T E T HE CONOMIC IMES HOW TO HELP THOSE WHO HELP YOU P13 www.etwealth.co|Ahmedabad, Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai, New Delhi, Pune|September 5-11, 2022|24 pages|`8 ARE YOU READY TO BE SCAMMED? HERE’S HOW CITY GAS PLAYERS ARE Increasing access to tech has also led to a rise in cybercrimes. GAINING Find out how savvy you are about digital security. P2 P8 REAL REFORMS INSURANCE SECTOR NEEDS NOW P9 DO YOU NEED GOLD AND SILVER IN THE PORTFOLIO? P11 cover ssttoorryy 02 The Economic Times WealthSeptember 5-11, 2022 ByNamrata Dadwal “Hello Mr. Sharma, here is `15 lakh for you!” “But why are you giving it to me?” “Oh, I just feel like it. Now, if you just give me your ARE YOU house keys, I’ll put this money in your cupboard.” S ounds suspicious, doesn’t it? If you were Mr. Sharma, you would obviously be skep- tical of some random person just handing you money, and you would never give READY TO BE him or her your address. Yet, somehow in the cyberworld, our acumen gets blurry, we trust whoever it is on the other end of the digital line, and give them the keys to our personal information. We come to our senses only after we discover that we have become victims of a fraud. SCAMMED? While the Internet has opened a plethora of op- portunities, like Pandora’s box, it has also brought a multitude of problems, the biggest one being rising cyber crimes. Social media, online shopping sites, and unknown calls can sometimes be blackholes that scamsters use to suck you in. According to data released by the National Crime Records Bureau Increasing access to technology has also last year, 50,035 cases were registered in 2020 under cybercrime, a rise of 11.8% over 2019 (44,735 cases). led to a rise in cybercrimes. Find out how Compare this to just 3,377 cases in 2012, the past dec- savvy you are about digital security. ade has seen an almost 15-fold increase. The rise is due to many reasons—wider use of technology, increasing access to mobile Internet, lack of technical awareness, innovative methods used by tricksters and difficulties in investigating and arresting swindlers for cybercrimes. The only way to protect ourselves is by being cautious of every move we make in the digital world. So, here’s a quiz you should take to find out how vulnerable you are to being conned, and the best op- tion to choose to avoid being swindled. When you get 1 a link to open in a message or mail, you… A Click on it immediately. B Check the URL of the link. C Prefer to type the link on a browser yourself. C is your best option. It’s always best to type the URL yourself to make sure you’re accessing the correct website. In most cases, if it’s a link to a bank or shopping portal that you use often, the entire URL will appear in your web browser itself. This will also help you check the correct spelling of the link. Scammers often use a different variation of a link that is ex- tremely close to the real one to fool people. For instance, fake ‘yahooo.co.in’ isn’t the same as the authentic ‘yahoo.co.in’ because of the extra ‘o’ in the spelling, something that most people might skip noticing. Another smart way is to check the age of ES a website by using ‘Whois Domain Lookup’ G MA (https://www.whois.com). Simply type Y I the name of the website and you will get T ET information on who owns the domain name, G S: where they are based, and how long the TO website has been active. If it has been O H created recently, it’s a big red f lag. P cover ssttoorryy The Economic Times WealthSeptember 5-11, 2022 03 If you get a call from your You have saved 2 bank’s representative 3 important asking about some passwords and details, you... PINs… A Provide whatever information is needed. A In a f ile locker app on your mobile phone. B Ask for identif ication proof and share only some info. B In a digital locker. C Say that you will call the bank’s helpline yourself. C On a piece of paper that’s in your locker. C is your best bet, though step B should All three options are secure, though also be followed. A and B are better because they allow you to access information from anywhere. If you haven’t lodged a complaint with your bank or requested aid, be wary of any incoming calls, especially those offering Digital lockers help to save your important docu- new schemes, discounts or unwanted help. Do not lower your ments in an encrypted format. The government itself guard even if the unknown caller provides personal informa- offers services of a DigiLocker that can be accessed tion like the last four digits of your bank account number or through your Aadhaar card. The other easier option your date of birth or mother’s name. Remember, this informa- is to download a f ile locker app, such as Folder Lock, tion is often easily accessible via your bills or social media. FileSafe, Filecrypt or Norton App Lock. These digital vaults can only be accessed via a special password or PIN code. If you conduct a lot of business on your phone, you could opt for a password manager too. Most people 74-year-old loses life’s create an easy-to-remember password and reuse it for everything, which is a dangerous mistake. A safer savings to cyber fraud option is to create unique passwords for each site, Retired bank manager