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Friday,03-December-2021

Business

Big Tech now a quarter of S&P 500 combined market cap

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Microsoft

Microsoft is now worth a smidge more than Apple, making the Satya Nadella-led cloud software giant the world’s most valuable company. Both companies are worth about $2.5 trillion, CNN reported.

Google owner Alphabet is worth just a touch less than $2 trillion, while Amazon is valued at $1.7 trillion. Tesla, Elon Musk’s electric car giant recently passed the $ 1 trillion mark and has since surged to a market cap of about $1.25 trillion.

These five companies are now collectively worth almost $10 trillion. That’s nearly a quarter of the combined $41.8 trillion market cap of the entire S&P 500, the report said.

It’s possible that the S&P 500 could have six companies worth at least $1 trillion at the same time if Meta Platforms, the social media giant formerly known as Facebook, continues to rebound. Meta now has a market valuation of about $930 billion.

But given the continued strength in tech, it’s altogether possible that all six of these companies could soon each be worth at least $2 trillion, if not more. After all, Microsoft and Apple are knocking on the door of $3 trillion.

And other techs, such as chip leader Nvidia and China’s Tencent are moving closer to the trillion dollar market valuation mark, the report added.

It seems almost unfathomable that so many companies could be worth this much. But earnings growth for many of the top techs continues to be strong, and that is pushing prices higher, the report added.

Still, the insatiable investor appetite for trillion-dollar techs reminds some market analysts of the Nasdaq froth of the 1990s and early 2000. It could be a warning sign, it said.

“Tesla’s rally is reminiscent of Cisco’s move in 2000, a move that marked the bubble top in 2000,” said Mike O’Rourke, chief market strategist with JonesTrading, in a report this month.

O’Rourke pointed out that Cisco shares soared about 50 per cent in the first three months of 2000 and analysts at Credit Suisse predicted that Cisco would be the world’s first trillion-dollar company, the report said.

It didn’t happen. Cisco, which was worth about $550 billion at the height of tech stock mania two decades ago, is now valued at about $240 billion. Intel, another tech stock leader of the late ’90s, has struggled in the past few years and is nowhere close to its 2000 peak valuation.

It’s proof that becoming a market leader may be easier than staying a market leader. There is no guarantee that the likes of Microsoft, Apple, Amazon, Alphabet and even Tesla will stay at the top, CNN reported.

Business

Unheard of Rs 3.3 lakh Cr bank deposit bulge in Diwali week slumped in a fortnight

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Indian-Rupee

State Bank of India’s Economic Research Department has highlighted the curious case of Rs 3.3 lakh crore deposit bulge and the Rs 2.7 lakh crore deposit slump in alternate fortnights.

As per the provisional data released by RBI for the fortnight ended November 19, ASCB’s aggregate deposits have slumped by Rs 2.7 lakh crore during the fortnight. The slump in deposits follows an abrupt increase by Rs 3.3 lakh crore during the previous fortnight ended November 5. Interestingly, such growth in deposits was around 36 per cent of the incremental deposit growth at that point of time. This increase in deposits and subsequent slump is quite a contrarian trend, says Soumya Kanti Ghosh, Group Chief Economic Adviser, State Bank of India.

While it may be exactly difficult to decipher the increase and subsequent decline, it does pose questions on liquidity management/financial stability or a shift in behavioural trend in customer payment habits through digitisation and hence lower currency leakage and concomitant deposit bulge or both.

First, the fortnightly increase of Rs 3.3 lakh crore. This has never happened during a Diwali week as there is always a currency leakage and concomitant deposit decline. This is also the fifth largest increase in any fortnight in the last 24 years. Such huge incremental addition has happened only a few times, with higher deposits accretion (than the current year’s fortnight) occurring during the fortnight ended November 25, 2016 (Rs 4.16 lakh crore), September 30, 2016 (Rs 3.55 lakh crore), March 29, 2019 (Rs 3.46 lakh crore) and April 1, 2016 (Rs 3.41 lakh crore). However, the increase in November 2016 was because of demonetisation and the March and April fortnightly increases could be attributed to seasonal year-end bulge. In this respect, the current deposit bulge requires a detailed explanation, the report said.

Next, the fortnightly deposit slump in the subsequent fortnight. ‘We believe that it is possible that there was a large influx of deposits into the banking system for the fortnight ended November 5, 2021 in anticipation of a build up in rally in stock markets post primary issuances of new age companies and others. However, when such a rally did not materialise, the bulge in banking deposits slumped and almost 80 per cent of deposit bulge was withdrawn, the report said.

Interestingly, the amount of money parked in fixed reverse repo window jumped from Rs 0.45 lakh crore on October 19 to Rs 2.4 lakh crore on November 17, 2021 and has remained at such level till December 1. However, it must be noted that the significant jump in digital transactions has also resulted in lower usage of cash in the current fiscal and ideally could also have resulted in a surge in deposits for the Diwali week.

Meanwhile, if we look at the quarterly ASCB data, though the deposits growth remains same in Q2 (2.6 per cent) as compared to Q1 (2.5 per cent), sequentially at all-India level, apart from Metro regions, the deposits growth has decelerated in Q2 as compared to Q1, particularly in rural areas indicating that the current economic recovery is mostly urban led and rural economy is still recouping. Meanwhile, ASCB’s credit has increased by Rs 1.18 lakh crore (7.1 per cent YoY) during the fortnight ended November 5, which may be due to festive demands.

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Business

Oil marketing companies keep diesel, petrol prices unchanged

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petrol

Oil marketing companies kept diesel and petrol prices unchanged across major Indian cities on Friday.

Accordingly, diesel and petrol prices in Delhi stood at Rs 86.67 per litre and Rs 95.41 per litre, respectively.

In the financial capital Mumbai, the prices remained unchanged at Rs 94.14 and Rs 109.98 respectively.

Prices also remained static in Kolkata at Rs 89.79 and Rs 104.67 respectively.

In Chennai too, it remained at Rs 91.43 and Rs 101.40 respectively.

Across the country as well, the price of the fuel largely remained unchanged on Friday, but the retail rates varied depending on the level of local taxes.

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Business

Equity indices rise for third consecutive day

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The 30-scrip Sensitive Index (Sensex) rose in the early trade on Friday. Indices have been gaining for the past three consecutive sessions.

At 9.15 a.m., the S&P BSE Sensex traded at 58,671 points, up 0.37 per cent.

It opened at 58,555 points from the previous close of 58,461 points.

Till now it has touched a low of 58,512 points.

Besides, the broader 50-scrip Nifty at the National Stock Exchange (NSE) opened at 17,424 points after closing at 17,401 on Thursday.

It traded at 17,475 points, up 0.39 per cent during the early-morning trade session.

Hindustan Zinc, Infosys, NMDC, L&T and BPCL were some of the top gainers during the early trade, exchange data showed.

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