Markets this week 📊
Last week was full of festivities for the country, with the winter harvest and the Q3 earnings rolling in, the same cannot be said for the markets.
The SC laid down the law, allowing startups more autonomy, Adani’s FPO, and the success of the Auto Expo’23, the market outlook seems optimistic with demand picking up post-pandemic.
Markets continued to oscillate up and down and finally closed in green. Midcaps however still seem to be painting it red for 2023. FIIs and DIIs have unloaded holdings worth thousands of crores in 2023 already.
With all eyes on the Budget, and the populist vs prudence debate in full swing we will be giving our insights on what to expect in 2023 in our Money section.
We shall do another sectoral earning analysis next week as result announcements are underway. But your portfolio analysis needs no wait. Book a call now and get it reviewed by our experts.
Let’s now dig deep into some of the important news that made headlines this week.
SUVs – The new king of the roads 🚘
The car of choice: Currently, out of every 25 cars sold in India, 11 are SUVs. Even the display at this year’s Auto Expo was a clear reflection of the mood of the people. SUVs are clearly the new reigning kings. 3.8 million cars were sold last year with SUVs and MPVs (multi-purpose) taking the lead with a share of 44% of sales, leaving behind its rival hatchback for the first time. With 10 new launches this year, all auto players are racing to grab a share in this growing craze for large family-sized cars.
Spotlight on EVs
The 2020 Expo had laid out plans for EVs, and in just two years they have all come very far. Market leaders like Tata, Maruti, and MG not only displayed and launched EVs that are ready to hit the road but also displayed their prowess in the alternate fuel sector. Tata stole the show with its infotainment system after having a history of lagging when it came to its touchscreen interface.
What segments are gaining?
The market dynamics have shifted, and out of the top 25 vehicles sold – compact SUVs and midsize SUVs comprise 11 of them. The focus has shifted from sedans to bigger, sportier, and sleeker rides. The EV segment also seems to be taking off, Tata Motors announced that 50% of its sales will come from EVs by 2030, which seems like an ambitious but achievable target.
India has overtaken Japan, becoming the world’s third-largest car market. But you may wonder why all of a sudden the sedans and hatchbacks have lost their charm?
Well, the SUVs are perceived as a comfortable family cars to travel together, and more durable for Indian roads with of course higher mileage. What more does a common Indian need? EVs are the future and SUVs are set to master it.
India shines at Davos ✨
The big boy: India outshined at the World Economic Forum currently underway in and was under a spotlight amidst others teetering on the edge of a recession. Big-ticket investment plans were announced. With China taking a backseat due to its endless policy and lockdown woes, India is all set to get seated at the big-boy table.
And the reasons: While the rest of the world struggles with an inflation-led slowdown, India is being praised for its investment-friendly policies and the resilience it has shown while the world struggled to keep up post-pandemic. A hub for clean energy and its digital and physical infrastructure prowess impressed too. Achieving its renewable energy targets 9 years ahead of time, allowing technology transfer facilities, and the retention of intellectual property rights has consolidated India’s position further
Money coming in
Maharashtra raked in funds of 1.37 lakh crores and signed multiple MoUs, for projects like electric vehicles, steel, infrastructure, and this money will help job creation and provide an added push to the economy. EVs and batteries were one of the top priorities and Telangana signed an agreement for setting up a battery material production unit with an initial investment of Rs 210 crore.
India doing well at Davos is just the start of something good and with domestic announcements, like Tata Group’s plan to invest $90b and companies like Siemens showing interest in India. It is great news on the home front! Prudent policies, focused exports, a strong Budget, and reforms in labor laws and India might be thrust into a very strong global position.
Go Mechanic: Digging its Own Grave? 🪦
Breaking down: Go Mechanic, a motor garage aggregator is facing a forensic accounting inquiry. The company has fired 70% of its workforce after its founders themselves admitted to cooking up numbers in its accounting reports. The company ran around 900 garages across 40 Indian cities and more than 60 such partner garages have been accused of material misstatements and accounting violations.
Red flags: Strapped for cash, the company’s founder Amit Bhasin took to LinkedIn and said he “got carried away” while chasing growth at any cost. The irregularities were exposed during due diligence conducted by potential investor Softbank. EY India, which audited its books, found ghost garages, preferred payments, and inflated metrics. Co-founder Amit Bhasin admitted in a LinkedIn post that the founders got “carried away” under pressure to perform.
Money drying up: SoftBank and Khazanah were supposed to invest $35 million through its vision fund, but have now pulled out of the deal. In its last funding round with Tiger Global, the company raised about $42 million at a valuation of $325 m and had been in talks of getting another round at $1.2 billion.
This comes at an awful time for Sequoia as Go Mechanic is the fourth Sequoia-backed startup that has been part of what looks like a “comedy of errors”. The financial services unicorn BharatPe, Singapore-based B2B e-commerce startup Zilingo, and social commerce startup Trell have all been accused of financial irregularities in external due diligence. It’s all an insane race for funding and getting the unicorn crown that is coming at the cost of “real” growth.
MONEY MATTERS 💰
Layoff underway, tread carefully⚠️
Reports of layoffs have been coming in from all over the world, Microsoft laid off 10,000 employees, some with excellent track records. Amazon has announced that it will cut 18K jobs, mind you this is not the first and definitely won’t be the last round. Goldman has announced a mass layoff in their Indian operations, laying off people within a couple of months of employment, and this poses a big question, why hire in the first place?
Why the layoffs?
More than 91 companies across the country have announced layoffs and at least 24000 jobs have been slashed, and that is just the January’23 figure with 10 days to go this month. Tech companies like Swiggy, Ola, Dunzo, and Big Tech like Meta, Twitter, and Apple have decided it’s time to “cut costs and restructure teams” to survive the winter that has set in around the globe.
Is anyone safe?
People with 20+ years of service have been shown the door and it is safe to say that this layoff season is real. Even the “elite” (read IITians and IIMs) have been handed pink slips this month. So it’s high time to think wisely, invest your paycheck, and gear up in case you are at the receiving end of the axe.
How to survive this?
For starters, SAVE! It is no secret that the only way to manage on a rainy day is to have a safety blanket, Please don’t buy that shiny new iPhone, on your first salary. Start an SIP instead. Also, firms should consider the plight of their employees, it is no picnic looking for jobs, hiring people and firing them for budgetary reasons in a gap of a few months!
What else made the news?
Netflix back to chill: After subscriber erosion in the first two quarters, Netflix added 7.7 million subscribers and a 1.9% bump in revenue in 4Q, ending the year with a bang!
📉Google at a loss: Startups celebrate as CCI upholds an antitrust order against Google, removing exclusivity and opening the market to competition.
🥇World’s Fastest Scam: Usain Bolt, the Jamaican sprinter lost $12.7 million in a financial scam, the athlete now has $12000 to his name and plans to run to court.
✈️Air India Slammed: DGCA slapped a penalty of 30 lakhs for violation of the DGCA Civil Aviation Code. Its 500 engine order is on hold, and pee-gate. Turbulent times.
💸Moneyball: PhonePe landed $350 million in funding from General Atlantic at a valuation of $12 billion, and plans to expand into wealth management, lending, and insurance.
💪Samsung on a roll: Samsung regained its position as the market leader in India replacing Xiaomi after 5 years, while demand in the smartphone market cools down.
Hope you liked reading this week’s wrap. See you next week. Till then, hope you have a great weekend!
Disclaimer: This write-up is solely for educational purposes. This in no way should be construed as a buy/sell recommendation. Please consult your investment advisor before investing.
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