loses like ‘20wty!bm13@h’. Since remembering multiple Kolkata, 19 February 2022: Swapan Kumar `3 lakh in 9 minutes passwords like this is almost impossible, you should Roy Chowdhury, 74, lost his life’s savings opt for a password manager that will generate smart worth `28 lakh after receiving a call from a Bengaluru, 9 April 2022: A 60-year-old retired passwords for you, sync them across multiple sites, fraudster posing as a customer care bank manager lost `3.04 lakh within nine and protect them with high-end encryption software. executive of a nationalised bank. The caller minutes after replying to a message that her promised to help Chowdhury with adding Net banking had been suspended. She clicked beneficiaries to his account, and sent him on the link in the message and submitted all a bank-lookalike link. When the victim her KYC details, including OTPs. The woman clicked it, the accused sent malware to his received the message at 6.14 pm on Monday, and phone, and then stole the money. when she got the OTPs, she updated them in the link too. Between 6.26 pm and 6.35 pm, fraud- sters withdrew `3.04 lakh from her account. If a friend There are plenty of stories of how someone got A Call them back personally to f igure sends you swindled because they out how much they truly want. received a mail or a What- a mail or 4 B Transfer the funds ASAP. sApp or Facebook message message from a friend asking them C Reply to the mail asking for more for f inancial help. If you’re asking you information. close enough for someone for money, to ask you for money, then you’re certainly close you… Always A. enough to pick up the phone and chat, isn’t it? In simple words, it’s the OTP that you get. In India, this exists compulsorily only for f inancial transactions. How- A Yes. ever, you should also use it for securing other important 5 B No. platforms where you may be sharing information such as mails and WhatsApp. It’s a double security feature C What’s that? against hackers. Also, don’t ever respond to calls asking you for remote access to your computer or phone, even Have you opted if they mention a reputed brand name. Scammers usu- ally offer to repair a problem remotely or install a free for dual-factor Opt for A ASAP upgrade, which could be a virus that will give them your if you haven’t authentication? passwords and personal details. If you’re suspicious of done so as yet. any link or f ile, you can use VirusTotal (www.virustotal. com) to check for malware or other breaches. cover ssttoorryy 04 The Economic Times WealthSeptember 5-11, 2022 “Check what permissions When someone You regularly you have given the apps 6 calls you in a panic 7 check your on your mobile phone.” and says it’s an privacy options emergency, you… A Yes, and update them too. RITESH CHOPRA A Rush and do whatever is asked. B No, I have no idea what’s that. DIRECTOR, B Calm down, take a deep breath, think and C It’s too complicated. SALES & FIELD then start working. MARKETING, INDIA AND C Refuse to comply completely. SAARC AT A, A and A. NORTONLIFELOCK Please opt for B. We know long reams of privacy policies seem intimidating, but you don’t have to read them. Scamsters often try to rush their victims and pressure Whether it’s YouTube, Facebook or Gmail, them so that they can’t think rationally. It’s a psycho- every social media platform has a privacy logical trick where they create a sense of urgency that check in its account settings. Go through those How can people safeguard their digital leads you to comply immediately or blurt out sensitive to inspect what kind of information you are devices? info. Don’t be forced into taking a quick decision. Think sharing with the world. Make sure your email, Cyber crime has moved away from just virus at- carefully and critically. Take a few minutes to compose date of birth and contact list is visible only to tacks to privacy and identity theft. Usually, you yourself and talk to someone. This may help you real- you. Even such a simple step can be another shut down your PC after using it, but you never ise that the situation isn’t really what it seemed to be. secure wall protecting you. switch off your mobile phone, which you use for everything these days. Your bank balance, NEFT transfer, EPFO statements, etc, come as SMS; you share your boarding pass or Aadhaar card on WhatsApp; you make a doctor’s appoint- Fraudsters use new SIM to steal `22 lakh ment or get food delivered through an app. 8 So, you need comprehensive protection soft- Mumbai, 10 Aug 2022: A his telecom provider, he was told ware on all your devices. Almost 90% of people businessman lost `22 lakh from they had received a request for understand they require an anti-virus on their his bank account after fraudsters deactivating the SIM because he PC, but hardly anyone has security software for got his existing SIM deactivated had lost his phone. A new SIM their phones. That’s the first thing you should When you’re on and conducted bank transactions was issued in its place, which the invest in when you buy a phone. For instance, the using a new SIM issued in his fraudsters used to carry out six vacation, you share… Norton 360 is available for an annual charge of name. When A.A. Shah contacted