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Foreign investors have withdrawn nearly Rs 20,000 crore from Indian stock markets in just five trading days (November 4–8), continuing a trend of large-scale selling that began last month. Experts say investors are now moving their money to China, largely due to the high valuations presently prevailing in Indian markets. In early November, FPIs have offloaded as much as Rs 19,994 crore in Indian markets. The month prior, i.e., October, was one of the worst months in terms of foreign outflows, with FPIs making a net withdrawal of Rs 94,017 crore. Before this, Indian markets faced such a situation during the pandemic, when FPIs withdrew Rs 61,973 crore from equities in March 2020. <h2>Why Are Investors Leaving? </h2>According to Himanshu Srivastava of Morningstar Investment Research India, two main factors are driving this exodus. First is China's renewed appeal due to lower stock valuations and new economic stimulus measures. In a bid to nudge the domestic economy and bail state governments, China recently approved a 10-trillion yuan (US $1.4 trillion) package. Per reports, approximately 60% of this stimulus focuses on allowing local governments to refinance the mountain of debt on them. Srivastava explains foreign investors are also flocking to US dollar and Treasury yields, which have appreciated significantly in the recent past, leading FPIs to anticipate a stronger US economy going ahead. Moreover, high valuations in Indian markets are discouraging foreign investors from putting more money in the economy. As a result, over the past week, the selling pressure eroded Rs 74,563 crore in market value for Reliance Industries, while Bharti Airtel and ICICI Bank lost Rs 26,274 crore and Rs 22,254 crore, respectively. The combined market valuation of six of the top 10 most-valued firms dipped by Rs 1,55,721.12 crore last week. <h2> Silver linings</h2>Despite the ongoing outflux of funds since last month, November also saw unprecedented applications of about 40–50 new FPI registrations, which are eyeing to enter the Indian market. This was due to markets SEBIs recent relaxation to NRIs, permitting them to participate up to 100% and announcing measures for ease of entry and operations in India. On the other hand, FPIs invested Rs 599 crore in the debt general limit and Rs 2,896 crore in the debt voluntary retention route (VRR) during the period under review. So far this year, FPIs have invested Rs 1.06 lakh crore in the debt market. <li class="whitespace-normal break-words"></li>Going ahead, investors will be looking for certain macroeconomic cues, which include corporate earnings reports, India's inflation (CPI) and industrial production (IIP) data on November 12, the US inflation report on November 13, and wholesale price index (WPI) data on November 14.

FPIs withdraw nearly Rs 20,000 crore from equities in the last 5 trading sessions, make a beeline for China and US

