Finly January 2023

Editor's Note

Dear Readers,

“Historically, pandemics have forced humans to break with the past and imagine their world anew. This one is no different. It is a portal, a gateway between one world and the next. We can choose to walk through it, dragging the carcasses of our prejudice and hatred, our avarice, our data banks and dead ideas, our dead rivers and smoky skies behind us Or we can walk through lightly, with little luggage, ready to imagine another world. And ready to fight for it.” - Arundhati Roy

This pandemic is an opportunity to expand our knowledge by finding new ways to circumvent the circumstances, invest in the most intuitive ideas that come to our mind and surpass this havoc. As Ben Franklin rightly said, “An investment in knowledge always pays the best interest,” we at Finstreet are back with the next edition of our monthly magazine “Finly” for the academic year 2022-23

Team FINLY has always been a dedicated group of people who put in a lot of time and effort to put this magazine together, and we can't thank them enough for their unwavering support and initiative

The January 2023 edition's cover story revolves around "Inception of UPI and its Effects". The Eco Section discusses "Can UHI revolutionize India's Health Care?". Further, the Intriguing Indeed section delves into "Market Anomaly"

We are thankful to Prof. (Dr.) Pankaj Trivedi (Course Coordinator, MBA Core and Faculty Coordinator, Finstreet) for providing the much-required mentoring, support and backing to the Finly team

Bharvi Shah

Bharvi Shah

Deep Thosani

Dhruv Vora

Ankit Singh

Anshika Singh Abhigyan Verma

Shreya Mathur Kush Thakker Aditi Vora

Shubham Gupta Unmesh Datar

INCEPTION OF UPI AND ITS EFFECTS

ArvindAggarwal|MBA4|2022-24

ShreyaMathur|MBA4|2022-24

The National Payments Corporation of India (NPCI), invented the Unified Payments Interface, which is a payments system that enables instantaneous, real-time money transfers between two bank accounts It hit the Indian markets in 2016

The NPCI serves as an enabler for standardization and settlement throughout the entire platform, which has been built as a protected API architecture on top of current banking platforms

The UPI is backed by API which stands for an application programming interface It is a set of definitions and protocols for building and integrating application software that lets your product or service communicate with other products and services without knowing how they’re implemented

By making P2P and merchant payments possible through mobile apps, UPI has revolutionized the way payments are made nationwide This has lessened the need for mobile wallets and avoided the requirement for a separate layer of integration between banks Now that UPI exists, every savings account functions as a wallet

The API that empowers UPI technology is a Payment API that helps e-commerce companies easily manage payments They can assist in enabling businesses to take on the role of a credit card processor and accept payments made via debit cards, bank accounts, or credit cards Additionally, by enabling customers to pay using their preferred method, they can enable businesses to accept a variety of payment options, enhancing customer convenience. They can also be utilized to allow PCI compliance, track payment information and details, and do other tasks.

THE DIGITAL TRANSFORMATION SCENARIO

Indian consumers' purchasing patterns are

shifting as a result of digital payments. Different kinds of digital payment methods are being used more frequently to make purchases from traditional brick-and-mortar establishments as well as online retailers. The migration to digital payments has significant economic and societal effects On the one hand, it helps the country's economy flourish, while also improving the standard of living for citizens Online and offline shops are seeing greater sales as a result of the growing digital payments.

DRIVERS FOR DIGITAL PAYMENTS

According to previous research, government initiatives, technology advancements, demographic changes, and marketing campaigns are mostly responsible for Indian consumers' use of digital payments. Following are some of the drivers:

Government Initiatives: The government is actively promoting the adoption of cashless transactions in both commercial and e-government transactions as part of its postdemonetization measures and financial inclusion policy. The Unified Payments Interface (UPI)-based Bharat Interface for Money (BHIM) app is a significant effort It was followed by encouraging private players by granting them permission to function as payment banks Among the innovators in developing mobile app-based payments are Airtel and Paytm.

Demographic Shift: Young people

make up more than half of the Indian population, and they are moving from rural to urban regions They are embracing contemporary lifestyles and spending patterns that are common in cities. They are also technologically proficient and the majority of internet and mobile users in the nation. For their numerous transactions, this generation has emerged as the biggest user of digital payments

Technology Innovation & Adoption:

Digital payments are now easy to understand, simple to use, safe, and riskfree thanks to the introduction of a wide variety of online and mobile payment solutions, such as e-wallets and mobile apps Most consumers, especially young people, are more open to change and eager to adopt new technology. They use digital payment systems the most frequently of any group in India

Marketing Initiatives: Many shops and service providers have partnered with numerous digital payment service providers, and these partnerships allow them to give discounts, cash backs, coupons, and other benefits to their associated partners when they make payments to them using the digital payment method This type of customer incentive is further encouraging the purchase of goods and services and the use of digital payments

Influences on Consumer Buying Behaviour: As a result of their partnerships with numerous merchants

and service providers, a sizable number of digital payment service providers now offer discounts, cash backs, coupons, and other promotions to customers who pay their associated partners using the digital payment method The purchase of goods and services, as well as the use of digital payments are further encouraged by this type of consumer incentive.