bank transactions. only `999 for three devices and has several fea- tures like SMS filtering. This allows the software to scan links you get in an SMS and alert you if there’s any malicious trojans or spyware in it. You get an SMS that electricity What are the risks people should be aware of 9 bill has not been paid, and to call while using apps on their phones? if you want connection… According to a survey Norton did a year ago, an A Photos and trip details average Indian has 48 apps on their phones. Most openly on social media. people never log off these apps and aren’t aware Fraudsters nowadays use what’s called of the permissions they have given to them. You B Share photos and some A You call back ‘social engineering’ to con people. In simple may have given access to microphone, camera information with a handful of immediately. terms, it means that they use tricks to people individually. manipulate people into breaking normal and location services, which you may not even B You use an app like need to share in many cases. When you’re sur- security procedures to gain access to their C Don’t tell anyone where TrueCaller to check information for f inancial gain. In this case, prised that you start getting ads for something, you’re going at all. the number. they’ve created a sense of worry, yet made it is because there are apps that are constantly C You ignore the you feel as if you’re in charge because listening to your conversations or tracking your message. you will approach them. The person on browsing history. To keep a check on this, you This may sound tricky but the other end of the line will probably be should download an app adviser that will alert B is the better option. extremely sympathetic and in the course you if there’s any fundamental change in an app, B is good, though of solving your problem, will just casually like alerting you to all apps that have access to It’s a good idea to let close people C is safe too. chat with you, sneakily taking away all the your microphone and camera. know your plans so that they can information they want. keep an eye on your home to check What are the big ‘Don’t Dos’ that people for any suspicious activity. Avoid should follow online? going for ‘A’ because you don’t want Don’t ever download any app or extension for strangers stealing your photos or `8.8 lakh lost in electricity bill fraud your browser without checking its authenticity. going through your social media Some of these can have embedded malware like feed and gleaning information about Chennai, 14 July 2022: Police facilitate the payment and a keylogger programme, which allows hackers where you’re staying, or your kids’ recovered `8.8 lakh that a asked Pynadan to download access to your keyboard. When you type your birth date, or your spouse’s name, Chennai resident lost in an an app called ‘R cube’. As soon password, they will know the strings of keys you all of which can be used to hack for online fraud. Romie Pynadan as he downloaded the app, the pressed and can then hack your password. more information about you, leaving got an SMS saying his elec- fraudster accessed his user- Also, don’t trust every profile you see online. you vulnerable to identity theft. tricity bill was pending and name and password and trans- Check the antecedents of the person and investi- supply would be disconnected. ferred `8.8 lakh from his bank A fraudster could use your photo to gate more about his or her social profile. For in- When he called the number account. Luckily for him, the create a new Aadhaar card or driv- stance, I could make a profile of an HR manager in the SMS, the person on the cybercrime police acted fast. ing license. Another increasing prob- on LinkedIn, and reach out to you with a lucra- other side pretended to be an The transactions were frozen lem is deepfakes, which can be used tive job offer, asking you for your salary slip. employee of the electricity and the money was credited to morph videos and images, and department. He offered to back to his account. then used as a tool for blackmail. cover ssttoorryy 06 The Economic Times WealthSeptember 5-11, 2022 Youth tries to claim online prize, loses `80 lakh Woman loses `3.25 Kochi, 20 January 2022: An Aluva charge. The youth continued to pay resident lost around `80 lakh after amounts to the fraudster to get the lakh to ‘NRI groom’ he received a scratch-and-win card reward. In a few months’ time, he on making an online purchase, the ended up paying `80 lakh in total Chandigarh, 19 July 2022: A 38-year-old police said. After scratching the before realising the fraud. The woman was duped of `3.25 lakh by a couriered card, he found that he had victim was convinced to pay the fraudster, posing as a US resident, whom won a reward of `25 lakh. When he huge amount with the promise that she had met on a matrimonial site in contacted the number on the card, it would be repaid along with the August last year. The woman claimed he was told to pay `2,000 as service cash reward, added the police. a man called Amit Bedi had proposed to her and said he would be visiting India soon. She later received a call from a man claiming to be an Airports Authority of India official, saying that Amit had been detained