rs 200 crore annually to benefit the farmers.

ALSO READ Govt assures sugar industry of examining demand related to export, MSP, ethanol rate

Informing the House about the present status of the payments, the chief minister said the cooperative sugar mills have already paid the entire dues of the farmers but two private sugar mills have not paid the dues yet.

He informed that the owners of these mills have fled from the country, adding that the state government has already initiated the process to confiscate their assets to pay the pending dues of the farmers. 

MCX Gold prices to consolidate next week, support seen at Rs 48,900; buy on dips as recession fears persist

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By Bhavik Patel

It was a volatile market for gold this week as we had seen some very heavy moves in the currency market. Last week GBP was getting rattled after unveiling a mini budget which shot US dollar into the sky and the outcome was a blanket selling of all asset classes. While struggling against the U.S. dollar, the gold market is trading near all-time highs against all three major currencies namely Euro, Yen and Pound. Gold was trading at a 2.5 year low this week after which there was intervention from the Bank of England to keep their currency from collapsing in the way of buying long dated British bonds.  

Gold prices welcomed the BOE’s dramatic intervention that avoided an imminent gilt crash and sent global bond yields sharply lower. This was somewhat expected and serves as a reminder that gold will do just fine once the global bond market selloff is truly over. However gold is not out of the woods as rates markets are pricing the potential for higher interest rates to persist for some time, and a steady stream of Fedspeak is likely to hammer this point home. This means the US dollar will continue to remain stronger creating headwinds for gold prices. US greenback has rallied 7% over the last 12 days, which could signify a technical blow-off top. What we are seeing right now is just that as an overstretched rally needs to cool down.

Also read: RBI Monetary Policy Committee hikes repo rate by 50 bps to 5.9%, cuts FY23 GDP growth forecast to 7%  

Historically, when the U.S. dollar has peaked, gold prices have rallied around 6% in the subsequent two months. It is difficult to say whether the US dollar has peaked or not at the moment but from a structural perspective, technically and given historical context, the US dollar is nearer the top and Gold is getting nearer its floor. Growing stress in currency markets could force the Federal Reserve to take a less aggressive stance at its November meeting.

For the moment, 48900 in MCX is the immediate support as twice the market has bounced from that level. In COMEX, $1600 seems to be support for now and if that breaches, then we may see levels till $1540. On the upside, 50800 and 51500 seems to be the resistance. For next week, we continue to advocate buy on dips as the US dollar rally seems to run out of steam temporarily and with risk aversion and recession fear, we might see safe haven buying. Long position can be held with stoploss of 48900 in MCX. Next week we don’t expect any major moves barring Friday when US non-farm payroll data will be released. After such a volatile week we expect prices to consolidate next week.

(Bhavik Patel is a commodity and currency analyst at Tradebulls Securities. Views expressed are the author’s own.)

Buy these two stocks for near-term gains, charts show strength; Nifty needs to hold above 17550, buy on dips

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By Rahul Shah

FIIs have bought almost Rs 54,000 crore (including primary markets) in Aug’22, their highest since Jan’21. DIIs however turned sellers after 17 months and sold around Rs 7,000 crore. Economic indicators supporting the rally, oil price fell to 7-month low, strong FIIs buying interest, impressive quarterly results announcement and strong PMI data. Even the banking system is seeing a healthy recovery with systemic loan growth at a high of 15.3% YoY recently. The last time systemic loan grew by ~15.3% YoY was in Nov’13.

We expect northbound journeys to continue on Indian bourses not only on account of strong domestic factors but also due to global cues. The global markets climbed up 1-2% against the previous week close (Dow Jones best weekly performance since late July) despite continued tough talk by members of the Fed and ECB’s jumbo interest rate hike (75bps to 1.50%). This means, investors have already priced-in the US Fed to aggressively hike interest rates where market watchers expect a 0.50-basis-point – 75bps increase in the benchmark lending rate – which will now be held in Sept. Investors are taking advantage of enticing valuations with the S&P 500 trading around 16.8 times forward earnings, below the average of 17.2 times over the past decade.

The Cboe Volatility Index, also known as the VIX, fell below 23 after nearly touching 28 earlier in the week and Dollar Index fell to 109 from its recent high of 111. It means, volatility in the global market will cool down and markets are looking for earnings and latest economic data. The US, China, Europe, Australia and India will announce CPI and IIP data next week.

Also read: India’s milk export to boost Modi’s Atma Nirbhar Bharat; PM says dairy sector employs 8 crore families

Back home, expect the rally to continue in the domestic market due to strong macro, continued FIIs buying interest and oil price falling to 7-month low. Sensex gained nearly 1000 points or 2%, biggest weekly gain since July. Better than expected quarterly earnings along with strong PMI data and above normal monsoon will be big positive in the local bourses. FIIs were strong net buyers over Rs6000cr this week while Sensex has shown over 60k intra-day high this week. It is expected that the Indian markets will continue its upward journey and any decline will be good buying opportunity

Nifty has formed an Inside Bar on daily scale but a Bullish candle on weekly frame with long upper shadow. Now, it has to hold above 17550 zones, for an up move towards 17667 and 17777 zones whereas support is placed at 17442 and 17350 zones.