<ul class="summary-list"><li>Now in <keyword id="19896940" type="General" weightage="20" keywordseo="Walmart" source="keywords" meta.keywordsubtype="org" meta.entityname="Walmart" meta.hostid="261" meta.entityid="Walmart">Walmart</keyword> aisles: a <keyword id="23944922" type="General" weightage="100" keywordseo="Skibidi-Toilet-action-figure" source="keywords">Skibidi Toilet action figure</keyword> — a $45 mystery toilet bowl.</li><li>The head of brands for toilet-maker <keyword id="23944923" type="General" weightage="20" keywordseo="Bonkers-Toys" source="keywords" meta.keywordsubtype="org" meta.entityname="Bonkers Toys" meta.hostid="261" meta.entityid="Bonkers Toys">Bonkers Toys</keyword> says it's selling well.</li></ul>Recently at my local Walmart, I saw a massive display in the main aisle of the toy section: It featured a plastic toilet, about a foot tall, with a ghoulish head sticking out. For $44.95, I could be the proud owner of the <a target="_blank" class="c-link c-link--underline" href="https://www.businessinsider.com/skibidi-toilet-is-good-actually-2023-10">Skibidi Toilet</a> — complete with <keyword id="23944930" type="General" weightage="20" keywordseo="toilet-themed-toys" source="keywords">toilet-themed toys</keyword> in the bowl. And in case you were wondering: Yes, it makes a flushing noise. If you've spent any time lately around someone who isn't old enough to drive, you've probably heard some utterance of the word "skibidi." I'll spare you the full summary of the <a href="https://www.businessinsider.com/skibidi-toilet-gen-z-alpha-memes-internet-culture-outdated-old-2023-7" target="_blank">Gen Alpha meme</a>, but the short form is: It's a YouTube series about a dystopian battle of good and evil (the toilet guys are the villains). My colleague Lindsay Dodgson <a href="https://www.businessinsider.com/skibidi-toilet-is-good-actually-2023-10" target="_blank">describes</a> it as "part 'Terminator,' part 'Bladerunner,' and obviously, part toilets." She says the series is actually good. What's interesting to me is that this absurd toilet meme appears to be doing a robust business in the toy aisle of your local discount store. I spoke with Dan Meyer, head of brands at Bonkers Toys, the company behind the flush. "Right away we noticed that it was exploding," Meyer said of the skibidi phenomenon online. Bonkers made a licensing deal and started pitching vendors on the toilet toy — an easy sell, he said. Bonkers started making prototypes of the toilet toy in early 2024 — and it's hit the shelves in time for the holiday season, a tight timeline. "When we're pitching it to [retailers], we had enough data to see that in middle schools and elementary schools, the term skibidi was already a thing," Meyer said. Bonkers could point to the YouTube views the Skibidi Toilet series had racked up — its channel has more than 40 million followers — or how if they searched Instagram, they'd find "hundreds and hundreds" of people dressed in homemade Skibidi Toilet costumes. Bonkers Toys, founded in 2017 in San Diego, has carved a niche for itself by licensing intellectual property from YouTube creators. Its first big toy was the giant "mystery egg" toy for Ryan's World. At the time, Ryan's World was one of the top channels on YouTube, a pioneer in the genre of "little kid opening toys." <div type="image" title="skibidi toilet toys" height="3000" width="3000" msid="115096128" hostid="261"></div>Bonkers' move into memes is in line with what retailers are trying to achieve, Blake Droesch, a senior retail analyst with BI sister company Emarketer, told me. He said big box stores like Walmart are trying to respond quickly to online trends, especially for toys. They need to move fast to compete with viral shopping on the likes of <a target="_blank" class="" href="https://www.businessinsider.com/why-gen-x-boomers-love-temu-2024-1">Temu</a>. "This environment has certainly created demand for manufacturers who can produce fast and cheap products that will serve this growing market," he said. "It's no different than fast fashion, but for toys. They respond quickly to viral moments and get products on the shelves while the trend is still hot." The original Skibidi Toilet was the creation of animator Alexey Gerasimov, who made it for his YouTube channel DaFuq!?Boom!, which has 44.3 million subscribers. Gerasimov has partnered with Invisible Narratives, a companyfounded by Adam Goodman, the former president of DreamWorks SKG and Paramount Pictures who works with YouTube creators to help them make the jump to more traditional media, like movies and TV. It also helps them with licensing their brands for merchandise, like Skibidi's deal with Bonkers. Merchandising, like with the toys from Bonkers Toys, is crucial to success for these new media brands, he said. "We believe that young people don't want to pay for content anymore," Goodman told Business Insider. "Their parents pay for subscriptions, and the don't really go to movies the way that they used to — but they like buying stuff." Skibidi Toilet is certainly not the first YouTube creation to enter into consumer merchandise. <a target="_blank" class="" href="https://www.businessinsider.com/how-mrbeast-pitches-brands-sponsorship-deals-jimmy-donaldson-youtube-2024-10">MrBeast</a> sells chocolates and premade lunches along with Logan Paul and KSI, who make the popular drink Prime. <div type="image" title="Skibidit toilet plush toy" height="3000" width="3000" msid="115096131" hostid="261"></div>Meyer wouldn't provide numbers on how many toilets they've sold, but so far, things are looking promising, he said. He said Bonkers' launch of a LankyBox-themed product about three years ago — which was another product centered on a YouTube creator — was one of the "biggest, most successful-selling brands in the boys' action aisle" at discounters, including Walmart. He said the Skibidi Toilet was outselling LankyBox by around double. (Walmart didn't respond to requests for comment on sales numbers.) Right now, there are only a few Skibidi Toilet-theme products from Bonkers: individual action figures, mini-figures, plushes (aw, cute), and the aforementioned "mystery" toilet, which includes stickers, minifigures, and lanyards. But there will be more products for next year, Meyer said — including what every little boy and girl dreams of getting from Santa: a remote-controlled toilet bowl. Correction: November 8, 2024 — In the Skibidi Toilet YouTube series, the toilet guys are the bad guys, not the good guys.