at the Mumbai airport with excess US dollars. She was asked to deposit tax against the cash, “You can call national helpline 1930 to report a cyber and she transferred `3.25 lakh to an HDFC bank account. When the suspect crime but remember that digital money moves fast.” started demanding more money, the victim realised she had been duped and filed a complaint. What are the risks people should be aware of while using an app? Don’t install any direct application in your de- vice by bypassing the App Store or Play Store. You also need to be cyber smart and check three things before you install any app or tool: the de- veloper, the reviews and the permissions. Recently, there was a wave of ‘Insta Loan’ apps. Most of these were Chinese and promised you a You’ve met someone loan instantly without any documentation. But 10 online and now these loans came with huge interests and led to extortion when people were unable to pay back. they’re coming to Worse, these apps could access data on your phones, and copy your contact list and photos. meet you, so you… If people had checked the developer info, they would have realised that the apps aren’t reliable. Another important thing is to have parental A Are excited and have given them your address. control on all devices. This helps you filter out DR. RAKSHIT TANDON inappropriate search words or content, and B Have checked about them from several DIRECTOR OF HACKERSHALA, AND sources, sites or people. also controls access your kids may have to some CONSULTANT AT INTERNET AND things. Last year, a 16-year-old boy in Mumbai MOBILE ASSOCIATION OF INDIA C Have agreed to meet them along with a friend spent `10 lakh from his mother’s bank account to at a neutral location. play PUBG. Around the same time, a 13-year-old boy in MP’s Chhatarpur hanged himself after he What are some of the basic tools one should spent `40,000 of his parents’ money on an online have to be more secure in the digital world? B f irst, and then C to follow for sure. game. Parents need to have content control, and Don’t trust everything on the Internet at first educate children about their digital footprint. glance. You have to do a little detective work Did this question seem incongruous or silly? But if you yourself. It’s easy to make a fake profile so you consider that conf idence fraud and romance scams What precautions do people need to take on need to know how to use basic OSINT or ‘Open account for the third-highest losses reported by cyber social media? Source Intelligence’. For instance, when you victims internationally, according to a report by the FBI’s We are doing a lot of ‘sharenting’ these days come across a matrimonial or dating profile, Internet Crime Report 2021, you’ll probably pay a bit without checking our privacy settings. Someone try to discover more about that person by doing more attention. While the past few years have led us to could morph your photo to create an inappropri- a reverse image search. You can upload a photo make more online than off line friends, play detective and ate video thumbnail, and then call you to say, or input the URL of an image on a search engine, dig up as much about them as you can. Avoid disclosing “Oh my God, how did your video get leaked?”. In such as www.google.com/imghp, yandex.com/ any information about yourself until you’re sure of the a panic, you will click on the thumbnail, which images/, or www.bing.com/visualsearch to facts, and ensure that your closest family or friends are takes you to a page that looks exactly like the show you related images or those that contain aware of who that person is. If they call up before meet- Facebook login page, and it asks you for your similar looking items or people. ing you about getting stuck at the airport/railway station email and your password. When you’re agitated, and that they need money to extricate themselves, avoid you may not pay attention to small details. The What can one do after being the victim of a them completely. hacker will use this information to lock you out cyber crime? of your social media account, but reach out to You can register a complaint on https://www. your friends asking for money immediately. cybercrime.gov.in/ or call the national helpline Another scary factor is Google poisoning. This number 1930. The government is building a net- is when you try to find something on a search en- work with bank nodal officers, and when there’s gine, but hackers, through what is called ‘Black any information about a suspicious account, it is Hat SEO’, have managed to put their own fake frozen. But keep in mind that digital money trav- website at the top of search results. So, it may not els fast and the hacker may have already moved be necessary that the first result you get is the the funds. Also, hackers often create dummy genuine one. And if they ask you to download any accounts by using fake PANs and Aadhaar cards, app or tool, be suspicious. which can be difficult to trace. stocks 08 The Economic Times Wealth September 5-11, 2022 and ONGC and the diversion of domestic gas supplied to the power sector. The new formula will reduce gas costs to $8/mmbtu from $10.5/MMBtu, according to reports from Emkay and Prabhudas Lilladher. CGD