Mixed signals 📉
Short video pivot, SPAC boom, and Flipkart's sweet investment.
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Market summary: 📊
Indian markets started Monday on a high note, gaining some more ground after last week’s awesome rally. US markets had a stellar run too, with tech leading the races.
US:
S&P 500 - up 1.64%
Nasdaq 100 - up 3.09%
India:
Nifty 50 - up 0.14%
Sensex - up 0.21%
Some Dalal Street mess for ya ☝️
Mining and natural resources player, Vedanta, ended up embarrassing itself after a bid to delist the company off the stock exchange went foul. The company’s promoters had tried buying out shares from the public and other investors to take the company private, but failed to acquire the necessary share count until the last moment.
Some handholding—in simple terms, companies delist themselves because minus public market pressures, promoters and management can make better and more flexible asset allocation decisions, driving better returns for the business. Or atleast they hope they can.
Back to the fiasco, as the bid failed, stock dropped some 23% as other investors ran for cover from the impending implosion. Some of the average retail investors who had put in bids to sell in the delisting got stuck however, holding the bag on a 20% loss, because without a transaction going through, their stock remains locked for a couple days. We’ve considerably oversimplified things so here’s a couple links if you want to nerd out.
Anyway, all the mess has led SEBI to be furious. Investigations are likely to follow. Meanwhile, if you’re holding their stock, well, sorry… but honestly, why do these things have to be so complicated for the average Joe to understand? 🤔
Notable capital moves 💰
In an interesting ecommerce move, Flipkart and its daddy Walmart plowed a massive $30 million into a B2B fresh produce procurement player Ninjacart.
The startup runs a tech-enabled platform that procures fresh produce from farmers across the nation, delivering it to big retailers. The investment is imagined to bolster Flipkart’s sourcing capabilities in this category as the company ramps up assault to capture more share in the online grocery arena.
Ninjacart, who’s been in the market for about 5 years now, plans to use the capital to expand into new markets while extending its tech capabilities. Finally, although this is a capital only investment, chances are that Flipkart is testing an integration out and perhaps if things go well, an acquisition plays out here eventually. Watch out.
Takeaway: online grocery market is estimated to top well over $4 billion by 2024, so it’s no surprise that the big boys would want to go after smaller players to solidify their own standing. Flipkart particularly needs all the help it can garner.
Turning our head to SPACs going viral 🔥—
Remember the TikTok rival called Triller? (they had signed a deal a few months ago with Jio Saavn). Anyway, so the disruptive short video app which is the most credible alternative to TikTok in the west is looking to go public via the SPAC route, merging with a blank check acquisition company.
Looking to capitalize on TikTok’s woes, the company believes that such a merger will give it solid cash fuel to keep paying out big bucks to creators to lure them into exclusive deals to use its platform—a strategy that has worked phenomenally well for the service so far. In under no time, they’ve managed to get a respectable 65 million monthly active users all over the world.
On final note, SPAC’s seem to have caught Wall Street’s fancy like nothing else and with little oversight and operating visibility into the underlying businesses, the odds are high that this house of cards comes tumbling down pretty soon.
Finally, a quick old tech update 🖥️
Intel has launched an AI Research Center in Hyderabad, joining hands with the reputed IIIT Hyderabad, and the Public Health Foundation of India—to exclusively put Intel’s AI research to work on to population-scale problems in the Indian context, specifically in healthcare and mobility.
Called the INAI, the research initiative will use Intel’s flagship global AI resources and infrastructure, combined with Indian talent, to accelerate adoption and usage of the tech as relevant to the local ecosystem and economy.
Chingari throws a curveball 💃
Extending its ambitions beyond bite sized content, Chingari has partnered with content-house NH Studioz, to licence and distribute NH’s slate of movies on a new service called Chingari Multiplex.
Chingari management highlights that while short video remains popular in India, the interest and appeal towards old classic movies is irreplaceable and hence to keep users engaged, the company will deliver whatever content needs to be delivered.
So far, the slate mostly includes old feature films, specifically notable works of Mr. Bachchan, including all-time hits like 'Hum', 'Shaan', 'Lal Badshah', 'Sarkar', 'Kohram' etc. However, the deal definitely sets the stage for more arrangements to follow.
Sudden change—so far, short-video apps had copied directly from the TikTok manual, music + cool moves = engagement. However as these apps fail to drive repeat eye balls, they’re going back to the drawing table, recognizing that some innovation is due.
The easiest shift obviously is in sourcing old movie libraries. But what’s next? Will they be widely coming to collect beat up titles from distributors and old media houses? Can they mount a lateral attack on content and streaming, threatening position of Netflix, Hotstar and the likes locally? Could movie production be next? A million questions loom and the arena is red hot for disruption.
Glass half full or half empty 💁♀️
India’s post-pandemic recovery is full of mixed signals—while the PMI Services Index and Manufacturing Index last week gave away some signals worth cheering for, the inflation data coming out this week dampened enthusiasm a bit.
The CPI index (indicator of inflation levels in the end markets) is now floating at its highest levels since COVID-19 hit, up at 7.34% for September, expanding 0.65% since August. For relative context, the Monetary Policy Committee had an embarrassingly low target of 4% (+ or -2%) for the fiscal year.
The driving force—majority of the uptick for this month was driven by higher inflation in food and transportation essentials, thanks to persistent disruptions and choking of food supply chains and transportation movement across the nation in the aftermath of the lockdowns + the effect of increased fuel taxes on trucking and such.
However, considering withdrawn consumer spending, there were some categories with lower than the mean inflation—including clothing, footwear, housing. It does appear however that investor expectations had this data baked in already because the stock markets, preoccupied with the Vedanta fiasco, barely bat an eye to this data. 🙌
Turning heads to the FM’s address for a bit —
FM Sitharaman held a press conference yesterday, giving investors and corporate a read on the government’s mood as they navigate the India-ship through the holiday season. Some doles were rolled and some hopes were raised. Notable moves:
One time ₹10,000 interest-free holiday advance for sarkari nokers
₹12,000 crore, 50 yr. interest-free lending to states for capital projects
Tweet of the day —
What else are we snackin’ 🍿
🙄Facebook and mental health, ummm - in its latest initiative in India, FB has tied up with “It's Ok To Talk” and actor Deepika Padukone's The Live Love Laugh Foundation to provide mental health helplines and other resources for people in India.
☝️ Watchout fintech - the headlines have all been about Amazon Pay lately. In the latest, the company partnered with Uber to process post-ride payments through its service on the Uber app. Amazon is offering cashbacks to lure users into the trap.
🐦Policing the Pres - Twitter is taking heat around the policing power of tech platforms for flagging a tweet by Donald Trump, citing the content was spreading misleading COVID-19 information. Trump has claimed he’s immune to COVID🤣
👏 Swadeshi innovation - IIT Madras has developed a sustainable antimicrobial wrapping material which can prevent packaged food contamination by bacteria and will also help in reducing the plastic waste.
😷 Biowaste is becoming a problem - India generated over 18k tons of biomedical COVID-19 waste in the last 4 months with Maharashtra contributing the most to it with 3,587 tons. The new normal brings some new problems.
🏀Basketball fans rejoice - the LA Lakers won their 17th NBA title while GOAT LeBron James clinched his 4th Championship, as Basketball fans across the world cheer the win in a year when fans and the team lost legendary ex-player Kobe Bryant.
Hit that 💚 if you liked today’s issue.
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