Dear Santa: Please bring me a Skibidi Toilet for Christmas

Wondering if the markets are closed on October 30th and 31st, 2024, on account of Diwali? Well, here's a ready reckoner for you to figure out when the markets are open and closed this week. Both NSE and BSE will be open and will be functional as usual between 9:15 am and 3:30 pm on Wednesday, October 30, and Thursday, October 31, 2024. On Friday, i.e., November 1, 2024, the NSE and BSE will remain closed on account of Lakshmi Poojan. However, a special, symbolic 1-hour muhurat trading session will take place on this day, between 6 pm and 7 pm. During this time, the markets will open for trading, marking the onset of the new calendar year in Hindu tradition, or Samvat 2081. Traditionally, it is considered auspicious to make new investments during this window since it is believed that they will bring them wealth and prosperity in the long term. The day after, i.e., November 2, is a Saturday, which is a weekly holiday; the markets will be closed. India will celebrate Diwali-Balipratipada on this day. Post Diwali, the stock markets (both BSE and NSE) will have only 2 holidays remaining for the year, namely Gurupurab on November 15, 2024, and Christmas on December 25, 2024. <h2>All you need to know about muhurat trading</h2> Muhurat trading on NSE and BSE will commence between 6 p.m. and 7 p.m. on November 1, 2024. There will be a special pre-open session for stocks of companies taking the IPO route. This will last between 5:45 p.m. and 6:30 p.m. Trade settlement will take place on a regular T+1 basis. For investors and traders planning their activities, remember that the markets will be volatile. However, muhurat trading has historically brought about positive returns for investors. For instance, in 2023, muhurat trading during Diwali 2023 yielded returns of about 0.52%. For 2022, this stood at 0.88%. Over the last 10 years, i.e., between 2014 and 2024, Nifty50 has generated negative returns only twice in 2016 (0.14%) and 2017 (0.63%). Says Puneet Sharma, CEO and Fund Manager at Whitespace Alpha, "Muhurat trading is more than just a trading session—it's a ritual of optimism. The one-hour session, steeped in tradition, typically attracts low volumes and less volatility, making it a great opportunity for tactical positioning rather than frenzied trading." Sharma suggests opting for the butterfly trading strategy to get through the muhurat trading session. Think of this strategy as a calculated dance where you’re limiting your risk but still positioning yourself for some upside. "Muhurat trading is not the time for big moves, and that’s where the butterfly spread excels. You’re betting on the market staying within a range, which is typically the case during this session. It’s like planning a party where you already know most guests won’t make a scene," he adds. The butterfly strategy works best in a market that is expected to trade flat, and the security prices won't be very volatile. This setup lets you profit if the market stays stable, which is highly likely during muhurat trading.

Stock market holiday on Diwali: Is the stock market open or closed on the 30th and 31st October?

<ul class="summary-list"><li>The <a target="_blank" href="https://www.businessinsider.com/guides/deals/black-friday-deals">holiday shopping season</a> continues to start earlier in the year, thanks largely to Amazon.</li><li>Amazon's 48-hour deals event is underway, along with competing sales by the major retailers.</li></ul>Nevermind Black Friday, <a target="_blank" href="https://www.businessinsider.com/october-becoming-new-black-friday-amazon-walmart-target-sales-2024-9">Green October is in full swing</a>.The holiday shopping season is underway earlier than ever, thanks largely to Amazon moving up its <a target="_blank" class="" href="https://www.businessinsider.com/guides/deals/best-prime-day-deals-big-deal-days-2024-10">Prime Day</a> deals event.Faced with what would ordinarily be a shorter stretch of discounting (Thanksgiving and Christmas are closer together on the calendar than usual), the e-commerce juggernaut is pulling the start of the spending spree into early October.And in modern retail, many competitors look to follow what Amazon does to stay competitive.As Amazon has inched its 48-hour event earlier — from October 11 and 12 in 2022, to October 10 and 11 in 2023, and now to October 8 and 9 this year — competing promos by major retailers are also stepping up to win shoppers' dollars.Target kicked off the sequence early on Sunday with its Circle Week, while Walmart's Deals event gets underway online on Tuesday and in stores on Wednesday.The quasi-gravitational influence of all this promotional activity has even roped Costco into the mix with a Member Savings Event that started on Monday. Costco isn't typically a trend-chasing company, so it's notable that it's on the pre-holiday deals bandwagon during this particular week in October ahead of its formal start to holiday savings in November.Even if the traditional interval between Thanksgiving and Christmas was on the longer side, it would make sense for this further encroachment into pre-Halloween deals to occur.As inflation has eased off, the big lesson for retailers over the past year is that <a target="_blank" href="https://www.businessinsider.com/americans-budget-era-value-retail-walmart-target-tj-maxx-2024-8">customers are still willing to spend</a> — if the price is right. US shoppers also splurged for celebrations and special occasions.What better way for retailers to tap into those trends than to <a target="_blank" href="https://www.businessinsider.com/history-of-amazon-prime-day-impact-on-retail-industry2023-7">invent a holiday that celebrates deals</a> and kicks off a whole season of festivities?