CHANGE IN CONSUMER BUYING BEHAVIOUR

Changing technology, particularly the internet and mobile phones, along with the banking and retail revolution are changing buying behavior of both urban as well as rural buyers. The growing use of digital payments is reshaping buying patterns of consumers Their awareness, perceptions, attitudes, and decisions toward the use of different digital payment options are undergoing major changes and also influencing their purchase behaviour

The spending habits of consumers conducting digital payments don’t differ much according to research by the International Journal for Research in Applied Science & Engineering Technology. Only six behavior patterns - ease of use, theft, seamless transactions, rejected transactions, time consumption, and supports in on-time bill payment - were found to have a substantial impact on purchasing behavior as a result of post-covid digital payments When determining spending patterns, the remaining 11 are only partially implemented. Although there is little to no difference between these 11 consumer spending

behaviour patterns as a result of digital payments post-COVID in terms of security, technical difficulty, education level, offers and discounts, tracking spending, convenience during travel, physical distance, budget discipline, save time, chances of losing it, and formed into a habit

RISE IN DIGITAL PAYMENTS IN POST PANDEMIC ERA

The National Payments Corporation of India (NPCI) recently revealed data showing that India registered UPI transactions worth Rs 7 7 trillion in October 2021 as opposed to Rs 6.54 trillion in September 2021. These numbers demonstrate how consumer behaviour is changing favourably in favour of digital payments In the last 12 months, digital payment transactions have increased by up to 76%, according to Razorpay, with a number of new users According to the estimate, real-time payments will make up more than half of all electronic transactions by 2024 and will reach 71.7 percent by 2025.

The Covid-19 outbreak accelerated the growth and adoption of online transactions in India, despite the country's digital payments business having had outstanding growth since demonetization in 2016 The pandemic caused a minor glitch in India's digital payments development story, with transactions declining marginally in the first few months of the fiscal year 2020–21, although the volume has now recovered to pre–Covid–19 levels. In reality, the postpandemic recovery has taken the form of a V since the outbreak has expedited the shift to

Number of UPI transactions across India from F Y 2019 TO 2021, with estimates until 2026 (in billions):

GOVERNMENT INITIATIVES TO STRENGTH THE DIGITAL ECONOMY

Sources: Statista, NPCI, PwC India

t Digital platforms and companies are now aiming to combine online and offline channels to give customers an omnichannel experience Additionally, people turned to net banking and other digital payment options throughout the pandemic to purchase products like necessities, groceries, retail, medical supplies, and educational materials

In addition, there have been many factors that have contributed to India's rapid growth in digital payments These include the introduction of fresh and cutting-edge payment products, a rise in smartphone adoption, an increase in the demand for faster payment methods, discounts and cashback on mobile wallets and UPI transactions, and a persistent push from the government and regulators to adopt digital channels

The introduction of fresh and cutting-edge payment services like UPI, National Electronic Toll Collection (NETC), and Bharat Bill Pay Service (BBPS) has contributed to a rise in the use of digital payments. UPI has shown exponential growth since its inception in 2016 and has elevated to the top payment product in terms of volumes The country anticipates a seven-fold increase in UPI transaction volume by 2025. With the push from the government and regulations, BBPS and NETC have had massive compound annual growth rates of 500% and 123%, respectively, since 2018.

The NPCI introduced e-RUPI, a brand-new digital payment system, on August 2, 2021. A beneficiary receives an e-RUPI digital voucher on his phone in the form of an SMS or QR code It is a pre-paid voucher that may be used at any location that takes it In the coming days, it is anticipated that e-user RUPI's base would grow, with even the private sector embracing it for business-tobusiness transactions and micro, small, and medium-sized enterprises (MSMEs) using it to give employee benefits. Meanwhile, another important reason driving the expansion of the nation's digital payments business is the appearance of improved technology. Together, these factors are predicted to create a revenue potential for digital payment players worth around Rs 2 94 trillion by the financial year 2024–2025 as opposed to Rs 1.98 trillion in the financial year 2019–20

CAN UHI REVOLUTIONIZE INDIA'S HEALTH CARE?

Anshika Singh | MBA 4 | 2022-24

Kush Thakker | MBA 4 | 2022-24

OVERVIEW

In a nation like India, the growth of technology and the digitalization of society leads to a dramatic improvement in the economy and the demise of some of the most formidable multinational corporations in the world The best example is UPI (Unified Payments Interface), a system that enables users to combine various banking functions for all forms of payments into a single mobile app The result of this unification was such that from tea shop owners to vendors in polish malls, everyone uses it.

It was all about easy accessibility and userfriendliness that made UPI a huge success in India. In the same sequence, UHI (Unified Health Interface) is expected to revolutionize the healthcare sector

The launch of the Ayushman Bharat Digital Mission, to integrate the various and separate digital health systems already in existence into a National Digital Health

Ecosystem, was announced by Prime Minister Narendra Modi on September 27, 2021

The Ayushman Bharat Digital Mission (ABDM) is being implemented by the National Health Authority (NHA), the highest-ranking entity of the Indian government, in collaboration with state governments, the commercial sector, and civil society organizations. Through digital highways, it would close the distance between the various healthcare ecosystem stakeholders. By offering a variety of data, information, and infrastructure services and properly utilizing open, interoperable, standards-based digital technologies, ABDM will provide a seamless online platform while maintaining the security, confidentiality, and privacy of personal health information

The Ayushman Bharat Pradhan Mantri program, another government of India flagship program, is also implemented by NHA

UNIFIED HEALTH INTERFACE (UFI)

Various estimates place the value of the digital healthcare sector in India between $5 billion and $10 billion. Despite being one of the sectors with the fastest growth, customers and providers of health services are dispersed across several platforms. To increase access to healthcare services bringing them together on a single platform is necessary Under the Ayushmann Bharat Digital Mission, the National Health Authority has launched the unified health interface (UHI) in order to achieve this goal (ABDM) UHI is an open network created to support the delivery of digital health services that are interoperable.

