Month: December 2023

Shaping ethical user experiences: India’s draft guidelines on dark patterns need a lot more nuancing

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By Anupam Shukla & Abhishek Gaur

The phrase “dark patterns” was introduced in 2010 by Harry Brignall, an expert in user experience (UX). In essence, dark patterns refer to user interfaces (UIs) intentionally crafted to deceive, manipulate, or compel users into specific actions, often contrary to their preferences. These manipulative techniques strategically leverage cognitive biases, including the perception of scarcity, urgency, and the weight of social validation. Consequently, users often find themselves pressured to make hasty choices, driven by fear or the desire to avoid missing out.

Notably, India has also made significant strides in this regard by recently introducing the draft Guidelines for Prevention and Regulation of Dark Patterns (“Guidelines”). As per the Guidelines, “dark patterns” encompass deceptive design tactics within UIs and UXs on digital platforms. These practices aim to mislead users into unintended actions, undermining their autonomy. Under the Guidelines, certain specified dark patterns have been defined and illustrated with examples, to bring more clarity. These include practices such as false urgency, basket sneaking (the surreptitious addition of items without user consent), confirm shaming (utilising fear or guilt to influence user actions), forced actions (imposing additional purchases), subscription traps, interface interference (manipulating information presentation), bait and switch tactics, and drip pricing (concealing costs or delaying price disclosure). The Guidelines aim to prevent such tactics to protect consumers from misleading or coercive practices on online platforms.

The Guidelines are intended to be extended to all platforms systematically offering goods or services in India, advertisers, and sellers. This broad applicability ensures that a wide range of digital entities can be held accountable. The Guidelines are issued in exercise of the powers conferred by the Consumer Protection Act, 2019 (CPA) and can be read as an extension to the concept of “unfair trade practices” as envisaged under the same.There was a need for such guidelines in India due to a combination of cultural and economic factors. India’ diverse and expansive digital user base includes people with varying degrees of digital literacy. This diversity makes users particularly vulnerable to deceptive design tactics.

Culturally, trust plays a significant role in Indian consumer relationships, and the exploitation of that trust through dark patterns can erode this vital foundation. Economically, India’s digital market is growing rapidly and exposing it to unscrupulous practices may potentially hinder this growth and result in financial losses and compromised user confidence. Strengthening the regulatory framework can enhance user trust, encouraging more meaningful engagement and increased business revenue. Overall, these regulations can create a more equitable digital ecosystem, safeguarding both users and businesses from the negative impact of deceptive practices.

However, the Guidelines are not flawless, and a few shortcomings come to mind. First, the effectiveness of these regulations heavily depends on enforcement. Without a robust enforcement mechanism and adequate resources, regulating dark patterns on a vast and rapidly evolving digital landscape, such as ours, may prove challenging. Regulators will also need to stay ahead of new deceptive tactics that will keep on emerging.Second, nagging, as a form of dark patterns under the Guidelines, is relatively broad in its definition as determining the threshold between “effective marketing” and “undue interference with the user experience” can be subjective. This lack of clarity may lead to disputes and litigation, requiring a more precise delineation of this dark pattern.

Lastly, stricter regulations pose numerous challenges to businesses. Compliance costs can be substantial, particularly for smaller enterprises, necessitating significant investments in redesign and testing to ensure UIs meet the guidelines. Furthermore, some businesses might struggle to design UIs that are both user-friendly and compliant with the regulations. Resource allocation would be another possible concern, with the need for additional resources in areas like compliance monitoring, legal support, and employee education to ensure full adherence to the regulations. While these challenges highlight the complexities of implementing the Guidelines, they also underline the importance of a balanced approach to safeguarding consumers and supporting businesses.

The introduction of the draft guidelines on dark patterns in India is a significant step toward safeguarding consumers in a rapidly growing digital landscape. The Guidelines align with global efforts to combat deceptive design practices, ensuring transparency and trust. While they exhibit some imperfections, continued refinement and diligent enforcement can help create a more equitable digital ecosystem, benefiting both users and businesses. The collective international recognition of the need for such regulations underscores their relevance and importance in the digital age.

