Memory – and the resulting prudence – always comes out the loser when pitted against greed. ~ Howard Marks

The Fed threw cold water on the markets’ hopes for interest rates being cut anytime soon by signalling at least two more rate hikes for 2023. In the past, higher interest rates in the US has spelt trouble for the Indian market because it meant a strong dollar and lower inflows as a part of the money meant for risk assets like emerging market equities would get diverted into US Treasury bonds. That has changed over the last couple of years as domestic inflows have been strong enough to offset a prolonged spell of selling by foreign funds. Also, the mood among wealthy domestic investors is quite upbeat at this point, writes my colleague in this piece.

CDSL

Demat accounts may not be growing at the same clip as they did in FY22, but some HNIs are betting that there is a good long term story to be spun around the CDSL stock. Parent BSE Ltd sold 47 lakh shares of which over 5 lakh shares were picked up by ICICI Prudential AMC’s Technology Fund. Chatter is that a few other MFs too picked up small slices, but HNIs seem to be more bullish on the stock than institutional players

Deepak Nitrite

The stock gained 2 percent, with F&O positions indicating short covering. Massive activity in calls of 2100 and 2200 strike on Wednesday. Huge call writing typically indicates that the stock could be running into resistance. The stock has been stuck in a narrow range over the last year, frustrating both bulls and bears. Outlook on the chemicals sector is divided following the tepid export numbers for May. Rohan Gupta of Nuvama Institutional Equities expects a weak first quarter for the chemicals industry as demand from Europe has slowed down. Besides, capacity addition is also something that is leading a section of analysts to take a cautious view. Those bullish on chemicals include Old Bridge’s Kenneth Andrade, who feels that the ongoing weakness in the sector will in fact force many Indian companies to fine tune their processes and cost structure, which in turn will drive long term growth.

Can’t bank on them

Banking stocks continued to struggle on Wednesday, as the dominant theme is that net interest margins are likely to slip here on. Canara Bank and Bandhan Bank were among the prominent losers in the sector, falling around 3 percent each. Rating agency CRISIL is of the view that NIMs have peaked for now and are likely to come off by 10-20 basis points over the rest of this fiscal as banks will have to pay higher rates when deposits come up for renewal. Not all gloom for the sector though, as corporates are in good shape and so bad loans are unlikely to go up in a big way. Lesson for investors: flavour of the season can go out of fashion as easily. Just before the fourth quarter earnings, banks were the most sought after by fund managers and HNIs.

Kremlin’s cut

Russia’s oligarchs have a Putin problem. After being forced to navigate Western sanctions, the resultant financial crunch and supply chain snags, Russian corporate majors are now staring at a ‘windfall tax’, reports FT. Russia has proposed a tax to raise an estimated USD 3.6 billion from its oligarchs to shore up its coffers as the war in Ukraine continues to drag on with no end in sight. In fact, one senior cabinet official claimed the idea for the levy had come from the companies themselves, who realised they had made “gigantic” profits during the period that needed to be properly taxed. Interestingly, some of Russia’s largest firms had staved off a similar levy in 2018.

NZ in recession

New Zealand entered a technical recession at the start of the year, registering its second consecutive quarterly contraction with a dip of 0.1 percent for the March quarter. This follows a 0.7 percent drop in the December quarter. Meanwhile, the IMF has said that New Zealand’s central bank will need to hold interest rates at their current level “for a prolonged period” and should remain open to further hikes if necessary to tame inflation. The Reserve Bank’s rapid increases of the benchmark Official Cash Rate to date are “appropriate” and are helping to slow consumer-price gains, the IMF said in its report reviewing New Zealand’s economy.

Uber cool Taxi Prince

Ichiro Kawanabe, chairman of Japan’s biggest taxi company Go, and known as the taxi prince, has been instrumental in thwarting Uber’s growth in Japan, reports Wall Street Journal. Kawanabe first campaigned to make ride-hailing apps work only with licensed Japanese taxis, then started his own taxi-hailing app called Go, and later pushed other taxi operators to avoid becoming partners with Uber. Go, which recently attracted investment from Goldman Sachs, controls nearly 75 percent of Japan’s ride-hailing market. Uber and two other companies make up for the rest.