The goal of ABDM is to establish an environment that will guarantee the smooth interchange of health-related data made possible by UHI The UHI network consists of apps from both Various estimates place the value of the digital healthcare sector in India between $5 billion and $10 billion. Despite being one of the sectors with the fastest growth, customers and providers of health services are dispersed across several platforms. To increase access to healthcare services bringing them together on a single platform is necessary Under the Ayushmann Bharat Digital Mission, the National Health Authority has launched the unified health interface (UHI) in order to achieve this goal (ABDM) UHI is an open network created to support the delivery of digital health services that are interoperable.

The goal of ABDM is to establish an

environment that will guarantee the smooth interchange of health-related data made possible by UHI

SERVICES COVERED BY UHI

A wide range of digital health services between patients and health service providers (HSPs) will be made possible by UHI, including:

Locating healthcare professionals

Scheduling a Medical Appointment: For both in-person and online consultations Hospitals and their facilities are discovered.

Finding laboratories and their services Establishment of Pharmacies Discovery of drug availability Finding beds for critical care that are available

Booking an ambulance service Booking an appointment for home collection of samples Ordering medicines for home delivery

BENEFITS OF UHI

There are several digital health applications available, but they all demand that the patient and the health service provider utilize the same platform, making it difficult for patients to interact with many doctors and vice versa. In addition to their own organised medical information, patients with serious illnesses who seek a second opinion travel with physical CD copies of their MRI, CT, and X-ray images.

Using any UHI Network app, patients may quickly find doctors

Advances ecosystem to find a doctor, arrange an appointment, pay bills, acquire medications, and keep their data digitally

Doctors listed will be able to control when they are available for online consultations Patients can simply share their medical records with any doctor by allowing the doctors to examine the records at all hospitals and facilities

Additional features, like assistance for people in need of routine medical attention , bots that may check their medical history, issue reminders, give recommendations based on their trends, and help clinicians manage chronic care. These include reminders and reviews of their medical conditions

Patients can check to see if the medications they need are offered by local pharmacies if yes , home delivery services are also available

Ambulance services, group consultation will also be offered via the health facility register

CONCLUSION

The digital revolution in India is expanding rapidly, be it banks, PDS, and now healthcare. The vision and mission to serve every household are quite successful, but

there are challenges when you consider the healthcare sector as data and information play a huge role here The main concern is the privacy of 1.4 billion people for which there must be a surety, that it is shared with the most authentic and reliable party

The med-tech industry is emerging at a good pace in India and the introduction of UHI might accelerate this industry or may impact negatively as rules and regulations regarding the same might be revised and made strict.

Recording accurate data is yet another concern as people might not know what operation they went through, so how we are going to deal with such cases is still a big question mark

EDUCATION

EDUCATION

AnkitSingh|MBA8|2022-24

ShubhamGupta|MBA2|2022-24

OVERVIEW

With 580 million people, India has the largest population in the world in the age range of 5 to 24 years, creating a significant opportunity for the education industry India occupies a significant position in the global education sector. One of the world's largest networks of institutions of higher learning is found in India Private Indian enterprises are working with foreign companies to offer an international standard of education as awareness of the issue grows Over the past two decades, private investments in the Indian education system have grown significantly. With more students choosing specialised, industry-focused degrees, the demand for specialised degrees is also increasing.

India's education industry will see a transformation in the coming years because of cutting-edge technologies like AI, ML, IoT, and blockchain. Additionally, it has adopted

the Education 4 0 movement, which encourages inclusive education and improved employability. The NEP, which will be completely implemented this decade beginning in 2021–2022, is one of the policies the government has put in place and will strongly emphasize high-quality vocational education.

KEY PLAYERS

The top three players in the educational sector in India are:

Educomp Solutions Everonn Systems NIIT Limited

Educomp Solutions

One of the fastest-growing providers of educational solutions in India is Educomp Solutions, which provides end-to-end services to both private and public institutions. Since its founding in 1994, this

company has provided solutions to schools not just in India but also in other parts of the globe Their Smart Class programme is becoming more and more well-known these days for its cutting-edge teaching methods. The business's mission is to use cutting-edge solutions to address pressing issues involving universal access to high-quality education. Due to their effective sales team and well-written educational content, they have achieved success in the educational sector.

Everonn Systems

In India, Everonn Systems is a pioneer in the telecommunications industry and one of the top government schools Their strong reliance on government contracts, reduced susceptibility to economic cyclicality, emphasis on content development, and best-in-class IT infrastructure services are just a few of their unique characteristics They have a great conviction in the power of technology-enabled learning to break down social and economic barriers Because of this company's successes, millions of students have been able to fulfil their dreams They are providing courses in the skill-improving, career-related, finance and accountingrelated, and partnership with Appliance Partners categories

NIIT Limited

This is one of the biggest training organisations in India, and some of its unique characteristics include a firm foothold in the local IT training market, the

ability to scale up new ventures, and a strategic plan to become a worldwide talent development corporation Their e-guru programme includes a mobile scientific lab, a math lab, a learning lab for kids, an IT wizard, and an interactive classroom for teachers. There are more prominent players in India's educational industry who support the advancement of the discipline.