Writers are respectively, partner and associate, Pioneer Legal

Buy these two stocks for near term gains as bulls continue to push Nifty higher

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By Nagaraj Shetti

Nifty continued with a sustainable upmove for the second consecutive session on Wednesday and closed the day higher by 123 points. Nifty registered a new all-time high at 14666 in the latter part of the session. Another long bull candle was formed, which indicate an uptrend continuation pattern. The previous four sessions decline has been retraced completely in the last two sessions. This faster retracement could signal further upside in the short term.

The immediate support of 10 day EMA has proved to be a false downside breakout and that led to a sharp upside reversal. As per this pattern, this 10 period EMA could be tested again during next dip, after moving into new highs above 14666-14700 levels. On the upper side, the long term trend line resistances as per monthly chart) could come into play.

The short term trend of Nifty continues to be positive and Wednesday’s upmove could be a confirmation of bullish reversal from the lows. One may expect further upside for the next few sessions, before encountering a next crucial overhead resistances around 14800 levels. Immediate support is at 14550. 

Stock Picks: 

Buy SBI Cards & Payment Services Ltd (CMP Rs 997.15) 

After showing a range movement in the last 8-9 sessions, the stock price has witnessed a sharp upside bounce on Wednesday. We observe positive chart pattern like higher highs and lows, which indicate strength of an uptrend in the stock price. The volume has expanded during recent upside breakout and daily 14 period RSI is placed around 70 levels. Hence, further uptick of RSI from here could mean further strengthening of upside momentum.

Buying can be initiated in SBI Cards at CMP (997.15), add more on dips down to Rs 960, wait for the upside target of Rs 1100 in the next 3-5 weeks. Place a stoploss of Rs 935.

Buy Godrej Consumer Products Ltd- (CMP Rs 799) 

After showing an upside breakout as per weekly time frame chart at Rs 765 in the last week, the stock price continued with upside momentum so far in this week. This pattern could be a confirmation of valid upside breakout of a larger triangle pattern and one may expect further sustainable upside in the near term. Volume keeps on rising after the upside breakout and the weekly momentum oscillator like RSI/Stochastic signal positive indication.

Buying can be initiated in Godrej Consumer at CMP (799), add more on dips down to Rs 765, wait for the upside target of Rs 880 in the next 3-5 weeks. Place a stoploss of Rs 745.

(Nagaraj Shetti is a Technical Research Analyst at HDFC Securities. The views expressed by the author are his own. Please consult your investment advisor before investing.)

Rupee likely to fall further, dollar index may rise to 114 if US Fed hikes rate by 75 bps in November

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By Jigar Trivedi

The Federal Reserve met expectations and hiked rates by 75 bps. With inflation proving to be far stickier than imagined, the Fed repeated that activity needs to slow much more with the door left wide open for a fourth consecutive 75 bps hike in November. With recession looking virtually impossible to avoid, we see a strong chance of policy reversal later in 2023. The Federal Reserve has hiked the Fed funds target range by 75 bps in what was a unanimous decision and upped its forecasts for rate hikes aggressively.

Also Read: Rupee likely to fall further, dollar index may rise to 114 if US Fed hikes rate by 75 bps in November

A very hawkish Fed

Source: Tradingeconomics, Federal Reserve

More tightening is signalled for 2023 with the year-end rate at 4.6%, before it moves lower to 3.9% for 2024, 2.9% in 2025 with the longer run prediction remaining at 2.5%. To underscore the Fed’s willingness to sacrifice growth to get inflation lower it has cut 4Q 2022 year-on-year GDP growth to 0.2% from 1.7% with 2023 cut to 1.2% from 1.7%. The Fed is effectively acknowledging that a recession is coming, but inflation will not fall quickly and there will be a lot of pain. Note the unemployment rate for next year is expected to reach 4.4% versus the current 3.7% and stay there through 2024 with only a very minor drop in 2025.

