Moneycontrol Pro Panorama | Volatility to the fore in taper times

Dear Reader,

The Panorama newsletter is sent to Moneycontrol Pro subscribers on market days. It offers easy access to stories published on Moneycontrol Pro and gives a little extra by setting out a context or an event or trend that investors should keep track of.

India’s stock markets are trading slightly weak at the start of the week, down by 0.3 percent at 12 pm. They are following in the footsteps of Asian markets, which in turn are taking cues from Friday’s decline in the US markets, where investors fretted at firm trends in inflation data.

Now, it’s a given that markets will be volatile till the timing and direction of the US Federal Reserve’s tapering of asset purchases are established.

The European Central Bank appears to have done a much better job of managing taper expectations, says this column in the Financial Times (free to read for Pro subscribers​).

“A series of manoeuvres have quietly shifted the euro’s central bank into a position where it can do what needs to be done with minimum controversy. The one-time sound and fury have been replaced by a natural, but contained and manageable, range of opinion,” it says. To know what it did and how that has made a difference, do read the piece.

The US and Europe are not the only regions pondering a withdrawal of ultra-loose monetary policy. Investors are watching the Reserve Bank of India too to see if it could turn into a hawk in the near future. Reports in recent weeks have been indicating that the economy is in much better shape. Recently, India’s CEA pointed to a V-shaped recovery taking hold. Others have made comforting noises, too. Also, the monsoon is getting back on track after a nasty dry spell in August – that’s what this week’s edition of Monsoon Watch concludes.

If all is going well and the recovery has taken root, is it time for the RBI to press the taper button, we ask in today’s edition. It’s a question that’s going to get louder as the months pass, unless another wave of COVID-19 stops the recovery in its tracks.

The government’s effort to support domestic manufacturing is opening up opportunities for Indian industry. The production-linked incentive (PLI) scheme for the textile industry has been announced and textile stocks are wearing a broad smile after the details were made known. We argue in this piece that the scheme is a much-needed shot in the arm for the industry, but the ball is now in the industry’s court, to invest and source orders so that it can meet the targets that come attached to the incentives.

Lastly, we bring you yet another Financial Times report, this one an exclusive on how China is breaking up Ant’s Alipay, and creating a separate app for the company’s profitable loans business.

The plan would also require Ant to turn over the user data that underpins its lending decisions to a new credit scoring joint venture which would be partly state-owned, according to two people familiar with the process, said the report.

This continues a series of actions by China’s government to curb the ambitions of its tech titans, a process that has acquired urgency after they began showing greater interest in listing in the US stock markets. In this week’s edition of the column, The Eastern Window, we examine the tensions facing investors in US-listed Chinese stocks and if there’s a solution for their predicament.

Do dive into these investment insights put together by our research team:

Happiest Minds – One year journey of happiness, more in store for investors?

Railway engineering stocks: Growth gets on to a stable track

Shemaroo Entertainment: An attractive bet on digital media play

What else are we reading today?

Chart of the Day: July IIP shows several industries still below July 2017 levels

Ford's exit, while inevitable, denies India access to its future auto technologies

Axis Value Fund NFO review: Will a differentiated style of investing pay off?

Moneycontrol Masterclass | Quick commerce is here to stay, but being empathetic to delivery partners is key

Saving for your child’s higher education abroad ? Here are 5 key factors to consider

Technical Picks: Piramal Enterprises, Pidilite and Marico (These are published every trading day before the markets open)
Ravi Ananthanarayanan

Moneycontrol Pro​