Bit by Bit 1st Oct || Another failed product for Google || Repo rate at 3-Year High & More

Good Morning! One month in! We have been sending you this newsletter for more than a month now (1 day extra than a month to be exact). We hope you are finding our stories relevant. If not, let us know how we can improve.

Here are:

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MARKET DATA

• BSE SENSEX : ₹57,426.92 (+1.64%)

• NIFTY 50 : ₹17,094.35 (+1.80%)

• NIFTY BANK : ₹38.631.95 (+2.61%)

• USD/INR : ₹81.42 (-0.06%)

• BRENTOIL : $85.40 (-2.04%)

• MCXGOLD : ₹50,027.00 (+0.07%)

• FII Net Cashflow : - ₹1565 crores

• DII Net Cashflow : + ₹3245 crores

(Market Data as of 11:00 PM on 30/09/2022)

ECONOMY

RBI raises repo rate by 50 bps to 3-year high

The Story:

The monetary policy committee (MPC) of the Reserve Bank of India (RBI) decided to raise the repo rate by 50 basis points (bps) to 5.9% on Friday, making it the fourth consecutive increase. Since May this year, the repo rate has been increased by 190(bps), a three-year high. The committee is continuing to fight inflation and is still concentrating on the withdrawal of accommodation.

The central bank reiterated that inflation would likely slow to 5% in Q1FY24, while the rate-setting panel maintained the inflation prediction for the year at 6.7%.

RBI governor Shaktikanta Das did sound a note of caution on inflationary pressures that could emerge in the days ahead, even as crude prices show signs of easing. “Consumer price inflation remains elevated and above the upper tolerance band of the target due to large adverse supply shocks, some firming up of domestic demand, and the spillovers from global financial markets,” Das said, adding that the recent correction in global commodity prices, including crude oil if sustained, may ease cost pressures in the coming months.

The panel also reduced its projection for the growth of the gross domestic product (GDP) for FY23 from 7.2% to 7%, with Q2 GDP growth expected to be 6.3%, Q3 GDP growth expected to be 4.6%, and Q4 GDP growth expected to be 4.6%.

AUTOMOTIVE

FADA: Increased repo rate by RBI is a significant deterrent for the auto industry

Key Facts:

• Federal fund rates have been increased by 190 basis points to 5.90% which is the highest since April 2019.

• The MPC-RBI also lowered the growth forecast from 7.20% to 7%.

• The hike will majorly affect the entry-level two-wheeler and passenger vehicle segment where customers are most sensitive to price changes.

The Story:

The Reserve Bank of India (RBI) increased its benchmark interest rate on Friday, which the Federation of Automotive Dealers Associations (FADA) stated had a significant negative impact on the industry, particularly for the price-sensitive entry-level two-wheeler and passenger car segments. In an effort to bring inflation into its target range and in line with aggressive policy tightening by significant global central banks, the RBI's rate-setting panel raised the benchmark rate by 50 basis points on Friday. This is a continuation of the withdrawal of the "accommodative" posture.

The FADA President, Manish Raj Singhania, said in a statement that the move "is obviously a significant dampener for the auto sector, especially for both entry-level two-wheeler and passenger car segment where buyers are extremely sensitive to any price spike."

According to Singhania, rates on car loans have increased since May 2022, raising EMIs. He claimed that because of rising input costs, two-wheeler manufacturers have already increased the price of their cars five times in the last year. In addition, he said, "the rate increase will further discourage clients from purchasing their goods during this auspicious time when we do (sell) almost one-third of the entire year's sales." He claimed that since the epidemic hit, the segment has not performed and is already under stress.

AIRLINE

Akasa Air Partners with RateGain for dynamic pricing

Key Facts:

• Akasa Air was launched on August 7, 2022.

• It is backed by the late billionaire investor, Rakesh Jhunjhunwala.

• RateGain is an AI focused startup which helps companies optimize their revenue streams.

The Story:

To gain an advantage by having dynamic fares, Akasa Air has partnered with RateGain Technologies. RateGain offers Airlines market insight to build competitive pricing strategies by making use of its product, AirGain.

AirGain makes use of changing market dynamics and optimizing airfare in real-time to provide the best-in-class fares to its customers.

"As Akasa grows, our product AirGain will help in maximizing revenues by providing accurate and real-time competitive intelligence," Bhanu Chopra, Chairman and Managing Director of RateGain, said.

According to the release, it provides the user with real-time competitor insights across channels to reduce disparity and revenue losses.

TECH

Say goodbye to Google stadia

The Story:

Google has announced that it will closing Stadia, its gaming streaming service, on Jan 18, 2023

Google has also announced it will start refunding money for all the hardware as well as software purchases. This is one of the many failures in which google has invested a lot of money, some of the previous failures include google+, google glass, etc.

Some of the reasons for failure are high subscription prices and a lack of first-party developers so it was not able to distinguish itself from the competitors.

"They had a great idea and a bad business model", Wedbush Securities analyst Michael Pachter said of Stadia. "They tried to offer the service as a subscription without games.."Xbox-maker Microsoft, meanwhile, offered a rival Game Pass service "with a ton of games," making it a more tempting option for players, Pachter said.

Some of the reasons for failure are high subscription prices and a lack of first-party developers so it was not able to distinguish itself from the competitors. Stadia was not able to provide its users with good games and its cloud capabilities were not as good in its initial days when it launched in 2019.

Want More Bits?

Does the asteroids have the potential to destroy earth?

The Story:

Around 66 million years ago, dinosaurs met their doom at the hands of an asteroid measuring atleast 6 miles (10 kms). Although, the asteroid rendered 75% of the species extinct but through all these, earth remained and thrived again.

Our planet is far tougher than you think, but humans as a matter of fact, aren’t. So, can we say that our earth is immune to asteroid attacks? Technically, YES! It would take an asteroid of the size of the earth itself to completely obliterate it, but far less size to wipe out the life on earth.

Brian Toon, a professor from university of Colorado boulder mentioned about the Giant Impact Hypothesis which suggests that a mars sized planet named THEIA once collided with earth resulting in big chunk of debris getting launched into space that coalesced into what we know as our moon.

Is there a way to deal with rogue asteroids?

Thankfully NASA has already tested a plan to deal with potentially hazardous asteroids that can threaten the life on earth. Through the mission DART- Double Asteroid Redirection Test, NASA aims to test if redirection is the viable defense option for the planet or not. On Sept. 26, NASA smashed an unmanned rocket into an asteroid named Dimorphos in hopes of altering its trajectory.