Amazon's jump-start to the holiday shopping season has even roped in Costco this year

Amid questions on the depleting <keyword id="20776807" type="General" weightage="100" keywordseo="loan-to-deposit-ratio" source="keywords">loan-to-deposit ratio</keyword> in <keyword id="19895091" type="General" weightage="20" keywordseo="Indian-banks" source="keywords">Indian banks</keyword>, a recent report by <keyword id="19896146" type="General" weightage="20" keywordseo="Motilal-Oswal" source="keywords" meta.keywordsubtype="org" meta.entityname="Motilal Oswal" meta.hostid="269" meta.entityid="Motilal Oswal">Motilal Oswal</keyword> suggests that the loan-to-deposit (LD) ratio is likely to subside on its own in the coming months. The debate on loan-to-deposit ratio (LD), particularly concerning sluggish <keyword id="19998084" type="General" weightage="20" keywordseo="deposit-growth" source="keywords">deposit growth</keyword> and potential risks to <keyword id="20089808" type="General" weightage="20" keywordseo="financial-stability" source="keywords">financial stability</keyword> is raised by even the finance minister and the <keyword id="20151998" type="General" weightage="20" keywordseo="RBI-governor" source="keywords">RBI governor</keyword>. However, the report notes that on closer examination, the situation may not be as alarming as it seems. As of 9th August, 2024 the Indian <keyword id="19964544" type="General" weightage="20" keywordseo="banking-sector" source="keywords">banking sector</keyword>'s loan-to-deposit (LD) ratio stood at 77.2 %, which is slightly below its recent peak of 78.2 % on 22nd March 2024, and its all-time high of 78.8 % in September 2013. The report stated that typically a rising LD ratio is indicative of a tightness in the banking sector, potentially indicating overheating. A lower LD indicates that the bank is aggressive in its credit disbursement practises, which could be risky. It highlighted that an analysis of the sector's transactions with the Reserve Bank of India (RBI) through the liquidity adjustment facility (LAF), along with recent trends in the weighted average call rate (WACR), suggests that the current rise in the LD ratio does not indicate tightness, which is why there is no immediate cause of concern. In fact, the report added that the concern over weak deposit growth may be overstated. Historical data show that bank deposits grew at an average rate of 9.5 % during the pre-COVID period (January 2015 to February 2020) and 10.4 % in the post-COVID period (March 2020 to August 2024). Earlier, Finance Minister Nirmala Sitharaman also urged state-run banks to enhance deposit mobilization through attractive offers and focusing on Tier-2 and Tier-3 cities. Loan-to-deposit ratio pegs the total deposits received by the bank against the loans it has offered. It helps in understanding how liquid the bank is. The loan-to-deposit ratio (LDR) is a financial metric that compares a bank's total loans to its total deposits. It's used to assess a bank's liquidity and credit risk, and to inform lending and deposit-taking decisions The report said while the exact measures are unclear, the deposit growth could potentially be increased by making other asset classes less attractive through taxation or interest rates, or by boosting fiscal spending to increase net credit to the government. In its forecast, the report noted that private banks will witness a moderation in their <keyword id="19998083" type="General" weightage="20" keywordseo="credit-growth" source="keywords">credit growth</keyword>, while public sector banks will maintain a healthy credit growth rate. "Our analysis suggests that deposit growth could be raised by either making other asset classes unattractive (through taxation and/or interest rate) or increasing the growth in net credit to the government by pushing fiscal spending higher" the report added. Alternatively, policymakers might consider curtailing loan growth to lower the LD ratio. However, this could slow deposit growth, particularly if corporate credit growth remains weak. Encouraging savers to shift investments from other assets to bank deposits could also be an option, but this carries risks of overreach and potential damage to economic confidence. Das had also flagged the excessive growth, or froth developing in the personal loan space. Notably, while credit growth in unsecured personal loans like credit cards continues to decline, it remains elevated at 23.3% as of June 2024. However, this is a significant reduction from 34.2% witnessed in November 2023. As fiscal spending increases, bank credit to the government is likely to grow, which should elevate deposits and broad money supply. The report said "However, the extent of foreign capital inflows and the RBI's policy for managing these inflows remain uncertain". Last month, RBI governor Shaktikanta Das had also addressed this issue in the 50th meeting of MPC (Monetary Policy Committee). Per him, deposit mobilisation has been lagging credit growth for some time now. This may potentially expose the system to structural liquidity issues. "While there could be a debate regarding ‘deposits funding loans’ vis-à-vis ‘loans funding deposits’, the current regulatory concern stems from the fact that there could be structural changes happening which banks need to recognise and, accordingly, devise their strategies. Households and consumers who traditionally leaned on banks for parking or investing their savings are increasingly turning to capital markets and other financial intermediaries", Das said. Per him, while bank deposits continue to remain dominant as a percentage of financial assets owned by households, their share has been declining consistently, since households are now increasingly allocating their savings to mutual funds, insurance funds, pension funds and other avenues.