Federal Reserve forecasts September versus previous June predictions

Source: Federal Reserve

Another 75 bps hike in November with 50 bps minimum in December

Inflation has been stickier than the Federal Reserve expected and certainly more broad-based. To get it down the economy needs to run below potential, bringing demand into better balance with supply capacity. The only way the Fed can do that is to hike rates and keep policy restrictive until that is achieved. Given the Fed’s aggressive stance and the likelihood that inflation moves little over the next month while job creation remains firm, we expect the Fed to hike 75bp for a fourth consecutive time at the November 2nd FOMC meeting. Come December FOMC meeting, we are more hopeful that we will see clearer signs of moderating price pressure on the lead indicators, but we are also fearing weaker activity data that may be enough to convince the Fed to move more cautiously. 50 bps is our call, which would leave the target range at 4.25-4.5%, but we certainly can’t dismiss the possibility of a fifth 75 bps hike.

Also Read: Rupee falls to fresh lifetime low, slips below 81 for the first time amid strong dollar, high bond yield

In the scenario mentioned above, the dollar index is likely to travel to 113 / 114 levels in sessions to come and the USDINR may hit levels above 81.5 a dollar unless the RBI intervenes. The Reserve Bank of India will hold its monetary policy on 30th September (next Friday) which needs to be closely watched for now. Any further escalation in the geo-political risk between Russia and Ukraine may push energy prices, eventually hurting the rupee. The outlook is bullish in the USDINR but we don’t deny technical correction, still….it could be used for going long.

(Jigar Trivedi, Senior Analyst – Currency & Commodity, Reliance Securities. Views expressed are the author’s own.)

Will bulls stage a comeback or bears drag Nifty to 17150? 5 things to know before share market opening bell

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Indian stock market is likely to open in green on Monday as trends in the SGX Nifty hinted at a positive start for Indian benchmark indices, with a gain of 43 points. In the previous session, the BSE Sensex fell nearly 1,100 pts to 58,841, while the NSE Nifty 50 plunged around 350 pts to 17,531. “Indian markets were the worst performers in the Asian pack on Friday, as higher inflation and likely aggressive rate hikes by the US Fed sent stocks tumbling across the board. We are likely to see strong bouts of volatility in the coming sessions as global slowdown looms large. Technically, the double top formation on daily and intraday charts and bearish candle on weekly charts is indicating further weakness from current levels,” said Amol Athawale, Deputy Vice President – Technical Research, Kotak Securities.

Also Read: ACC, Adani Power, Ambuja Cements, Tata Steel, Paytm, Tata Power, HDFC Life, Indus Towers stocks in focus

Nifty technical view: “A long bear candle was formed on the daily chart, that has engulfed the last 9-10 sessions range movement with positive bias in the last two sessions. Technically, this faster retracement on the downside could mean more weakness for the market ahead. Nifty on the weekly chart formed a long range bear candle with the bearish candle formation like dark cloud cover. Last week’s chart pattern confirms a false upside breakout of the significant resistance of down trend line at 17900 levels. The short term trend of Nifty seems to have reversed down. The formation of bearish candlestick pattern on the daily and weekly chart indicates more weakness ahead for the market,” said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.

Levels to watch for: “Markets have shown tremendous strength so far amid the global turmoil however the lingering fear of aggressive rate hikes by the US Fed has capped the upside and also trigger intermediate declines. The prevailing market structure combined with cues from the US markets is pointing towards further fall. A breakdown below 17,500 in Nifty could push the index to the 17,150 zone. In case of any rebound, the 17,800-18,100 zone would act as a hurdle. We feel participants should stay light and maintain positions on both sides. Amid all, we reiterate our preference for private banking counters and suggest using correction to accumulate them in a staggered manner. On the flip side, IT and pharma look weak to us and can be considered for short trades,” said Ajit Mishra, VP – Research, Religare Broking.

Trade Setup: “The Indian market performance showed resilience in the last couple of months and outperformed the major global market by a superior margin. We believe macroeconomic factors will continue to influence the market, and in the near term, market performance will be range bound. We could see the reaction in both directions. On Friday, we saw weakness in the equity ahead of the FED meeting scheduled this week. We believe the market is likely to be volatile in the near term as the global central bank could surprise the market by raising interest rates beyond the market’s current estimates,” said Neeraj Chadawar, Head – Quantitative Equity Research, Axis Securities.