SWOT ANALYSIS

Strengths

Huge demand: an estimated 150 million people in the 18-23 age group alone

Growing middle class with increasing incomes.

A growing economy with multiple employment opportunities. Huge demand for Indian students abroad

Weaknesses

Lack of infrastructure. Shortage of trained faculty to meet the humongous demand

Regional attention is required due to the presence of different cultures and languages

Opportunities

Inflow of foreign students. Increased competition leading to efficiency and improved quality.

FDI in education helps students attain education at a cheaper cost

Threats

Time lag in the introduction of reforms Deterioration in quality of education due to lack of availability of trained faculty. High level of control over curriculum leading to overregulation

OPPORTUNITIES

In India, a more extensive and high-quality educational system is clearly needed. The Union Human Resource Development (HRD) Ministry has therefore started a comprehensive programme of educational reform. However, according to estimates made internally by the ministry, just 20% of the total expenditure necessary will be covered by the Eleventh Plan's gross allocation for education (2007–12). This makes the case for increased private sector involvement stronger The amount of opportunity for private companies in education is significant given that consumer spending on education is anticipated to increase eightfold over the next two decades Three roles are currently played by the private sector in Indian education In the formal education sector, which includes K–12 schools and higher education institutions, it first plays a direct role (colleges and universities)

A "not-for-profit diktat" governs the majority of private schools in K–12 education, except for those connected to overseas examination boards. Higher education offers comparatively more independence, despite strict operational controls on costs, the

curriculum, student admission, and other factors

The informal education and training sector, which consists of pre-schools, career training centres, and coaching classes, is where private sector education entrepreneurs, also known as edupreneurs, perform their second role. The informal sector does not have the same restrictions on operations or the ability to make a profit as the formal sector.

The third space available to edupreneurs is that of a vendor in the formal and informal education sectors. Here, players provide various products and services, e.g., books, stationery, e-learning solutions, etc , to formal and informal sector enterprises In this segment, too, financial and operational constraints do not apply.

In the US, private institutions tutor 11 percent and 26 percent of students enrolled in school and higher education, respectively. These independent private institutions enjoy a high degree of financial and operational autonomy For-profit private institutions in the US are expanding their enrolments at a rate of 10 percent per annum as compared to public institutions, which are experiencing 1 percent growth an indicator of the value addition that private entrepreneurs are creating for their customers.

INVESTMESNTS/RECENT DEVELOPMENTS

FDI equity inflows from April 2000 to March 2022 totalled $7 72 billion, according to

information provided by the Department for the Promotion of Industry and Internal Trade (DPIIT)

In 155 deals, Indian ed-tech startups received a total investment of $3 94 billion in FY22

UnfoldU Group, one of the largest providers of online education in India, declared ambitions to enter the Metaverse education market in September 2022.

With cooperation from Alteria Capital and WestBridge Capital, Edtech firm Sunstone, which provides higher education programmes, raised US$ 35 million in funding in August 2022. A postgraduate programme in life insurance sales will be curated and developed by Great Learning, a top global provider of edtech, according to a cooperation announcement made by Bharti AXA Life in August 2022

By receiving US$ 100 million in a Series-A fundraising round from WestBridge Capital and GSV Ventures in June 2022, edtech platform PhysicsWallah valuing the company at US$ 1 1 billion became India's 101st unicorn. UpGrad, an educational technology unicorn, received US$ 225 million in funding in June 2022 from Lupa Systems LLC and an educational testing service, valuing the business at US$ 2.25 billion.

GOVERNMENT INITIATIVES

Significant actions taken by the government

include:

The Indian education industry is open to 100% FDI under the automatic method.

The National Accreditation Regulatory Authority Bill for Higher Education and the Foreign Educational Institutions Bill are two government measures that aim to liberalise the industry.

The funding for the Samagra Shiksha Scheme has grown by almost 20 3%, from Rs. 31,050.16 crore (US$ 4.16 billion) in FY22 to Rs. 37,383.36 crore (US$ 5.01 billion), according to the Union Budget 2022–23

The "New India Literacy Programme" was approved by the Central Government in February 2022 for the fiscal years FY22–27, including all facets of adult education in accordance with the National Education Policy 2020 and Budget Announcements 2022–23

ROAD AHEAD

According to estimates, higher education in India will:

Use creative and revolutionary strategies in higher education.

Own a 50% increased gross enrollment ratio (GER)

Be one of the top five nations in the world for research output, spending US$140 billion yearly on R&D

Become the world's leading supplier of talent, with one in four graduates coming from the Indian higher education system.

Have more than 20 institutions in the top 200 worldwide

Be one of the top five nations in the world for research output, spending US$140 billion yearly on R&D

The Indian government has taken several actions, such as creating new IITs and IIMs and providing educational grants for research scholars in most government institutions. Furthermore, the higher education sector in India is poised for significant change and development in the years to come as a result of the growing usage of online education by several educational institutions

RAJRATAN GLOBAL WIRE LIMITED

COMPANY OVERVIEW

In 1991, Rajratan Wires Pvt Ltd started commercialising concrete wires and supports after it had been commenced its operation as a company in 1989 In 1995, the firm announced that it would be going public and changed its name to Rajratan Wires Pvt. Ltd. In Thailand, Rajratan Thai Wire Co Ltd was established in 2006 and began commercial manufacturing the following year (2008).

