Good morning! Kotak Mahindra Bank couldn’t be Happier. Per The Economic Times, the bank has witnessed a fivefold increase in applications for premium credit cards. The reason? Ed Sheeran’s upcoming concert in Mumbai. The collaboration is turning out to be The A Team for the bank, as Beautiful People are lining up to avail the discounts on offer. This seems to be a part of the larger strategy of Kotak Mahindra, which is looking to attract customers by offering deals on premium live entertainment. Looks Perfect.

Soumya Gupta, Dinesh Narayanan, and Adarsh Singh also contributed to today’s edition.

🎧 Kotak Mahindra Bank gets an Ed Sheeran boost. Also in today’s edition: what’s the deal with Anthropic? Listen to The Signal Daily on Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.

We would like to know more about you. Participate in our annual survey by filling up this form. We’ll use your answers to tweak our products and make them more enjoyable for you. As always: you will remain anonymous.

The Market Signal 

Stocks & Economy: With every passing day, the war in West Asia adds more risks to the global economy. The World Bank has warned that oil prices could cross $150 a barrel if the war escalates, reprising the 1970s oil shock. 

US stocks gained on Monday but Asian sentiment Tuesday morning was subdued. Japanese indices dipped ahead of the Bank of Japan’s (BoJ) decision on interest rates. The US Fed and the Bank of England will follow the BoJ later this week with rate decisions. 

After perking up in September, Chinese factory activity shrank in October, dashing hopes of an economic recovery of the global manufacturing hub. 

Indian equities will likely follow Asian cues. The GIFT Nifty indicates a weak opening. 

Meanwhile, hedge funds are buying shares of uranium companies as nuclear energy makes a comeback worldwide.

BANKING

Coming Together

In yet another sign of consolidation in the small/micro finance industry, AU Small Finance Bank is set to acquire Fincare Small Finance Bank in an all-share deal. AU will merge Fincare with itself by February 1, 2024.

The merger will allow AU to penetrate South India, where Fincare has a strong presence, especially in rural areas. More importantly, it’ll mark AU’s entry into the microfinance segment. While microfinance is a low-return, high-risk business, it might help in AU’s push towards becoming a universal bank. The lack of a universal banking licence has been stifling AU’s stock price compared with peers such as Suryoday and Ujjivan.

The AU-Fincare merger follows similar moves by Slice-North East Small Finance Bank and Svatantra Microfin-Chaitanya India Fin Credit, primarily due to the high cost of funds.

ENTERTAINMENT

Disney’s Ultimate Boss Fight

This could be Marvel’s next villain origin story. Earlier this year, Disney laid off 80-year-old ‘Ike’ Perlmutter, the former Marvel Entertainment chairman who sold the firm to the House of Mouse. Perlmutter insisted he was fired. Now, he’s teaming up with activist investor Nelson Peltz.

Perlmutter has moved his stake in Disney to Peltz’s Trian Fund. Peltz is using his shareholding along with Perlmutter’s voting rights to demand board seats. 

Old wounds: This is Peltz’s second proxy fight. He’d asked Disney to cut extravagant paychecks and fix its succession plan. When Disney began restructuring and Bob Iger replaced Bob Chapek, he called the fight off. 

Dimming Star: Meanwhile, Disney has local problems. Star India’s net profits dropped by nearly a third in FY23, even though total revenue grew to over ₹20,000 crore ($2.4 billion), making it India’s biggest media and entertainment company. Disney is in talks to sell the firm.

SOFTWARE SERVICES

All Hired Out

This time last year, India’s Big Four IT companies—TCS, Infosys, HCL, and Wipro—were doing all they could to discourage moonlighting, even going to the extent of introducing controversial non-compete clauses to stem attrition. Now, the sector has found a way to address the talent crunch without increasing staff costs: reskill the existing workforce instead of going on a hiring spree.

For the first time in 25 years, nine of India’s top 10 software services companies have seen workforces shrink in the first half of FY24, per a Mint analysis. IT companies usually end a fiscal year with more employees than in the first half. The result: a net reduction of 77,758 jobs over the last 15 months.

Why’s this happening?: Clients, especially in the US, are cutting IT spending, leading to subdued growth and decreased increments too.

Does AI play a role here?: Short answer, yes. Long answer, 👇🏽

The Signal

The only thing IT clients are gung-ho about is AI, which is why Indian outsourcers are rushing to launch AI ecosystems. While HCL, TCS, and Wipro have partnered with Google Cloud for generative AI (GenAI) projects, Infosys is collaborating with Nvidia.

Developments like these are happening faster than the Big Four can amass staffers who are proficient in GenAI. Hence the focus on upskilling existing workforces.

A study reveals that one in two Indian employees is worried about losing their jobs to AI. The fear isn’t unfounded: BPO automation, for one, is a clear and present danger.

