March 02, 2019|
We are pleased to present to you our monthly market commentary and outlook for the forthcoming month. The ‘stockaxis’ Market Intelligence’ is a quick update on the markets for the month gone by and our view for the next month. Use our sharp and crisp synopsis to continue building your wealth!
Impact of FinTech in the financial sector:
FinTech or Financial Technology is changing the face of the financial services sector as nimble FinTech startups emerge and disrupt existing business models and practices. While in India the FinTech sector is relatively young, the Indian government’s push towards digitalisation and a cashless society mean that this sector has innumerable opportunities. The country is witnessing the impact of FinTech in the Peer-to-Peer lending services segment where alternative credit models and data sources are being used to provide quicker and easier access to credit. Payments is another area where FinTech has had a marked effect with wallet providers rivalling banks and the unique opportunities existent in India due to the regulatory approval of payments banks. India is the largest remittance market in the world at US$ 69 billion according to the World Bank, and startups have the opportunity to fill in the gaps to address remittance needs of Indians - both inbound and outbound. In the arena of personal finance, there is now a possibility of providing tailor-made solutions and information to individuals using data available, thanks to FinTech. Equity funding can be conducted through crowdfunding models including Initial Coin Offerings (ICOs). This said, there are tight restrictions on cryptocurrency in the country; however this may change in the near future as regulators erect the necessary framework for their use or even introduce an official cryptocurrency, which has been discussed in the past. Banks, NBFCs and IT companies from the listed space will be some of the beneficiaries to this fintech revolution.
India’s changing consumption profile:
India is all set to become the third largest consumer market by 2030. At the moment, India enjoys a GDP growth rate of 7.5% and is tagged as the world’s fastest growing major economy. With fast growing incomes and an expectation that the growth of the Indian middle class would uplift 25 million households out of poverty, India is riding a consumption wave. Domestic consumption that is the backbone of 60% of the GDP, will translate into US$ 6 trillion opportunity by 2030. According to figures reported by the Bain Price Consumer Survey 2018, It is expected that new categories such as healthy and organic food alone would contribute 32% of the total incremental spending on food consumption by 2030. Formal wear would add 25%, while communication would add an overwhelming 72%. In India, the consumption growth will be driven by middle income consumers who are sensitive to price points and it is expected that nearly US$ 2 trillion of incremental spending will be on products and services described as “more of the same”. We will witness a trend of “many Indias” where the top 40 cities will form a $ 1.5 trillion opportunity, but thousands of Indian small towns will offer the same opportunity in consumption growth as well. The divide between rural-urban India will diminish significantly. In short, the drivers for the change in Indian consumption profile are rising incomes, changing attitudes, technology and demographics.
Media emergence of OTT players:
On demand content consumption through ‘over the top’ (OTT) service providers is now an established fact of life. Consumers have a choice in both audio and video content streaming like at no other point in history. The year 2018-19 is a crucial period in India when it comes to media emergence of OTT players. While Netflix has dedicated Rs. 600 crore per year to original content in India and Amazon had committed Rs. 2,230 crore in 2017, to be allocated over the next 2-3 years, new entrants like Spotify have made their presence felt as well. Local companies like Balaji, Zee etc. have also stepped up their game and have entered the OTT segment. According to Deloitte, Video and Audio alone will generate 89% of internet data traffic by 2018 globally and this is being driven by innovation in better mobile networks like 4G and LTE technologies. The growth in India would be substantial as well with OTT market which stood at US$ 0.5 billion in Nov 2018 expected to grow to US$ 5 billion by 2023 as per figures made available in a Boston Consulting Group (BCG) report. With the emergence of these OTT channels, we can expect more original content for India to be generated, convergence of digital advertising and e-commerce, more content regulation from authorities and a highly competitive environment as near-future trends.
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