Currently, the company is engaged in producing high-carbon steel wires, with a particular focus on TBW, a type of bronzecoated wire typically found in tyres. Rajratan Thailand, a wholly-owned overseas affiliate of the company, manufactures these wires All kinds of cars, earthmoving equipment, and aviation tyres have TBW, reinforcing and enhancing the adhesion to the rim These functions are present in all forms of TBW

In addition, the firm manufactures drawn

steel wire, sometimes known as "black wire," for use in the engineering, construction, and automotive sectors

The company maintains two production facilities, one in Ratchaburi, Thailand (near the port) and one in Pithampur, Madhya Pradesh

The Pithampur facility has an installed capacity of 72,000 MT/year, while the Ratchaburi unit has an installed capacity of 40,000 MT/year. Leading tyre manufacturers have authorised both of these manufacturing facilities as suppliers on the local and international markets. Rajratan Thailand is the sole local provider of TBW in Thailand, but Rajratan India holds a substantial portion of the domestic TBW market

SHAREHOLDING PATTERN

As of September 30th, the promoters of Rajratan Global Wires possessed most of the company's shares, which had steadily .

Source: Screener

which is expected to rise by 2024, Rajratan is well positioned in the market compared to its competitors It has one of the highest liquidity ratios in the market, whilst other companies' liquidity ratios are substantially lower.

KEY METRICS

Rajratan Global Wires has invested in creating capacities supported by top-notch technologies currently produced in Thailand and India They installed 72,000 TPA capacity in India and 40,000 TPA capacity in Thailand during FY 2021–22. The company had 6,062 MT of high carbon steel wire and 84,749 MT of tyre bead wire in FY 2021–2022, respectively

In FY 2021–22, the company had the most significant R&D investment of 272 lakhs compared to the previous two years, with a market share of 42% in India and 28% in Thailand.

OUTLOOK

Rajratan Global Wires currently operates two plants, one each in Pithampur, Madhya Pradesh, and Ratchaburi, Thailand. These facilities have a combined capacity of more than a million 1,00,000 metric tonnes (MT) The company intends to increase that capacity by constructing a new greenfield facility in Chennai, India The company intends to use the proposed factory in Chennai to produce at a total capacity of 60,000 MT TBW. In the upcoming 24 to 36 months, the company plans to begin operating at full capacity

The corporation has good room for growth over the next two to three years due to South East Asian countries' increasing automobile production and demand For the coming year, a 3.6% growth rate is predicted for the global market. Rajratan Global Wires will have a chance to increase its market share as the domestic market for the Indian tyre industry is anticipated to rise by Rs. 20 billion by 2026, bringing the overall market capacity to 1 88 lakh MT

Source: Rajratan’s Integrated Annual Report

MARKET ANOMALY

LITIGATION FINANCING

Jinal Shah | MBA 6 | 2022-2024

In economics and finance, when the actual results are different from what is expected under a set of specific assumptions is called an anomaly. An anomaly proves that a given model cannot be held in practice. Anomaly is inconsistent with the theory of asset prices

In the market, the pattern contradicts the efficient market hypothesis like calendar effects are an example of an anomaly.

Many investors always look for easy ways to earn in the market, and certain tradable anomalies fascinate them. But investors should always remember that these anomalies might appear, disappear and reappear with huge risk This risk can be avoided if investors pay attention to several moments in the market, which can create good rewards for the investors

Even if you do not intend to trade as per market anomalies directly, it is vital that you understand them so that you are not unaware of surprising market movements and can adjust your trading strategy accordingly.

It is not possible that any investor can earn consistent profits from market anomalies, so traders need to have risk management strategies in place to deal with certain fluctuations. Although some anomalies recurrence can build confidence in profiting from the discrepancies, investors should be aware that historical patterns are not always a reliable indicator of future performance

Source: Investopedia

Below are a few of the market anomalies that everyone should be aware of:

SMALL FIRMS TEND TO OUTPERFORM

Investors often think of large companies as safe investments, but even small companies have great potential to outperform As per anomaly, it is a deviation from the accepted theories that small-firm effects can make sense. The growth of small companies is much more than larger companies They have more potential to explore and improve their stock performance.

A large company might require extra revenue and sales to grow by a certain percentage, but at the same time, small companies can lead to faster growth with a comparatively smaller increase in sales

JANUARY EFFECT

Mostly used anomaly is the January effect This effect describes the idea of stocks underperforming in the fourth quarter of the previous year and outperforming in January month. This is a logical scenario where trading volume and share prices rise at the start of the year; hence, this is also known as a turn-of-the-year effect.

It is generally believed that the January effect is caused by the change in the tax calendar Investors use the underperformance of small companies to claim losses and offset them with capital gains tax Then in January, as the price rises, it runs into the market to buy the

same Therefore, there is more selling pressure at the year ’ s end and buying pressure at the start of the year.

LOW BOOK VALUE

According to this anomaly, stocks with low price/ book value tend to outperform more It is generally believed that buyers get attracted to these stocks, but unfortunately, this is not a strong anomaly. A Group of small stocks with low book value can help to gain profits, but individual performance does not help investors earn much. An extensive portfolio of low book value helps to see the benefits

REVERSALS

As the name suggests, certain stocks act in reverse order Many times, it is noticed and statistically proven that today’s topperforming stock will be underperforming tomorrow and vice versa When a stock is a top performer in the market, there is a situation that its performance has made it expensive, likewise the opposite for underperformers.