companies get priority alloca- tion of domestic/APM gas for CNG and PNG-domestic segments. However, the production of domestic gas is inadequate to meet the demand. Such shortfall is met through costly LNG, which in turn, leads to an increase in gas costs per unit for CGD companies. Currently, domestic gas is priced at $6.1/mmbtu which is applicable for the first half of 2022-23. The price has increased by 2.1 times in the April 2022 revision. On the other hand, spot LNG as meas- ured using Japan Korea Marker has aver- aged over $45/mmbtu in the second quar- ter of 2022-23. Increased costs have forced companies to raise prices of both CNG and PNG. In Delhi, PNG and CNG prices have gone up by 70% in the past one year. S GE The impact of such an increase in prices A M has narrowed the CNG differential with TY I petrol/ diesel, which has impacted its at- T GE tractiveness as a cleaner fuel option. The move will help companies to reduce prices City gas players to gain and increase competitive advantage of CNG against other traditional fuels. Price of CNG has declined `4-9 per kg across India after implementation of guidelines. However, analysts await clarity on the from higher allocation allocation of gas supply for the third quar- ter and remain cautious about the upcom- ing revision in domestic APM gas prices in October 2022. According to Bhanu Patni, Associate Director, Corporates, India The margins of city gas distribution players, particularly IGL and MGL, are set Ratings & Research, “At the current pric- ing formula, the domestic gas price is esti- to improve as government has increased priority sector gas allocation. mated to go up to over $9/mmbtu, thereby pressuring prices. Changes to the pricing formula or allocation strategy would con- by Sameer Bhardwaj over 10% and 6% since the announcement has lost 1.4% during the same period. All tinue to remain key margin determinants of policy guidelines by the oil ministry on returns are calculated as on 29 August. for CGD players.” ET Wealth analysed the T he CGD sector is showing ro- 10 August. On the other hand, Gujarat Gas Increased gas allocation will be availa- first quarter performance of CGD compa- bust growth signs due to rising gained 1.8%. Comparatively, BSE Sensex ble through increased supplies from GAIL nies and their future prospects. demand for cleaner fuels, expan- sion of transmission network and favourable regulatory INDRAPRASTHA GAS MAHANAGAR GAS GUJARAT GAS environment. The government aims to increase the natural gas share in its energy THE COMPANY’S REPORTED num- THE COMPANY REPORTED strong THE COMPANY REPORTED decent mix from 6% in 2019 to 15% by 2030, which bers in terms of adjusted EPS in the revenue growth of 139.8% y-o-y EBITDA margins in the f irst quarter would improve gas penetration and boost f irst quarter of 2022-23 were 12.8% in the f irst quarter of 2022-23 of 2022-23 as it passed on the high consumption. A Sharekhan report expects higher than the consensus estimates helped by improved volume cost of gas to the customers. How- sustainable, single-digit growth in India’s of analysts compiled by Bloomberg. growth and increased realization. ever, the demand was impacted due gas demand for the next 4-5 years. The strong prof itability was due Robust pricing power, traction to higher prices as consumers either The sector is also set to benefit from to a robust recovery in CNG sales in volumes from CNG station in moved to alternate fuels such as the recent government guidelines where and price hikes during the quarter. Mumbai and Raigad, signif icant propane or announced the closure of domestic gas allocation to the priority Robust demand in the existing NCR opportunities in CNG penetration some units. A JM Financial report ex- sector —CNG and PNG Domestic— is region, strong pricing power and in private cars in Mumbai, gradual pects the company’s volume growth increased to 94% for the second quarter ramp-up of new geographical areas margin recovery and attractive momentum to sustain in the medium of 2022-23 compared to 85% for the first provide strong volume growth vis- valuations are the key catalysts. to long term led by rise in gas use by quarter of 2022-23. Brokerage reports ibility in the future. industrial consumers. from JP Morgan, ICICI Direct, Prabhudas Lilladher and Emkay believe that the deci- PE CURRENT TARGET PE CURRENT TARGET PE CURRENT TARGET PRICE (`) PRICE (`) PRICE (`) PRICE (`) PRICE (`) PRICE (`) sion will be favourable for the sector in the 19.7 420 467 14.8 861 973 27.2 463 516 near term. It will help improve margins due to a reduction in gas costs. CGD companies Indraprastha Gas (IGL) UPSIDE 11.27 UPSIDE 13.02 UPSIDE 11.43 POTENTIAL % POTENTIAL % POTENTIAL % and Mahanagar Gas (MGL) will benefit the most as these companies have a higher proportion of priority sector volume while ANALYSTS’ RECOMMENDATIONS ANALYSTS’ RECOMMENDATIONS ANALYSTS’ RECOMMENDATIONS the cost-benefit for Gujarat Gas will be rela- BUY HOLD SELL BUY HOLD SELL BUY HOLD SELL tively lower given the higher contribution 27 5 3 24 6 4 21 3 8 of the industrial segment in its sales mix. Share prices of IGL and MGL have jumped Current price as on 29 August 2022. BSE Oil & Gas Index PE: 8.8, BSE Sensex