State Bank of India (Target: Rs 590)

State Bank of India has surpassed the falling supply trend line on a weekly scale and is respecting the 20 week average indicating strength in the counter. SBI has formed a strong bullish engulfing candle pattern on the weekly scale and follow up buying is visible. RSI oscillator is also positively placed on weekly and monthly charts and supports are gradually shifting higher. Looking at the overall price structure, we are expecting the stock to inch higher towards 590.

Oberoi Realty (Target: Rs 1,100)

Oberoi Realty has given a consolidation breakout on the weekly scale and has formed a strong bullish candle. On the monthly scale it is making higher highs since the last 3 months and supports are gradually shifting higher. RSI oscillator is positively placed which will support the move towards higher levels. Looking at the overall price structure, we are expecting the stock to inch higher towards 1100 zones.

(Rahul Shah is a Senior Vice President, Group Advisory Leader-PCG, Broking & Distribution, Motilal Oswal Financial Services. Views expressed are the author’s own.)

Bond market investors should invest in infra assets: Crisil

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With their credit risk profile and long-term nature showing improvement over the past few years, infrastructure assets are increasingly becoming a preferred investment choice for bond market investors, according to a report by Crisil Ratings.

The agency further said the improvement in the credit risk profile reflects a series of policy measures that has helped boost the attractiveness of the infra sector as an investment destination.

Also Read: EPFO pension scheme may cover unorganised workers 

Entities rated AAA and AA comprised ~46% of the Crisil Ratings infra portfolio (361 companies) last fiscal, compared with ~22% (260 companies) in FY17.

This is also reflected in the median ratings by Crisil portfolio of infra assets improving from ‘BBB’ in FY17 to ‘A+’ last fiscal, it showed.

Gurpreet Chhatwal, MD, Crisil Ratings, said: “The government has taken a slew of measures to address legacy issues in the infrastructure sector. Risk sharing in contracts has improved with the concessioning authorities assuming their fair share of risks, and concession agreements revised to remove bottlenecks.

“Now, central counterparties are playing a greater role, and the introduction of InvITs has boosted investor confidence.”

Government-owned companies such as National Highways Authority of India (NHAI), Solar Energy Corporation of India (Seci), NTPC, and PowerGrid Corporation have ensured predictability in the payment cycles, reducing cash-flow volatility significantly, the analysis said, adding that the IBC and pre-IBC platforms have also improved the recovery prospects and resolution timelines.

OYO IPO valuation falls in private market after SoftBank’s reported markdown

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Valuation of IPO-bound OYO in the private market has dipped to around USD 6.5 billion following reports of a markdown of valuation of the hospitality and travel-tech firm by SoftBank in its private books, according to industry players. In the week ended September 30, 2022, nearly 12.3 lakh shares of the company were sold in the private market as compared to over 1.6 lakh shares sold in the previous week.

The sell-off followed reports that its largest investor SoftBank has cut the valuation of the hospitality platform by 20 per cent to USD 2.7 billion in its books, said a source. When OYO updated its financials in its draft prospectus last month, reporting positive EBIDTA besides the narrowing of losses, the company’s share price in the private market had risen to Rs 94 per share. However, in the subsequent days following reports of the markdown of OYO’s valuation by SoftBank, the company’s valuation dipped by nearly 13 per cent to Rs 81 per share, said the source.

“Last year, transactions (of OYO shares) in private markets happened at around USD 8 billion range but in the recent past transactions are happening up to USD 6.5 billion valuation,” Analah Capital CEO & Founder Vaishali Dhankani said in an e-mailed response. Dhankani, who is also the CEO of Tradeunlisted.com, a tech-based distribution platform for private equity, said some of OYO’s “past distractions seem to have gone away and one anticipates a stronger bottom line and sticking to its knitting.” Last month, in a regulatory filing OYO reported a revenue of Rs 1,459.32 crore in the three-month period ended June 30, 2022.

Also read| OYO acquires Denmark-based holiday home operator Bornholmske Feriehuse

The company, which had last year in October filed preliminary papers with Sebi to raise Rs 8,430 crore through an initial share-sale, also posted an “adjusted EBITDA” of Rs 7.27 crore in the quarter ended June 30, 2022, improving from adjusted EBITDA loss of Rs 471.72 crore in FY22.According to the filing, OYO’s restated loss for the three-month period ended June 30, 2022 stood at Rs 413.87 crore. In the fiscal ended March 31, 2022 it had posted a loss of Rs 1,939.8 crore.

OYO said its total number of ‘storefronts’ was down at 1,68,012 in the quarter ended June 30, 2022 from 1,68,639 as on March 31, 2022 due to a decrease in the number of hotels to 12,668, sequentially down from 17,994 in the fiscal ended March 31, 2022. When it filed the draft prospectus for its initial public offer, OYO was initially looking at a valuation of around USD 10 billion but later on prepared to settle for a lower valuation at around USD 7-8 billion.