Reversals work if people sell last year ’ s winners and buy last year ’ s losers which will move the stocks in the expected direction

DAYS OF THE WEEK

Many market supporters hate this anomaly of days of the week and say it does not

make sense As per research, stocks move more on Fridays than on Mondays, and there is a possibility of bias for good performance on Fridays This pattern is a persistent one

In this anomaly, there is no logical reason, but psychological factors could be influencing the market It may be some kind of optimism for a weekend or perhaps some kind of reading done by investors during weekends which develops pessimism for Monday

fluctuations moving toward surprise earnings. As per this anomaly, investors react after any announcement made by the company and shift the prices Usually, if it is an efficient market, instant changes will be noticed. However, in real, 60 days shift in the prices can be seen. Positive earnings cause an upward shift, and negative earnings cause a downward shift in prices

The widely accepted reason for this delay is that markets under-react to the earnings report, so it takes time to get information absorbed into the stock prices

Source: IG

DOGS OF THE DOW

This anomaly suggests that investors can beat the stock market by selecting stocks in the Dow Jones Industrial Average which have value attributes. Investors may select the top 10 Dow stocks as the first step Further, take five stocks from the list with the lowest stock value and hold them for a year. This can be considered a modified version of the reverse anomaly

POST-EARNINGS-ANNOUNCEMENT DRIFT

Post-earnings-announcement drift is the name given to the pattern of price

Source: IG

All these were several market anomalies that helped to understand the various behaviors of investors. Thus, it gives us better clarity on unexpected fluctuations. What are the behavioral-finance explanations of market anomaly?

The opposing model to ‘conventional’ finance theories is Behavioral finance Although it is assumed that investors are rational and predictable, there are no sure explanations for market anomalies. Behavioral Finance gives some likely factors:

Conservatism: Investors might prefer to stick to old beliefs and set of mindsets rather than to adjust strategies on new information.

Overconfidence: Investors tend to overestimate their belief and abilities for the accuracy of information. This can cause irrational choices

Biased self-attribution: The human inclines more toward the events that confirm their beliefs while ignoring those that disapprove of them.

Attention Bias: There is a high chance that investors will give attention to big and new companies at the expense of lesser-known companies.

But this does not mean that conventional financial theory has no value or correctness. Both of the theories can provide clarification on market and trader behaviour

THE BOTTOM LINE

Investors depend on many statistical data to analyze the market But do all investors have this fundamental or technical knowledge? No, they believe in certain anomalies to get abnormal returns Using these trade anomalies is a risky way to invest. Many anomalies are not even real, but they are also unpredictable These are a product of large-scale data analysis that looks at portfolios consisting of hundreds of stocks that deliver just a fractional performance advantage.

GOODLEAP

Aditi Vora| MBA 10 | 2022-2024

INTRODUCTION

Goodleap, formerly known as Loanpal, is a fintech company that offers its clients access to various residential lending products Goodleap is a sustainable home solutions marketplace with a product portfolio that includes home improvement loans, mortgages, and solar financing The company provides simple, fast, and frictionless point-of-sales technology for countless people who want to upgrade their homes and save money Goodleap aims to save the planet while helping homeowners save money. One way they do it is by assisting clients in installing solar panels, which not only preserves the environment but also saves money

The company ’ s platform provides a pliable way for customers to pay for an extensive range of sustainable products, including solar panels, smart home devices, battery storage, energy-efficient windows, modern HVAC systems, upgraded roofing, water-

saving turf, and more

The company was founded in 2003 as Paramount Equity and was later rebranded to Loanpal In June 2021, the company rebranded to Goodleap to prepare for the forthcoming initial public offer. It is among the list of companies that have become unicorns recently, with a current valuation of $12 billion Goodleap has been able to generate interest from eminent investors, such as tech mogul Michael dell, a significant investor in the business Goodleap is a company with positive cashflow and has a zero-debt business model. The company makes regular dividend payments to investors As of 2020, the company was responsible for 41% of the U.S.'s solar loan market and is the country's top solar lender.

Investment Officer

VALUES

AND MISSION OF GOODLEAP

Goodleap is committed to caring for the planet, building long-lasting relationships with its valued partners and customers, and delivering cuttingedge technology that enables more people to embrace a sustainable lifestyle.

Goodleap has an ambitious mission: to connect a world in which everyone can live sustainably

It is one of the fastest-growing financial technology companies in the United States With swift and uncomplicated payment alternatives for clean energy systems and smart home innovations, Goodleap is revolutionizing home improvement with its next-generation platform

GOODLEAP - BUSINESS MODEL AND REVENUE MODEL

Goodleap is a finance company that helps individual buyers set up solar projects to improve the efficiency and sustainability of their homes Most homeowners need the cash required to set up home improvement projects independently. Hence, to fulfil their loan requirements they need to borrow money, that Goodleap provides through a mobile application, which is their primary point of sale.

The application for a loan is dependent on the credit score of homeowners Only

people with decent credit scores can apply for the loan Even the interest rate offered by Goodleap is relatively low. The company can provide finance at an interest rate as low as 3% Moreover, the company offers both secure and unsecured loans However, the interest rates charged on unsecured loans are much higher. Thus, the company is well known for financing homeowners who want to reduce their electricity bills by taking advantage of solar energy. Goodleap loans also have other consumer-friendly features For instance, there is no prepayment penalty if the owners decide to close the loans earlier than expected.