“The current setup is a ‘Buy on dips’ market, and investors should use volatility in the coming weeks in a phased manner to build a position with a view of 12-18 months in quality companies where earnings visibility is very high. In this context, domestic-oriented themes like Banks, FMCG, Hospitals, Domestic Industrials, and Discretionary consumption are well placed over export + cyclical-oriented themes,” he added.

Also Read: US FOMC meeting preview: Fed may announce 50-75 bps rate hike in Sep monetary policy as inflation persists

Stocks under F&O ban on NSE: Indiabulls Housing Finance, India Cements, PVR, and RBL Bank are the four equities under the NSE F&O ban list for September 19. Securities thus banned under the F&O segment include companies where derivative contracts have crossed 95 per cent of the market-wide position limit.

PhantomFX plans to raise funds via SME IPO

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Chennai-based creative visual effects (VFX) studio Phantom Digital Effects (PhantomFX) has decided to raise funds via an SME IPO with fresh equity shares to the public, and to get listed on the NSE-EMERGE platform.

The company said it is aiming to raise a sizeable amount through the issue. PhantomFX, which creates visual effects for feature films, webseries and commercials, has also drawn up expansion plans in India and abroad.

The company plans to set up studios in Kochi, Hyderabad, Coimbatore and Madurai. It is also eyeing expansion of it existing facilities in Chennai and Mumbai. “Currently, we are operating in a 25,000 sq ft area and the studios will be expanded to 1 lakh sq ft area by March next year,” he said.

Also read: FPIs return to Indian equities; invest Rs 1,100 crore in July

It also plans to set up studios in Vancouver and Montreal in Canada, Los Angeles and Delaware in the US, the United Kingdom, and Dubai. “We are also ambitious about exploring other potential offshore markets,” he said, adding, “in all, we will be investing about $1 million”.

PhantomFX also plans 2,000-plus placements within three years, Bejoy said. The company will collaborate with universities and other educational institutions that produce VFX talent for placements.

What’s crippling share market? SEBI boss calls out markets’ polio, smallpox; no view on IPO pricing

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SEBI chairperson Madhabi Puri Buch termed insider trading, front running, and information asymmetry as Indian equity market’s smallpox and polio. She assured that SEBI’s every single policy is back-tested by data. “There is not a single piece of paper now that moves within SEBI that is not backed by data,” Buch said at an event on Tuesday, 13 September. She added that the capital market regulator was trying to keep pace with the evolution of the market. SEBI holds no view on the IPOs pricing, and companies are free to price their issue, which they feel is appropriate for them, Buch iterated. She added that there is a need to manifest the spirit of partnership between SEBI and corporates.

Also read: Inflation may cool off in next 2 quarters, another 50 bps RBI repo rate hike likely in September

Buch noted that the regulator is in a disclosure-based regime, and full disclosures protect all stakeholders. “Every step at SEBI will be taken after recommendations from the advisory committee,” Buch said. The Securities and Exchange Board of India is working to improve trust in capital markets, and see a lot of opportunities for India in the current environment. “SEBI believes that it exists for capital formation for the Indian economy,” the SEBI Chairperson said. She added that trust in the system needs to be protected, otherwise SEBI will fail in its core objective. She also noted that transparency is one important aspect of trust building, which holds importance for SEBI. Nation building is being done on the ground by the corporates who are building businesses, producing products, delivering services to the consumer, and that is what is creating wealth for the nation, she further said.

Also read: FM Sitharaman’s 4-wheel car to drive India’s economic growth: Skills, jobs for youth important; check other 3

Technology is the magic bullet

Talking about public issues and preferential share allotment, Buch said that firms must disclose differences in pricing on the preferential allotment and subsequent public offer. In regards to litigation against managerial personnels, SEBI Chairperson advocated consulting, saying “SEBI has plenty to do if firms fail to disclose litigation against managerial personnel in offer documents. Our working assumption is that the world is too complex, thus we must consult.” Buch believes that technology is the ‘magic bullet’ as according to her with technology, it is possible to reduce cost, serve the customer better, have better control, and compliance.