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Paytm Fall! - Inflation worries - Fed rates Hike! - Asset allocation

Paytm Fall! - Inflation worries - Fed rates Hike! - Asset allocation
By Rakshith Pai M • Issue #5 • View online
No:5 
Hi everyone,
I welcome you all to his week’s top news regarding Investment, Economy & Personal Finance. 
Paytm’s stock price fell to a historic low
Shares of One 97 Communications (Paytm) fell to a record low after the Reserve Bank of India advised Paytm Payments Bank to temporarily cease new client onboarding. The central bank has expressed worries about the payments bank’s supervision.
Paytm, which owns 49 percent of Paytm Payments Bank, does not anticipate these events having a material impact on Paytm’s entire operations. Investors, on the other hand, became uneasy due to regulatory uncertainty. The company is at an all-time low since its failed IPO listing. The stock is down over 70% of its IPO valuation and is trading below Rs. 600 per share.
Watch this YouTube video to learn more about Paytm and other FinTech companies: FinTech Bust! What Next? PAYTM Loss!!! Should We Invest Now? #PayTm
Macquarie Research cut Paytm’s stock target price by 36% to Rs 450 in response to the Reserve Bank of India’s prohibition on Paytm Payments Bank onboarding new clients due to suspected data leakage to Chinese entities.
Inflation exceeds market expectations!
In February, consumer inflation in India rose to 6.07 percent, the highest level in eight months. The amount was significantly higher than street predictions of 5.93 percent and the RBI’s top range of 6%.
In general, the price increase was concentrated in rural regions and was mostly attributable to rising gasoline prices. Meanwhile, wholesale inflation increased as well, reaching 13.11 percent. WPI inflation is seen as a sign that retail prices will go up because manufacturers often pass on rising costs to customers, so this is seen as a good thing.
Now with China’s second Covid wave, a further hit in production end such as export of Chinese goods, container shortage, blockage of necessary products. As a whole, the entire global economy is said to take a hit as we did in the 1st wave of covid during 2020. Now with the Russia-Ukraine war, the impact on the economy is predicted to be much worse than earlier. 
Developed economies spend less than 10% of their discretionary income on food. As a result, they can often tolerate price hikes slightly better by reducing other expenditures. People in economically weaker countries spend more than 40% of their income on food. 
This means that emerging countries won’t be able to compete with developed economies for a limited food supply.
What Should Retail Investors Do?
Investors are suggested to Diversify their portfolio mainly into assets that are least affected by war worries and perform well during inflationary periods. 
Few such assets are Gold, Silver, and other precious metals, Large-cap company with monopolistic market share (these companies could put all the added cost onto the consumers and still maintain their market dominance), and Bonds (mainly corporate bonds with ‘AAA’ ratings and Government bonds)
For now, Construct your portfolio keeping safe heaves in mind.
A safe haven investment is one that is predicted to retain or improve in value amid a downturn in the economy. It is often regarded as a reasonably safe way for investors to reduce their exposure to riskier assets such as equities. 
Precious metals such as gold are examples of safe-haven investments. Due to the fact that gold is a tangible commodity, unlike the currency, its supply remains consistent. Gold is frequently seen as one of the safest investment alternatives during periods of economic uncertainty. Gold prices increased considerably during the 2008-09 global financial crisis.
The US Fed did it!
To battle rising inflation, the US Federal Reserve increased interest rates by 0.25 percent, bringing them to 0.5 percent for the time being. Consumers may face higher borrowing rates as a result of the rate increase.
Rates could rise by as much as 1.9% by the end of 2022, which is faster than expected. In 2023, they could reach 2.8 percent. This is a rapid rate of increase trajectory. In general, a scenario of rising interest rates does not bode well for equity markets in the long run.
It is estimated that at least 6 more rate hikes are on their way. Such aggressive credit tightening stance taken by the Fed has shocked investors. Whether the Fed could keep up to its words is to be seen in later days. For now, Investors are suggested to buckle up for an almost stagnant market with a much further downturn in the following days. 
The Bank of England this week increased its policy rate by another 25 basis points and used clear language. “Global inflationary pressures will likely intensify much more in the coming months,” the report stated, “while growth in economies that are net energy importers, such as the United Kingdom, is expected to stall.” 
Notably, India is also a net energy importer, as seen by February’s trade imbalance. Consumer mood indicators are blazing red, as inflation is wreaking havoc on consumption, as our Economic Recovery Tracker demonstrates. Indeed, as the Index of Industrial Production shows, the government is investing in infrastructure to help businesses grow and thrive.
News for the Week:
  1. For the second month in a row, Goldman Sachs reduced its S&P 500 year-end projection, citing slower-than-expected economic growth and rising commodity prices as a result of the Russia-Ukraine conflict.
  2. According to media sources, LIC’s massive IPO, which was scheduled to start this month, will now likely begin in mid-May, pending resolution of market instability induced by the Russia-Ukraine crisis. After May, the government may have to submit new documents with more up-to-date financial information if the IPO is put off.
  3. Bharat Pe has entered the secured loan market with the launch of gold loans for merchant partners. The firm has teamed with RBI-approved non-bank financial companies (NBFCs) to provide gold loans of up to Rs 20 lakh.
  4. To recognize and appreciate India’s rich biodiversity, MakeMyTrip created limited-edition NFTs (non-fungible tokens). The NFTs serves as a showcase for India’s varied landscapes, vegetation, and animals.
  5. India’s total exports, including products and services, were $57.03 billion in February 2022, a 25.41 percent increase over the same month the previous year, according to government statistics. 
  6. Niramai Health Analytix, a deep-tech Bengaluru-based healthcare firm that offers an innovative radiation-free, non-touch, and accurate breast cancer screening solution in India, has gained US FDA certification for its first device, the SMILE-100 System.
  7. Intel has chosen Germany as the location for a massive chip manufacturing complex, the first details of a $88 billion investment in Europe as the country scrambles to raise output and resolve a supply problem plaguing the automotive sector.
  8. China said on Wednesday that it was going to help Chinese stocks after a lot of people were worried about them getting kicked off the US stock market for a long time.
  9. The German cybersecurity agency has warned Kaspersky Lab antivirus software users that it poses a significant risk of successful hacking attacks.
  10. Ola Electric, Reliance Industries, Hyundai, and jewelry manufacturer Rajesh Exports have all obtained government contracts to increase battery cell production in India, which provides incentives for these four companies to pursue battery cell manufacturing.
  11. Volvo Group announced the expansion of its research and development (R & D) operations in India, setting the groundwork for the establishment of the “Vehicle TechLab” — the company’s largest facility outside of Sweden.
That’s all the major updates for the week. See you next Sunday at 10:00 am. Until then, Work hard, stay safe, and most importantly… Always believe in India!
Week’s Website Articles & YouTube Videos:
  1. YouTube link: 3 Simple Habits To Get Out of Poverty and Become Rich! #Habits
  2. Website link: 10 Simple Habits to Overcome Poverty and Become Rich!
  3. Website link: 10 Best Stock Screeners For Indian Investors!
  4. YouTube link: What is Sukanya Samriddhi Yojana? Its Features & Benefits are explained. #SSY
  5. Website link: Fixed Income Investments & Risks Involved:
  6. Website link: Everything you need to know about Mutual Fund Investing:
  7. YouTube link: FinTech Bust! What Next? PAYTM Loss!!! Should We Invest Now? #PayTm

FinTech Bust! What Next? PAYTM Loss!!! Should We Invest Now? #PayTm
FinTech Bust! What Next? PAYTM Loss!!! Should We Invest Now? #PayTm
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Rakshith Pai M

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