Yesterday’s Market Performance

Nifty: 17461.50 I 64.60 (0.37%)
FII Buy Net: 7779.47 CR
DAX: 15,132.06 I 358.11 (2.31%)

Sensex: 58446.39 I -44.54 (0.08%)
DII Sell Net: 7653.11 CR
FTSE: 6,903.91 I 59.73 (0.86%)

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In today’s issue, we discuss;

• ITC rallied 12% in the last week; what’s next with our fav stock?
• India’s digital architecture: Digital Empowerment Protection Architecture (DEPA), Account Aggregators (AA) explained.
• FPIs back in action in September
• And an educational concept to widen your horizon (not saying otherwise 🙈)  Read along!

Bigbloc Construction: 115.70 | +4.45 (+4.00%)

• The script gained around 4% after the company and SCG International Corporation announced the signing of an MOU for the purpose of marketing AAC Panels & other building materials

VST Tillers: 2550.20 | -65.70 (-2.51%)

• The script was down over 2% today after the company announced the launch of the 95 DI Ignito – Power Tiller

Is it finally ITC’s time to shine?! (Not another meme, just some facts and possibilities) 😎

• Analysing ITC Ltd on a weekly time-frame (over 50 weeks), indicates that the stock is currently making an ascending triangle pattern

• An ascending triangle is a chart pattern that is created by drawing one trend line (view image below) that connects a series of higher lows and a second horizontal resistance line (in this case 235-240) that connects a series of higher highs

• Patterns like these are called breakout patterns which means traders wait for a breakout above the lines (resistance which is 235-240 in this case) to plan their entry

• In this case, if you see a breakout above the trendline, you would go long and one below would go short

But should I look for a breakout on the higher side or the lower side? (Nice q) 

• Once we shift to a smaller time-frame (daily), we’ll get a better picture; initially, we looked at the FMCG giant on a weekly time frame, trying to ascertain the trend the stock is making, analyzing the daily time-frames is equally important to avoid any traps

• On a daily time frame, you can observe prices are consolidating between the two lines (view image below) suggesting good accumulation of the stock. The stock recently broke this resistance band (222-227) after prices had been accumulating in this range, indicating that future accumulation ranges could provide similar moves

• The stock has tested its resistance (235-240) on 20/09/2021, which has been a price barrier for the best part of 2021; If prices manage to sustain above 240 for a few trading sessions, this foundation could just be the launch ITC has always promised (but rarely delivered :P)

• Yes, Finding multiple confirmations while performing technical analysis on a chart is important and helps avoid traps, at the same time notifies us about any upcoming trades and breakouts

• We started on a weekly time-frame with overall price action and trend analysis and took second confirmation on a daily time frame. With this good setup, one can keep track of our very own “Nifty meme stock”

Digital Empowerment Protection Architecture (DEPA), Account Aggregators (AA) & a transformation that began with Aadhar in 2009; What’s up and how does this impact you? 🤩

We covered some interesting use cases of AA in the educational section. Check it out to get an in-depth understanding. 

• DEPA is India’s attempt to create a data-driven economy and coupled with Account Aggregators (AA) aims to give individuals & small businesses the power to unlock their data, which is lying idle in the walled enclaves of Banks, Telcos, Regulators and more

• Think about your entire transaction history, beginning with banks & financial service products, extending to your healthcare purchases, and including how often you booked a cab or purchased McDonalds for lunch (jk jk, but you get the point right?)

• It’s your data, and this legislation aims to make you the owner of it; you presently still do own it, but have to go through multiple convoluted processes to access & share this with relevant parties

• According to new legislation, going forward you have the option of registering with an AA (RBI categorises them as a specialist form of NBFC), and link your existing bank details; in case you wish to apply for a loan, you just need to link your bank to your AA account, through a secured PIN and share the exact information that is required

• This is just a very singular, financial services focused use-case; we’re sure there will be multiple different implementations across industries

Nice! So how did we get here? (Lets take a walk down memory lane shall we? :P) 

Step 1 : Identification & UIDAI 

• It all started in 2009, with the Unique Identification Program or UIDAI the first step in the process; at that point, the initial goal was to give every resident a unique ID, and enabling them to prove “ I am who I claim to be”
• ~400 Million Indians lacked any sort of personal identification, and thus started one of the largest such endeavours in the history of mankind
• Today 1.27 Billion Aadhaar cards have been issued, covering more than 94% of the country’s entire population (massive)
• The E-Authentication that followed meant that by 2018, the number of adults with bank accounts shot up to ~80% of the entire population, which at the start of the program was in fact less than 20%
• & it wasn’t just limited to banking; when Mukesh Ambani decided to cut down the cost of data to less than a Vada Pav (his words, not mine), E-KYC helped Reliance Jio acquire 100 Million Customers in 170 Days
• The applications were endless and the efficiency was unparalleled