COMMODITIES

Rice Is A Sticky Issue

Indian agri commodities have once again fallen between the need to ensure income for farmers and keeping prices low for consumers. 

Markets regulator Sebi has extended the ban on trading of wheat, gram, mustard, soybean, crude palm oil, lentils, and paddy (non-basmati) futures until December 2024. The ban, in place since December 2021, has practically wrecked commodity exchange NCDEX, where agri-commodities accounted for 70% of the trading volume.

Domino effect: High food prices are a big political risk for the ruling dispensation, which will seek reelection in 2024. It has kept prices under control by curbing exports of select items such as sugar and non-basmati rice. India ships 40% of the commodity that comes into global markets, and the ban resulted in international prices rising 28% in September. 

The curbs not only mean Indian farmers are losing out, but they’re also creating a food crisis in many countries. 

ENERGY

A Tale Of Two Economies

Bangladesh’s 2018 pivot to buying liquified natural gas (LNG) not only helped the country wean off coal but also helped it achieve 100% electrification.

That transition is now becoming a bane.

LNG—which accounts for half of Bangladesh’s electricity generation capacity—is more susceptible to price volatility and erratic supply than ever before due to current geopolitical turmoil (Russia, Israel). As the Financial Times notes, Bangladesh didn’t invest as much in domestic gas exploration or renewables, resulting in an import-dependent system that’s contributed to a 20% fall in foreign currency reserves this year.

In the west, Big Oil’s race to the finish has benefited Guyana, one of South America’s poorest countries. Its economy grew by a whopping 62.3% last year on account of one of the biggest oil discoveries in decades. But growing opposition to Big Oil’s exploitative contracts and recent (environmental) legal challenges may slow growth in the petrostate.

FYI

Something for nothing: The Nano might be going extinct but Tata Motors will get compensated ₹766 crore (~$92 million) for its investment in the still-born Singur plant in Bengal. 

Data breach: A hacker is offering personally identifiable information, including Aadhaar and passport details, of 815 million Indians on the dark web for $80,000.

So long: Mumbai’s iconic Premier Padmini kaali peelis will go off roads from today owing to the city’s 20-year age limit for taxis.

Deal: Private equity firm Blackstone, has marked its entry into Indian healthcare by acquiring Hyderabad-based CARE Hospitals and Kerala’s KIMS Health for $1 billion.

Shoo-in: Chinese fast-fashion retailer Shein has acquired British online fashion brand Misguided for an undisclosed amount. The deal will widen Shein’s offerings, giving it an edge in a competitive market.

Beauty beckons: Private equity investor Aurelius is looking to buy beauty major The Body Shop from its Brazilian parent, Natura & Co. Back home, Manipal Group’s Ranjan Pai has bought JSW Ventures’ stake in beauty retailer Purplle.

Reentry: Setting aside a Sebi order banning him from boardrooms, the Securities Appellate Tribunal has allowed Zee Entertainment CEO Punit Goenka to sit on group company boards. 

THE DAILY DIGIT

16.1 million

The number of investor accounts in India held by people aged 18-20 as of September 2023, according to BSE data. That’s nearly 5x the 3.4 million accounts held by the age group in March 2021. (The Economic Times)

FWIW

Treasure to trash to treasure: Chandigarh Chairs, those old wooden chairs with woven cane seats and backrests, are returning with a flourish. The humble chair had been an inextricable part of Indian households and government institutes for decades, only for it to be replaced by plushier, more modern furniture. But those very chairs are now being courted by the who’s who of the design world. Made by Pierre Jeanneret, the Chandigarh Chair now goes for lakhs of rupees in auctions and has also found a place in the Kardashian home. 

Hope: Scientists Jacques Pironon and Phillipe De Donato have discovered the world’s largest deposits of white hydrogen in Lorraine, France. Hydrogen, though abundant in nature, can only be used after being ‘derived’ from other molecules through large industrial processes, making its use expensive and energy-intensive. The discovery of white hydrogen will change that, as it does not require these intense processes, making it a clean and primary energy source. But the high costs of discovery and extraction could well put a dampener on the early celebrations. 

Family drama: The Ingebrigtsens are not your average family. They’re considered Norway’s fastest and most famous runners. Gjert Ingebrigtsen, father and coach to his sons Henrik, Filip, and Jakob, has guided them to international success, with Jakob even clinching Olympic gold in Tokyo. But this glory has come at a cost. The three brothers ended their coaching relationship with their father last year; and now, in a revealing tell-all, they’ve written about Gjert’s “aggression and physical punishment” as the reason. While he denies these allegations, police are investigating. The Norwegian Athletics Federation has already ruled that, going forward, Gjert would not be granted accreditation as a coach for international competitions.