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BW Businessworld

Jotting: Hold Your Nerve

Financial markets are prone to knee-jerk reactions — wiping out or adding to billions from the net worth of individuals

Photo Credit : Bloomberg

To see stock markets fluctuate the way they do after any major event is often unnerving. But financial planners suggest a strategy to see these events through — Do nothing. Financial markets are prone to knee-jerk reactions — wiping out or adding to billions from the net worth of individuals. Once, however, an event plays out — and is weathered — the emotions surrounding the event die down, and markets normalise. During the US election results, the markets swung from the depths of pessimism back to their normal optimistic trajectory. Trump as president pushed down stocks nearly 1,100 points. The next day they recouped that, and more. In all, they see-sawed 2,300 points in two days. Over time stocks recover — as long as the underlying economy and companies are expanding and growing. Remember, the BSE Sensex crashed 2,273 points on 22 January 2008 and closed at 16,730 after the Lehman crisis blew over. But look where it is now.
— Clifford Alvares


This festive season of Diwali, apart from Flipkart’s big sales, there was something else that made the e-tailer the talk of the town – the resignation of its chief financial officer Sanjay Baweja who quit in a span of under two years after joining the company from Tata Communications. Baweja’s exit comes at a time when chief executive Binny Bansal’s efforts to revive growth was beginning to show some results. At the same time, Flipkart is also trying to raise fresh funds from investors to build its war chest to fight international rival Amazon. With a series of top-level exits, Flipkart’s ability to retain top talent has seen a dent in the recent past. Punit Soni, the high-profile hire from Google quit the company in less than a year while Ankit Nagori quit from the position of chief business officer to start his own venture with Mukesh Bansal, head of Flipkart’s commerce and advertising business. The industry will be closely watching its people movements.
— Ayushman Baruah

Uttar Pradesh, the state going to polls shortly and Gujarat, the land of Prime Minister Modi, have both diluted certain key provisions of the contentious Real Estate (Regulation & Development) Act. This central Act, which was passed by the Parliament earlier this year, clearly states that it is mandatory for developers to register “all ongoing projects” (those which are yet to get completion certificate and not handed over to consumers) with the Real Estate Regulatory Authority of respective states. While Gujarat has exempted all projects launched before notification of the rules, the rules notified by UP have kept ongoing projects out of the ambit of the central Act even when the services had been handed over to the local authority for maintenance and the common areas and facilities handed over to RWAs. Is politics getting the better of homebuyers’ interests? It seems so!
— Ashish Sinha


The board for Control of Cricket in India (BCCI) has no money to pay for the India-England Test series which has just got underway! Apparently, the BCCI’s woes emanate from a Supreme Court enforced freeze on all its financial dealings, and it would be allowed to transact only after it provides the Supreme Court-appointed Lodha committee with details as to where and how the money that would be spent. “I am…at great pains to inform you that the BCCI is at present not in a position to execute the MoU between the Indian cricket board and the ECB. This is due to restrictions on execution of contracts imposed on the BCCI by a court order,” BCCI secretary Ajay Shirke wrote to Phil Neal, manager of the visiting English team. Effectively, it means the England Cricket Board will have to settle all the bills for hotel stay, local travel, food, transportation, among others. Whatever has happened to our famed hospitality?
— Ashish Sinha

The 8 November evening announcement that Rs 500 and Rs 1,000 currency notes would cease to be legal tender from midnight is the most dramatic step against black money in recent history. The circulation of Rs 500 notes had shot up by 70 per cent between 2011 and 2016, when the overall circulation of all currency had gone up by 40 per cent. The Rs 1,000 notes had proliferated by 109 per cent during the period, according to government estimates. Something was obviously amiss somewhere. The World Bank had estimated the size of India’s shadow economy to be 23.2 per cent of its GDP in 2007. How big was it a decade later and how much of it buoyed up inflation stoked by fake currency?
— Madhumita Chakraborty