Step 2: Payments Infrastructure 

• With over 400 Million Smartphones, armed with the cheapest & fastest internet, the next step in the process involved utilising this device (beyond Netflix & chill)
• What followed is a runaway success story: in 4 years, the Unified Payments Interface became the world’s 5th largest payment network by volume, behind only Visa, Alipay, Wechat Pay & MasterCard
• This system removed the need for a wallet, with direct bank to bank transfer through a single API plugged into the mainframe driving all transactions; no need to load & reload capital into wallets and then transact (rumour has it, Paytm is still trying to make a comeback :P)
• In addition to bank transfers and similar tasks, UPI integration has allowed for far easier access to other financial services (which were notorious for poor UI and extremely long on-boarding times)’; users were now able to seamlessly invest in IPOs, MFs, Stocks, and other financial assets

Step 3: Data & more data (not the Jio kind :P)

• Data is the new oil, only Mr. Ambani was speaking in another context; a logical flow from the first two steps is the utilisation and control of your data footprint, through DEPA and AA
• Impending legislation, once passed will bring into force the Personal Data Protection Bill (PDP) which will provide Indians with a range of new rights pertaining to their data –
  • Right to Data Conformation – know where what data is being stored & how is it processed
  • Right to Data Correction or erasure –
  • Risk to be forgotten (nice one) – data deleted from a service provider’s database
  • Right to Data Portability- share data in a structured manner
• Dovetailing DEPA with AAs, the government aims to create an ecosystem that starts with UIDAI and culminates with data independence, security and efficient utilisation

Interesting!! Closing thoughts? 

• The model of data driven underwriting (going beyond just looking at your CIBIL score) has exciting potential; even in developed economies like Hong Kong, credit penetration amongst SME is very low relative to employment & GDP

• At present, all use cases only seem to take into consideration financial benefits of such technology, yet the application beyond and into related industries like Healthcare, Food & Mobility really open up some interesting possibilities (as an exercise, think of the various use cases)

• Yes I agree with you, imagine if this kind of data is unregulated or under-regulated? One of the major criticisms for frameworks like these, will ultimately remain the fact that data, regardless of the number of layers / security measures you add, will always have the threat of being Mis-used

• Interesting times, yet it won’t be without its pitfalls; data security within a framework that maintains that trust will be key for wider scale adoption, with anything new taking time to be entirely accepted

What else caught our eye? 👀

Gov puts tax onus on food delivery platforms 

• From January 1, food delivery platforms will have to collect and deposit 5% GST in place of restaurants for deliveries made by the platform.

• The move is aimed to bring more restaurants under the GST ambit which are currently not paying taxes, and hence will affect restaurants with annual turnover of < Rs. 20 lakhs the most.

• Nothing changes for the consumer (whohoo!) who will continue to pay the same tax at 5%.

FPIs back in action in September

• FPIs were net buyers in September to the tune of ~ 16k crore (11,287 crore into equities and Rs 5,018 crore in debt)

• FPI investments in Indian equity markets have been volatile lately but it seems like the continuing rally was something they could just not ignore!

• Kotak Securities’ experts believe that inflows may dwindle following quantitative easing tapering by the Federal Reserve.

Advent International acquired Eureka Forbes

• Advent International (Global PE firm) has acquired Eureka Forbes (Shapoorji Pallonji Group) for Rs. 4400 crore.

• Eureka Forbes Ltd will be separated from the parent (Forbes and Co. Ltd.)and listed on BSE after which Advent will pick up 72.56% in the same.

• The transaction is aimed to help SP Group reduce its debt and then focus on other businesses.

Use cases of Account Aggregators 

1. Flow-based lending: The AA framework in conjunction with the upcoming Public Credit Registry (PCR) enables lenders to offer sachet-sized loans based on the cash flow of the business.
2. Aggregated Account Statements & Analytics: Provide consent to some fintech FIU to read and access all of your banking/wealth/tax accounts
3. Anonymized Data Aggregation: This usecase seems to have the option of sharing your anonymized data with companies in exchange for offers and incentives