Newbie IIM-M places with flying colours
Also in today’s edition: Shadow banking doyen advises pivot; Of fossils and mammoths; Cash is king at local weddings; Gemini delayed
Good morning! In a major W for women in the Indian armed forces, Commander Prerna Deosthalee has become the first woman officer of the Indian Navy to command an Indian Warship. Per Mint, Commander Deosthalee will command INS Trinkat, a fast attack ship based in Goa. Deosthalee’s elevation is part of the Navy’s new philosophy of 'all roles-all ranks' for female personnel. As always, we’re super proud. Onwards and upwards! 🥳
Roshni P. Nair and Adarsh Singh also contributed to today’s edition.
🎧 Why are young Indians dropping dead? Listen to The Signal Daily on Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.
The Market Signal
Stocks & Economy: Prime Minister Narendra Modi’s Bharatiya Janata Party’s election wins usually trigger a rally in Indian equities. The party’s thumping victory in three key north Indian states is likely to fuel one today too. The GIFT Nifty is indicating a buoyant opening.
While this week will begin with political factors dominating the markets, the focus will shift to the Reserve Bank of India later. The RBI’s monetary policy panel will meet on December 6-8, although an interest rate change is not expected.
Some foreign equity researchers, meanwhile, are less enthusiastic about India because of high valuations and have begun to look at attractively priced Chinese stocks. Societe Generale says there is a “tactical case for China to outperform”.
Asian stocks opened in the green but Japanese shares loitered in the red zone in morning trade.
Gold hit record highs and Bitcoin crossed $40,000 for the first time in 18 months.
HIGHER EDUCATION
(Not so) Great Expectations
Global headwinds have finally reached the hallowed gates of IITs and IIMs. The placement season is in full swing but many prestigious institutes are staring at the prospect of muted hirings and stagnant salaries.
Trending Down: In the past, high-frequency trading (HFT) and quant companies such as Jane Street and Quadeye have shelled out packages north of ₹4 crores ($480,000). However, the big cheques are expected to dwindle this year. IT giants, the biggest recruiters at these institutes, will also recruit less given the global slowdown.
Trending Up: Startups are filling in the vacuum for now. With less competition and lower salary expectations, these startups are recruiting en masse.
Missing the action: A similar story is unfolding at the IIMs. Top institutes such as IIM-Bangalore have struggled to place students for summer internships. The newest, IIM-Mumbai, however, has marquee employers lining up to sweep away its graduates with eye-popping offers.
CORPORATE
Insuring For Regulation
When R Thyagarajan thinks it’s time for the conglomerate he founded, the Shriram Group, to change tack, it perhaps is. You see, he is someone who often gets to say “I told you so”.
Why: Thyagarajan believes tighter regulations are hurting the lending business and Shriram should aim to service diversified businesses and focus on insurance. He says as banks look for newer areas to lend, shadow banks will have to cede territory. Group managers disagree. They believe lending still has a good run left.
What next: The 86-year-old built his reputation and the financial conglomerate by lending to sub-par borrowers when they were seen as uncreditworthy. He says insurance has been mis-sold as a savings product and its true worth as security for the non-affluent is under-explored.
There’s a global example of a financier whose mainstay is insurance: Warren Buffet’s Berkshire Hathaway. Perhaps Thyagarajan is hinting at that model.
COP28
Can Mammoths Solve A Mammoth Problem?
After a flying start, the United Nations’ flagship climate summit appears to be going sideways. COP28 president Sultan Al Jaber told former Irish President Mary Robinson that phase-out of fossil fuels will only “take the world back into the caves”.
Al Jaber also said that no science backed the view that fossil fuel phase-out will contain global warming to 1.5C.
Big oil companies have pledged to cut methane emissions from their operations but without a commitment to cut oil and gas production.
India and China have endorsed but not signed a pact to triple the global renewable energy capacity by 2030 because it seeks a parallel commitment to reduce fossil fuel use.
Meanwhile, Russian billionaire Andrey Melnichenko’s pavilion at the summit showcases his idea to recreate the ice age ecosystem, including woolly mammoths, in Siberia to slow methane emissions.
The Signal
Climate talks in Dubai have now entered tricky territory. The most important one perhaps is a granular database of emitters that identifies 350 million individual sources, including power plants and steel factories. Built by a global coalition backed by former US veep Al Gore, Climate TRACE uses machine learning and satellite imagery to track emission sources. This database is expected to be used by multinational companies to clean up their supply chains. That could mean suppliers in countries such as India and China could come under pressure. The database would be handy for European lawmakers who are proposing to crackdown on supply chains for environmental damage.