PE: 22.9. | Source: Bloomberg. guest ccoolluummnn The Economic Times Wealth September 5-11, 2022 09 How to actually reform the insurance sector The proposed reduction in insurance commissions just draws attention to how absurdly high they are to begin with, says Dhirendra Kumar. A few days ago, Irdai, India’s insurance regulator, published a document that was an ‘exposure DHIRENDRA KUMAR draft’ of new rules on expenses CEO, VALUE RESEARCH and commission that it is money proposing. This draft proposed a 20% limit on commissions for general insurance mysteries companies, down from the 35% now. The regulator also proposed life insurers whose expenses were under 70% of the maximum permissible limit to set their own commission rates. For those who are above this threshold, the highest commission allowed is proposed to be reduced sharply When you buy an from the current 40% peak. insurance policy, There’s also a proposal for commissions you pay a certain to be paid in the 5th, 10th and 15th years of the policy tenure. This could, in theory, amount and you get increase the incentive for agents to recom- some combination of mend and sell policies that have a chance of life cover and future being sustained by customers for a longer investment value out period of time. Whether it will actually do of it. Imagine if each so, only time will tell. Of course, these are part of the money draft proposals right now and feedback can that you pay was be given till 14 September. What happens after that, whether these lower rates of com- billed separately and mission are actually implemented, only was paid separately time will tell. according to what it was used for. If every customer had enough information, then where their money is going when they pay you would start thinking hard, very insurance reforms would a premium. The premium goes into a black hard. If every insurance customer in the not only happen easily, they box the contents of which are a secret. I country had this information, then real propose a simple reform that makes the cus- insurance reforms would not only hap- would be hard to avoid. tomer aware of where the money is going. pen easily, they would be hard to avoid. When you buy an insurance policy, you pay However, one thing is certain. Anyone a certain amount and you get some combi- Please send your feedback to who is familiar with the scale of commis- nation of life cover and future investment [email protected] sions or intermediary fees of any kind value out of it. Imagine if each part of the in any other financial service is always money that you pay was billed separately stunned by the scale of commissions in in- and was paid separately according to what surance. In consumer financial services, be it was used for. Broadly, the money that you it mutual funds or equity or anything else, pay for a policy goes into four buckets. Some the maximum permissible commissions is used to fund a life cover for you. Some is are always 1/10th or 1/20th or some such an investment, which you will eventually tiny fraction of what they are in insurance. get back at a (hopefully) enhanced value. To someone used to paying from nothing to Some is paid to an agent as a commission perhaps 2% in equity trading and mutual and some is kept by the insurance company fund investing, the idea that 40%is permis- for its own expenses and profits. sible and now a reduction to 20% is being Suppose you were billed separately for presented as an achievement is utterly flab- each. You could pay as one transaction for bergasting. convenience but you get a clear and simple Not just that, if you read the various news statement showing how much of your mon- articles where industry executives are ey went in each of these heads. My guess being quoted, you will find that they are is that you would become a much smarter uniformly of the opinion that this reduction shopper of insurance products and insur- will be detrimental to the interest of the ance companies and agents would have a policyholders. With a (presumably) straight much harder time selling to you. When you face, they are all saying that a cost reduction write a cheque for `1 lakh and in front of you will be harmful for customers. there’s a statement showing that `18,000 of In fact, the fundamental problem with it would go straight to the agent and `12,700 insurance is that customers do not know to the insurer’s expenses and profits, then investing 10 The Economic Times Wealth September 5-11, 2022 “Large part of undervaluation in the value theme is done” The earnings trajectory will remain steady and investors should put money into equities in a systematic manner and keep expectations in low teens, Neelesh Surana tells Sanket Dhanorkar. giving a structural shift to flows, thereby 15-20% in value theme – all based on bottom- improving India’s macro. up stock selection. Is the market not fully acknowledging How is the mid cap basket placed from possibility of a painful recession? a 3-5-year perspective? Growth slowdown worries is high currently Currently, the Nifty Midcap Index is trad- in the US, China and Europe. Worries in ing at about 16.5x 2023-24 earnings, which Europe have increased given additional is at slight discount to the