As someone new to economics with only a basic understanding of the terms, I find it a bit challenging to follow at times. It would be really helpful if, whenever you use abbreviations like MSCI, NPA, etc., you could provide a quick definition in context. This would make the reading experience much smoother for readers like me.
Right now, it feels like the content is primarily tailored for those with an economics background.
That being said, I’ve been following your work for a while and have gained immense knowledge on various topics—kudos to Zerodha and the team. Looking forward to seeing this small tweak in future editions.
Thank you for writing to us. This was a miss on our part, and we completely understand how the first story could feel overwhelming without enough context. We truly appreciate you pointing this out and sharing your feedback—it helps us improve and write better.
MSCI is Morgan Stanley Capital International. Basically, they are asset and wealth management companies who also have their own Indexes and Index Funds.
NPA is Non-Performing Assets. The Bad loans which cannot be recovered.
Equity valuations remain elevated despite recent market corrections, with both trailing and forward price-to-earnings (P/E) ratios above historical averages. This suggests potential overpricing relative to earnings. The market-cap-to-GDP ratio also indicates stretched valuations, trading at levels higher than the economy's output justifies. The earnings yield, inversely related to the P/E ratio, reflects lower expected returns compared to alternative investments. Small- and midcap segments are particularly overvalued, posing higher risks and vulnerability to market sentiment shifts or worsening macroeconomic conditions. Investors should proceed cautiously, emphasizing quality and valuation discipline to navigate potential volatility.
While sales increased by 6.2% in the first half of the fiscal year, operating profits for manufacturing companies declined to 4.3% due to rising staff salaries and input costs. Conversely, IT services grew by 5.7%, and non-IT services surged by 9.6%, revealing intriguing sectoral trends amidst the overall positive figures.
Although the gross NPA ratio stands at a 12-year low of 2.6%, deeper analysis uncovers concerning trends. Retail loan NPAs remain stable at 1.2%, yet over half (51.9%) of new retail NPAs originate from unsecured loans like personal loans and credit cards, signaling financial stress among borrowers. The substantial rise in write-offs by private banks, potentially concealing the true extent of defaults, raises alarms. Monitoring unsecured lending practices and loan recovery mechanisms is crucial to safeguard financial stability from underlying vulnerabilities.
Still it's misleading, as full year data is available and the difference of 8% is too huge to ignore. It looks like data has been choosen this way to exaggerate the return. I don't mean to disrespect, honestly I learn a lot from the newsletters of Zerodha. And thank you for your hard work in explaining the topics really at the level which are easy to understand and relevant to the market as well.
Great stuff on rbi report. Its role of the state-govt to step in to curb out inflation (Supply side measures).
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As usual great stuff. Thank you for this excellent write-up. Keep up the good work!
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Hi Kashish and Krishna,
Great work on the newsletter!
As someone new to economics with only a basic understanding of the terms, I find it a bit challenging to follow at times. It would be really helpful if, whenever you use abbreviations like MSCI, NPA, etc., you could provide a quick definition in context. This would make the reading experience much smoother for readers like me.
Right now, it feels like the content is primarily tailored for those with an economics background.
That being said, I’ve been following your work for a while and have gained immense knowledge on various topics—kudos to Zerodha and the team. Looking forward to seeing this small tweak in future editions.
Hi Sanjana,
Thank you for writing to us. This was a miss on our part, and we completely understand how the first story could feel overwhelming without enough context. We truly appreciate you pointing this out and sharing your feedback—it helps us improve and write better.
Keep your suggestions coming!
MSCI is Morgan Stanley Capital International. Basically, they are asset and wealth management companies who also have their own Indexes and Index Funds.
NPA is Non-Performing Assets. The Bad loans which cannot be recovered.
Equity valuations remain elevated despite recent market corrections, with both trailing and forward price-to-earnings (P/E) ratios above historical averages. This suggests potential overpricing relative to earnings. The market-cap-to-GDP ratio also indicates stretched valuations, trading at levels higher than the economy's output justifies. The earnings yield, inversely related to the P/E ratio, reflects lower expected returns compared to alternative investments. Small- and midcap segments are particularly overvalued, posing higher risks and vulnerability to market sentiment shifts or worsening macroeconomic conditions. Investors should proceed cautiously, emphasizing quality and valuation discipline to navigate potential volatility.
While sales increased by 6.2% in the first half of the fiscal year, operating profits for manufacturing companies declined to 4.3% due to rising staff salaries and input costs. Conversely, IT services grew by 5.7%, and non-IT services surged by 9.6%, revealing intriguing sectoral trends amidst the overall positive figures.
Although the gross NPA ratio stands at a 12-year low of 2.6%, deeper analysis uncovers concerning trends. Retail loan NPAs remain stable at 1.2%, yet over half (51.9%) of new retail NPAs originate from unsecured loans like personal loans and credit cards, signaling financial stress among borrowers. The substantial rise in write-offs by private banks, potentially concealing the true extent of defaults, raises alarms. Monitoring unsecured lending practices and loan recovery mechanisms is crucial to safeguard financial stability from underlying vulnerabilities.
any updates on the book club ??
We'll share an update by next week, Yash.
What am I missing, nifty50 has given around 9% of return last year. However in this report it is saying 17% of return. What am I missing
Hi, if you look carefully, the table mentions CAGR as on 12 December, 2024.
If you compute 1 yr returns from 12 Dec'23 to 12 Dec'24, the numbers will match up.
Still it's misleading, as full year data is available and the difference of 8% is too huge to ignore. It looks like data has been choosen this way to exaggerate the return. I don't mean to disrespect, honestly I learn a lot from the newsletters of Zerodha. And thank you for your hard work in explaining the topics really at the level which are easy to understand and relevant to the market as well.
The data is from the RBI report. They typically prepare it well before the end of the year and hence can't take the full year's data.