In most cases, Goodleap will have a lien on the solar equipment financed by the loan They will have no claim on the house itself. Therefore, in the event of a default, Goodleap only has access to solar equipment and cannot foreclose the home itself. Also, Goodleap makes it simpler for owners to transfer their loans in case they decide to sell the house Thus, such schemes make it an attractive option for consumers.

Due to its accommodating business model, Goodleap has become very popular with consumers in the recent past With electricity prices increasing yearly, people are willing to switch to alternative energy sources Also, the United States government provides homeowners various incentives like tax credits and cash incentives to use solar energy in their homes

HOW DOES GOODLEAP EARN MONEY?

The Goodleap business model is simple It makes money in three critical ways:

Firstly, Goodleap gets a commission from the companies that manufacture the equipment sold during these solar home improvement projects. Goodleap helps these companies increase their sales and can charge them through commissions.

Secondly, Goodleap earns substantial amount of money from borrowers in the form of transaction charges.

Goodleap works with various investment banks to sell these loans to financial institutions and only holds them in their books for a short time. In the short span of five years, Goodleap has already been able to securitize millions of dollars worth of solar loans and then charge a fee for servicing these loans.

CONCLUSION

GoodLeap has mobilized over $18 billion in financing for sustainable upgrades since 2018, empowering countless consumers to live more sustainably Goodleap is also a proud partner of GivePower, an international non-profit organization committed to deploying solar-powered clean water and clean energy systems to communities worldwide.

The bottom line is that Goodleap has a

unique business model that allows it to use its financial expertise and technological capabilities to make viable solar loans The company has been able to grow at a rapid rate due to lack of competition in the sector

However, soon, the company is expected to face some competition with increasing awareness among consumers As a result, the company must continuously innovate to grow and thrive in the marketplace.

LTCM CRISIS

AbhigyanVerma|MBA3|2022-2024

Abhigyan Verma| MBA 3 | 2022-2024

DEFINITION

Drawing inspiration from the well-known tale of Icarus, he was gifted a set of wings and used them to his maximum advantage. Unfortunately for him, he got a little carried away and flew as high as he could despite warnings not to At this altitude, the sun began to melt the wax holding his wings together, and within seconds, his wings broke apart, and he fell to his death It is simple to apply this well-known parable about the perils of hubris to Long Term Capital Management, a prominent hedge fund that dominated the financial market in the 1990s Like Icarus, they eventually went too far and punched their demise after flying high with revenues through the ceiling.

ESTABLISHED ON ARBITRAGE

Hedge fund LTCM was established in 1994 by trader John Meriwether Hedge funds look after the combined investments of small, mainly wealthy, investor groups. In contrast to mutual funds, hedge funds are subject to

very minimal regulation. Therefore, there are no restrictions on the size of the fund or the types of investments it can make Due to the absence of rules, hedge funds are an ideal setting for investing in riskier financial products. Like all other hedge funds, LTCM uses the arbitrage investment management approach to oversee its holdings.

ARBITRAGE'S WORKINGS

An organisation might sell its equities in two different marketplaces, for instance. It is only normal to anticipate that the price of two stocks representing the same company will be the same. However, occasionally overreaction in one market might cause a stock's price to fall below that in the other When this happens, a chance to acquire the stock rapidly before the prices return to equilibrium is presented After this, the story can be sold for a profit Although it's a typical tactic, LTCM took it to a new level by identifying openings and seizing them with

calculations, projections, and the most upto-date computer technologies By employing this tactic, LTCM became the biggest hedge fund ever.

LTCM is on the right track After all, John Meriwether, a well-known bond trader for Salomon Brothers, was in charge. On board were Myron Scholes, Robert Merton, and David Mullins, a former vice chairman of the Federal Reserve Board who joined LTCM. They both won economics awards at the Nobel Prizes Eighty-first investors, including James Cayne and his deputy at Bear Sterns, were persuaded to make the minimum contribution of $10 million, thanks to these requirements The technique adopted by LTCM was primarily focused on convergence transactions. These trades involved finding equities that were unfairly valued compared to one another, establishing long positions in inexpensive securities, and taking short classes in pricey guards. Convergence of U.S. government bonds prices on and off the run, as well as long places in dollar-hedged emerging country sovereign bonds

These value gaps were so minor that the fund had to make massive, substantially leveraged investments to break even With $125 billion in debt and $5 billion in equity as of 1998, the fund had a leverage ratio of nearly 30 to 1 The LTCM partners asserted that their sophisticated computer models proved the long and short positions were closely interconnected, and the net risk was modest

RUSSIAN SOVEREIGN DEFAULT: THE PRIMARY REASON

The primary reason for the failure of LTCM was Russia's non-compliance with its government commitments (GOs) By selling rubbles, LTCM thought it had somewhat hedged its GO exposure. The value of Russia's currency would theoretically plummet in the event of a bond default, making it possible to make money on the foreign exchange market to compensate for the bond loss

Unfortunately, when the Russian rubble plummeted, the banks providing the rubble hedge closed, and the Russian authorities halted further currency transactions Although this resulted in significant losses for LTCM, they were nowhere near sufficient to bring the hedge fund to its knees Instead, the subsequent flight to liquidity, covered in more detail in the next section, ultimately led to its destruction.

