Rise With Profit: US Retail Inflation, SEBI Proposal On AI, Tax Returns Rise | Podcast

This is the daily morning update from NDTV Profit. Over the next few minutes, we’ll bring you up to speed with everything you need to know to start your day ahead of the curve.

Let’s start, like we usually do, with the top news from overseas. The focus was on macroeconomic data from the US last evening—the latest retail inflation print came through. Consumer prices rose 2.6% in October, in line with consensus estimates. This compares with a rise of 2.4% in September.

Remember, the Federal Reserve’s target for inflation is 2%. And while, progress towards that mark has slowed in recent months, enough ground has been covered for traders to now bet on another rate cut in December. According to a Bloomberg report, there’s now an 80% chance of that taking place.

Bond yields in the US continued to be volatile. On the lower end of the yield curve, the yields on the two-year Treasury fell and settled around 4.3%. But the 10-year yield actually rose to 4.48%. A stronger dollar and a higher yield on the 10-year are reflective of expectations that Donald Trump’s policies, when he takes charge next year, will be inflationary.

US stocks were rangebound overnight with the Dow and the S&P 500 ending flat with a positive bias and the Nasdaq ending lower by about 0.2%. And it’s a positive start to trade in the Asia Pacific region with all three early risers trading in the green.

The higher bond yields in the US are particularly negative for Indian equities, where the selling by foreign institutional investors has remained unrelenting. They sold another Rs 2,500-crore worth of equity yesterday on a net basis. This means they’ve now been net sellers for 33 consecutive sessions, offloading equity worth over 1.5 lakh crore on a net basis. No surprise then that Indian equity markets entered the so-called corrective zone yesterday, with the benchmarks falling over 10% from their peaks.

In news back home, the Securities and Exchange Board of India has proposed holding market infrastructure institutions and intermediaries accountable for any consequences arising from their use of artificial intelligence tools in operations or client services. This includes ensuring data privacy, security, and integrity, particularly when handling sensitive investor information. Additionally, the entity should also be accountable for any actions taken based on AI outputs.

In corporate news, PepsiCo's bottling franchise partner Varun Beverages has set the floor price for its Rs 7,500-crore qualified institutional placement at Rs 594.56 per share. The floor price is at a premium of 4.66% to Wednesday's closing price of Rs 568.10 per share on NSE. The company will issue 13.27 crore shares having a face value of Rs 2 each. This includes 3.5 crore shares as greenshoe option, which would allow it to sell more shares if it gets enough demand.

Some interesting data coming from a source-based report by NDTV Profit. There has been a 120% rise in tax returns filed in India over the past 10 years. That number stood at 7.9 crore in 2024. There’s also a report in the Economic Times that says that nearly 75% of those that filed their returns for the assessment year 2024-25 picked the New Tax Regime.

And finally, the portfolio data of mutual funds at the end of October has thrown up some interesting talking points. The aggregate cash held in actively managed equity schemes fell for the first time this financial year. That needs to be put into context. As we’ve discussed, there’s been unprecedented selling by foreign institutional investors. That’s been more or less matched by domestic institutions, led by mutual funds. And the feeling was that mutual funds are using the significant cash holdings they’ve garnered from retail investors. The thing is, the reduction in cash held by active equity schemes was only 0.3% on a month on month basis. And in fact, because of the fall in equity markets, as a percentage of assets under management, cash now stands at close to 5%—the highest level this year. This doesn’t mean that mutual funds have not deployed cash. Do remember, that in October, mutual funds received their highest ever inflows into equity schemes. And what’s more, a bulk of that was in the form of lumpsum investments by retail investors. The way to interpret this is that fund managers have used all of these inflows and helped retail investors buy the dip.

It will be interesting to look at the data for the current month, though, with the selling continuing through the first half.