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Thursday, March 4, 2021

ABC of margin rules, bubble warnings & the unseen debt load on you: ETMarkets’ most read stories this week

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By Atul PM

Hello from ETMarkets’ work-from-home desk!

Phew! It’s been such a rollercoaster week since we last caught up! To begin with, Monday blues were hard thanks to Sebi tightening the margin norms, which woke up the hibernating bears. By mid-week the bulls toiled hard to pull the market up, but the bears had the last laugh, and by the end of the week, market health indicator Sensex ended up where it had started.

But if capital markets are the dark horse, the jockey is the liquidity. And the latter is in over-supply currently. Buckle up people! We are living in a time when financial markets and harsh economic realities are poles apart. This market can go either way at any point. That requires you, as an investor, to keep abreast of what’s going on around you.

So here it is, your weekly round-up of ETMarkets’ most-read stories. It includes a little of everything.

Living in borrowed times

“We don’t have a trillion-dollar debt because we haven’t taxed enough; we have a trillion-dollar debt because we spend too much.” That was Ronald Reagan. Now Moody’s has something similar to say about India. The global rating agency says India will carry the highest debt burden on emerging large economies by 2021. So are we spending too much? Or is it a need of the hour? When the economy is allergic to consumption and paralysed by demand drought, public spending is seen as the key to breaking this impasse. Naturally India’s borrowing is soaring through the roof.
Here how Moody’s assesses the situation >>

Riding the Robinhood wave?

If Robinhood investors are the heart and soul of the recent grand rally in markets, what’s really pushing them to speculate? Analysts largely agree on this: Investors are looking beyond ‘2020-21’, (Ostrich syndrome?) They are trying to quickly forget the washout year to focus on future earnings. Besides, they also blame it on strong capital inflows to India, which has also caused the rupee to appreciate.
Here is deep-dive analysis >>

RBI’s game-changing ‘twist’

Operation Twist! Following the footsteps of the US Fed, the Indian central bank is taking measures to control the liquidity floodgates, keeping an eye on the rising inflation. RBI has tweaked the yield curve and make the higher end to plunge to a new low to bring down the cost of funding.
Here’s how this works>>

Lesson in value investing: History repeating itself?

This value investing legend believes it’s easier to find value stocks in the current situation. Reminiscing the 1990s, this value investor says in the tech rally of the 1990s, the traditional stocks got ignored to a large extent all through that decade and that is where value emerged in the later period.
Here’s wisdom from an investing veteran >>

Tech bubble 2.0 in the making?

Humphrey Neill once said, “Don’t confuse brains with a bull market.” This investment guru now warns of a situation like the tech bubble of the 1990s in the current market. Most of these tech stocks, including big names like Apple and Tesla, are trading with multiple times their book values and, true to his words, the fear of the bears can be seen already. The seasoned investor warns that this is true of many Indian stocks too!
Is do we really have a bubble here? >>

A time bomb waiting to go off

After the dream run of many months, this stock gifted it’s CEO $71 billion this year! Riding the tech rally in the US market and reaching an all-time high, the stock was split 5 for 1 and still held its trend. It seems like the trend is changing with insiders dumping the stock, contributing to a 4.3% drop in share value. It’s now the most shorted stock in the US market, keep an eye on it.
Here is more about the stock >>

Big data to track tax frauds!

Here is a word of warning for all the tax evaders! You won’t be able to hide behind the complexities of tax system anymore! The Union Finance Secretary this weekend hinted at a brand new plan to employ Big Data to go behind what you declare in your tax filings. On one hand here’s ‘Faceless Taxation’ guaranteeing a fearless and painless regime to honest taxpayers, and on the other hand the machines are at work to catch if you tried to pull off a trick.
A classic case of carrot and stick, we would say >>>

Sebi shock therapy: A bittersweet move

Sebi’s recent move to tighten margin rules norms caused mayhem, if it’s not an overstatement: settlements got delayed, traders were confused, volumes dropped and what not! After two postponements, Sebi held its ground this time to not delay it any further. Surprisingly most brokers were not ready for this new and that resulted in this chaos. The hardest hit were the intraday traders whose profits got locked in for at least two day.
Here’s the ABC of the new margin rules>>>


Recovery in the fast lane? Well, looks like


The auto sector finally has something to cheer after demand crunch almost crippled the industry for many quarters. Primary contributors to the positive sales number have been tractors and passenger vehicles. So is the rural demand picking up as expected? Is this trend here to stay?
Check this out>>

Investing: The new hobby of the masses

Let’s give due credit to our Robinhood investors; they surely had a role to play in keeping the market euphoric all these past few months. The trend of newcomers entering the market is still on according to a market-disrupting broker, which has been adding 2,00,000 new clients every month! CDSL says it added 50 lakhs new demat account sinceJanuary 2020. The total number for the country in this period was 2.5 crore.
Here’s a cheer to India’s own Robinhood investors >>

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