Nifty PE multiple challenges of high gas prices and drought. of about 17.8x. There is no significant valu- China is facing pressure points in the prop- ation gap in favour of mid caps currently. erty market, broader geopolitics and also However, about 25-30% should be a core allo- repeated bouts of Covid induced lockdowns. cation towards mid caps, and the remaining Despite the challenging global macroeco- in large caps. The core allocation from long nomic backdrop, we expect India to do well term viewpoint is important as good mid- driven by six or seven trends. The balance sized businesses with early identification sheet of corporate India including that of has twin benefits of higher earnings growth banks is strong enough to weather volatility. which is generally accompanied with ex- The base is low for large sectors like auto to pansion of the PE multiple. recover. Then there are reforms, particu- With the growth in economy, we have larly related to manufacturing, driven by seen increase in choice as well as scale of PLI, etc. The housing sector will be steady businesses within the mid cap basket – the as affordability is not dented. This will be same is reflected in the cut-off for mid cap the fourth year of back-to-back decent mon- companies which is defined as 100th com- soons, which along with high food prices pany as per market capitalisaiton. A decade would help improve the rural demand which back, the market capitalisation of 100th is low. Corporate margin pressures should company was about `11,000 crore, which abate in second half of 2022-23 as the worst has now increased more than four times to of erratic commodity prices is behind us. `46,000 crore. Lastly, there is an ongoing consolidation and increasing formalisation trend across many Both Mirae Asset flagship funds have businesses—strong companies are getting seen moderation in returns profile. stronger, at the expense of weaker names. After years of strong outperformance, The consolidation is favouring listed com- is the market catching up? panies at the expense of weaker companies Investors need to assess the performance in the same sector. Near term, stability in over 3-year or in fact 5-year time frames. Indian economy is also evident in high- fre- Last one-year performance was primarily quency indicators like GST, credit growth, impacted due to underweight in certain cap- power consumption, etc. ital goods and infrastructure names. Also, few of our holdings have corrected owing to What are the sectors or themes that short term earnings getting impaired due Neelesh Surana How are you reading the market re- appear attractive now? to specific factors like margin challenges bound? Does the return of FPIs set the The choice is fairly widespread across sec- which is driven by high commodity cost, etc. CIO, Mirae Asset stage for bigger upside? tors and is not concentrated to few sectors Most of these drawdowns are quotational, Markets have recovered by about 15% from or stocks. We remain positive on financials, and thus should recover over the long term. Investment June lows, as FPI flows reversed from ear- healthcare and consumer discretionary, Managers lier massive selling. Despite buying of about particularly autos and building material. What should investors do now? `54,000 crore over the past two months, FIIs Our view remains constructive on equities, have sold about `1.75 lakh crore year-to-date Do you feel recent strength in value as we expect steady earnings trajectory over during 2022. theme can sustain for longer? the next few years, despite ongoing global The Indian economy, in our opinion, will be Value stocks doing well during the past one chaos. In this context, We would advise able withstand the ongoing regime change to year is owing to favourable risk reward investing in a disciplined way in equities high interest rates globally. In the long-term, given divergence earlier, as well as increase within the earmarked asset allocation, with FPIs will not shed weight in India, given the in interest rates which favours value stocks. long-term time frame. The returns expecta- relative strong growth versus other emerg- The large part of undervaluation in the val- tion should be low teens. The systematic ing markets. We thus expect continuation of ue theme is done and going forward, earn- plans are the most efficient way of capturing steady domestic flows via SIPs, and pick up in ings sustainability will be an important the volatility. New investors could also con- FII flows from current multiyear lows. On the factor. Further re-rating will be lot more sider participating via the asset allocator subject of foreign flows, there is rising proba- stock specific, and will be driven by merit hybrid funds. bility of Indian G-Secs’ inclusion in global debt of individual businesses. In our view, value indices. While the topic of index inclusion has should be hunted within growth-oriented been long on the radar, any inclusion will be businesses and valuation should not be the extremely important at the current juncture, sole investment argument while selecting Please send your feedback to [email protected] both for the fixed income markets as well as for stocks. Across our portfolios, we have about