CONSUMER
I Now Pronounce You…Broke
Match made in heaven? Yes, but the expenses are from hell. Stubborn inflation is hurting wedding celebrations in India’s rural Hindi heartland.
Demand for wedding goods, including gold and appliances, has dropped among low- and middle-income families; already, these consumers have been cutting discretionary spending for several quarters. People are giving newlyweds cash gifts instead.
Big fat wedding: The rich are doing fine though. In fact, wealthy Indians are splurging on destination weddings as international flights get cheaper and popular destinations like Thailand waive visa requirements. Indians will host 500 overseas destination weddings this year, The Indian Express estimates, at par with pre-pandemic levels. No wonder the Prime Minister is urging ‘big families’ to ditch forex-sucking destination weddings.
Need more evidence of growing inequality? More Indians will celebrate the year-end holidays abroad this year but penetration of international travel in India remains abysmally low.
ARTIFICIAL INTELLIGENCE
The Delay Show
What was supposed to be the blockbuster launch of Google’s most crucial initiative in a decade has morphed into a setback. Gemini, the in-house large language model (LLM) developed to compete with OpenAI’s ChatGPT, will now debut in January 2024, The Information reports. The delay is because of underperformance in non-English language tasks.
Gemini was expected to give a boost not only to Bard—which is behind ChatGPT in the AI chatbot race —but also power Google Assistant, Google Docs, and new tools for advertisers and YouTube creators. Time is currency in AI: OpenAI’s first mover advantage has given it access to more valuable data to keep improving its products.
For what it’s worth, OpenAI is also contending with a delay of its own. Reutersreports that the ChatGPT operator has postponed the launch of its custom GPT store to early 2024 because of continuing “improvements”.
FYI
Semi-final results: The Bharatiya Janata Party has won Madhya Pradesh, Rajasthan and Chattisgarh assembly elections even as the Congress Party wrested Telangana.
Slowdown: Amazon India’s top seller Appario Retail reported an 8% drop in revenue for FY23, indicating a slowdown in the e-commerce platform’s growth.
Exit route: Private equity firm Blackstone will sell its stake in its joint venture, International Asset Reconstruction Company, with the Tatas, HDFC Bank and ICICI Bank.
Move out: Delhi airport will levy higher charges on grounded aircraft as airlines keep grounding their planes due to technical and other issues.
Getting healthy: Healthcare app Practo says it will be profitable next financial year and is planning an IPO; it reported a poor set of numbers for FY23.
Regulatory tightening: The National Financial Regulatory Administration, which supervises China’s financial industry, will speed up reform of small and medium financial services firms.
No slip: Although it is fast losing users to rivals, beleaguered Vodafone Idea has managed to stop erosion of market share measured by revenue for the July-September quarter.
THE DAILY DIGIT
1.84 billion
The number of people who are currently experiencing drought worldwide, according to United Nations’ data. (Bloomberg)
FWIW
Forever lipsticks: A $88 lipstick compact is creating waves in the beauty industry. Created by the make-up artist, Fara Homidi, the lipstick compact has grown in popularity through word-of-mouth endorsements by the likes of Hailey Beiber. This has propelled it to the counters in exclusive retail shops such as Goop and Moda Operandi among others. Wondering what makes it so special? Sustainability and good packaging. The compact is refillable which makes it a part of the sustainable luxury trend. Its robin’s-egg blue design has also become a conversation starter at parties. The legend of the lipstick effect lives on.
More is good: The world’s largest study on universal basic income has shed some interesting insights on the idea. The study compared three groups of people: short-term basic income recipients ($20 payments for two years), long-term basic income recipients ($20 payments for 12 years), and lump sum recipients ($500 all at once). Upon completion it was found that by every financial metric, the lump sum group did better than the monthly payment group. Narayana Murthy would be fuming though.
Wrapped in confusion: By now, you’d have seen and shared your Spotify Wrapped. For this year, the company introduced something called Sound Town. The feature assigns users a city in the world where others’ listening habits reportedly correspond to their own. However, people of all hues reported being assigned one city in particular, Burlington. While Spotify has not officially given any reason behind this, users think that being a college town makes it an ideal ‘hip’ place. But there’s still no explanation for why Indians were assigned Noida. 🤔