Source: Medium

To save the American banking system, William McDonough, president of the Federal Reserve Bank of New York, urged 14 institutions to make loans to LTCM. They made a $3 5 billion investment to seize ownership of 90% of the fund

Fed funds rate cuts had started. The Fed's promise to take all necessary steps to support the American economy gave investors hope. The entire financial system was in danger of collapse without such prompt action

LTCM losses during the crisis:

Source: extreme-events-finance net

SUCCESS AND FAILURES OF UNIVERSAL BASIC INCOME

Growth and development as we know takes place in different facet and always involves same trade off. Some we ensure to mitigate while others remain repercussion of the same The concept of Universal Basic Income or UBI began in 2016 and involves unilateral fixed payment by the government to a fixed population stratum, while its original application can be autonomous by the recipient An idea that aims to liberalise the economy form the shackles of poverty and unemployment, one that aims to promote equality and struggles on the equity frontier

If we look at the data post covid, around 50-70% of roles are under the risk of replacement through automation and AI (Artificial Intelligence) based solutions. With the inception of self-checkout counters, kiosks model of selling, robo vacuums, self-driving cars and whatnot According to a study conducted by AIMA and PWC around 49% of corporates have inducted AI solutions into their repetitive

and mundane natured tasks On this frontier the retrenchment of blue collared and unskilled labour is at high risk. The government currently have plethora of developmental “Yojanas” in place and each have different agenda to cover, however the efficacy and reach of the same remains doubtful Major reasons behind it, bureaucracy and corruption UBI while today is a prospective concept, one that will be indispensable in the nigh future, its feasibility is remarkable considering the result the pilot projects have shown The basic physiological needs that a lower income level desires primarily comes from his job and that accounts for around 47% of India In the event of job losses due to automation and technological upgradation it will become imperative to create a job market for the retrenched, one that is selfsustainable and averse to similar risks One way of doing it is by bolstering their financial base in the form of monthly payment that will fulfil their bare minimum needs and negating the effect of job loss

Himanshu Gupta | Great Lakes Institute of Management, Chennai| 2022-24

because we know how much benefit an average person reaps from the “Yojanas” currently being employed The method of transfer is undemanding and involves direct transfer to the bank account of the beneficiary with full control over the magnitude of recipient and the best part is it eliminates the bureaucracy and does not incorporate any substantial administrative cost to the government

The political dogma of our leaders might load the scheme on the vanguard of inflation and decreased real income of the people But the scheme does not necessarily involves creating of new fund but more of shifting of fund and thereby curbing the inflationary impact as well as maintaining a healthy level of demand Those people who are currently engaged in “dirty work” such as canal cleaning, garbage collectors etc, will be given a push through UBI to better equip themselves with equipment and better working conditions which will reduce the risk of work-related hazards and lead to higher pay by standardising the job This can be corroborated by the Pilot Project done in Madhya Pradesh by SEWA (Self Employed Women’s Association) in 2010, wherein 20 villages were selected out of which 12 acted as control group and 8 were put under experiment and were given grants on monthly basis showed remarkable results with improvement in living standard and health of the village members and higher agricultural yield

The below chart shows the improvement in living standard of village with UBI grants as

against those who acted as control groups.

Source: Global Dialogue

A similar experiment was done in Canada in the early 1970s yielded results that showed -1% of the people stopped working with reduction in working hours for personal productive avenues and were to spend more time with their family and indulge in a better work-life balance situation Another instance is Spain, who lacks behind its European counterparts in terms of employment, in order to curb the economic ripple left by covid outbreak decided to spent 3 billion euros on its 2 5 million citizens.

While the UBI creates a floor instead of ceiling it has certain fearful utility, the autonomy of final expenditure remains in the hands of the recipient and the money can be used for satiating one ’ s penchant demand instead of gainful spending Apart from that there also exists risk of increased transaction cost for the banks who would be dealing with the payment settlement and without any incentive to facilitate the same there can be inefficiencies creeping in. Consider an individual who have to walk miles for his work and is unsatisfied with

the same, chances are people with similar grievances will drop out of the system intentionally

but also induce corporates for increased productivity and ultimately the requirement for labour in the manufacturing sector For women entrepreneur who have business ideas but lack financing UBI can be big boost for developing a sustainable business

Source: India Today

While the drawbacks are mostly hypothesis the reality tells a different story, according to a study done by World Bank in 2013, it showed a positive result wherein people mostly used UBI transfers for productive usage apart from the lazy and drunk who are mostly stereotype than reality. The concept of UBI is progressive and arduous considering the heterogeneity our country offers, however with logistical implementation and prudent scrutiny it can take us a step closer to poverty rid nation

The fund for UBI can be procured judiciously through a rational taxation system as the nation has a huge disparity in income wherein 77% of the wealth is held by top 10% echelons The UBI amount if becomes a universal transfer is easily returned by the middle class and upper middle class as their total tax spending amounts greater than transferred amount For a country like India where a huge proportion of rural demand remains unfulfilled a liquidity injection through UBI will not only increase spending

On a concluding note, by establishing a robust channel for transfer that captures the essence of universality and inclusion and bolsters the faith of citizens in the institutions such as health, education and insurance the UBI can be high-yielding and transformational for India.

About Finstreet

Finstreet, the finance committee of K J Somaiya Institute of Management aims at bridging the gap between industry and academic curriculum through effective delivery of knowledge-oriented sessions and events through a network of highly motivated members and renowned industry experts Through the FINLY magazine, we focus on covering crucial topics for each month and giving our members a platform to express their views.