Loan-to-deposit ratio will subside on its own in coming months, notes Motilal Oswal report

The <keyword id="19899810" type="General" weightage="20" keywordseo="Reserve-Bank-of-India" source="keywords" meta.keywordsubtype="org" meta.entityname="Reserve Bank of India" meta.hostid="261" meta.entityid="Reserve Bank of India">Reserve Bank of India</keyword> (<keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword>) on Monday said 97.96 % of the <keyword id="6429211" type="General" weightage="20" keywordseo="rs-2" source="Orion">Rs 2</keyword>,000 denomination <keyword id="20481528" type="General" weightage="20" keywordseo="banknotes" source="keywords">banknotes</keyword> have returned to the banking system, and only Rs 7,261 crore worth of the withdrawn notes are still with the public. On May 19, 2023, the RBI announced the withdrawal of Rs 2,000 denomination banknotes from circulation. The total value of Rs 2,000 banknotes in circulation, which was Rs 3.56 lakh crore at the close of business on May 19, 2023, when the withdrawal of Rs 2,000 banknotes was announced, has declined to Rs 7,261 crore at the close of business on August 30, 2024, the RBI said. "Thus, 97.96 % of the Rs 2,000 banknotes in circulation as on May 19, 2023, has since been returned," it said in a statement. The facility for deposit and/or exchange of the Rs 2,000 banknotes was available at all bank branches in the country till October 7, 2023. The facility for the exchange of the Rs 2,000 banknotes has been available at the 19 issue offices of the <keyword id="19922074" type="General" weightage="20" keywordseo="reserve-bank" source="keywords">Reserve Bank</keyword> since May 19, 2023. From October 9, 2023, RBI issue offices are also accepting Rs 2000 banknotes from individuals and entities for deposit into their bank accounts. Further, members of the public are sending Rs 2,000 banknotes through India Post from any post office within the country to any of the RBI issue offices for credit to their bank accounts. The 19 RBI offices depositing/exchanging the banknotes are in Ahmedabad, Bengaluru, Belapur, Bhopal, Bhubaneswar, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Jammu, Kanpur, Kolkata, Lucknow, Mumbai, Nagpur, New Delhi, Patna and Thiruvananthapuram. Rs 2000 banknotes were introduced in November 2016, following the demonetisation of the then-prevailing Rs 1,000 and Rs 500 banknotes. However, even after their discontinuation, Rs 2,000 notes continue to remain legal tender. Per the apex bank's last update, which came out on August 1st, 2024, Rs 2,000 banknotes had declined to Rs 7409 crore at the close of business on July 31, 2024. Thus, by last month, 97.92% of the Rs 2,000 banknotes which were in circulation as on May 19, 2023, had been returned.

Rs 2,000 notes: 97.96% returned; Rs 7,261 crore worth notes still with public

<div type="image" title="Are Indians depositing less money in banks, or more in mutual funds? Turns out, it&amp;#39;s neither of those." msid="113663806" hostid="261" sizebytes="1121785"></div> Over the past few months, there’s been a lot of brouhaha about the lagging pace of <keyword id="20202062" type="General" weightage="20" keywordseo="bank-deposits" source="keywords">bank deposits</keyword> in India. Simply put, the rate at which Indians are depositing their hard-earned money in banks has been falling constantly, and some blame the increasing financialisation of <keyword id="20751315" type="General" weightage="20" keywordseo="household-savings" source="keywords">household savings</keyword> in the country or the rising preference of Indians towards <keyword id="19929240" type="General" weightage="20" keywordseo="mutual-funds" source="keywords">mutual funds</keyword> and shares. So, the hypothesis is that people are choosing to invest more in mutual funds and the Indian <keyword id="19949641" type="General" weightage="20" keywordseo="equity-markets" source="keywords">equity markets</keyword> through direct investments, IPOs, or NFOs, the money flowing into Indian banks in the form of deposits is slowing down. But is that really the case? <h2>A crisis or a phase?</h2><keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords" meta.keywordsubtype="org" meta.entityname="RBI" meta.hostid="261" meta.entityid="RBI">RBI</keyword> data suggested that for the quarter ended June 2024, bank deposits grew at 11.7%. On the other hand, credit growth has outpaced this at 15%. This means that the outflow from banks as loans is far greater than the inflow into them in the form of deposits in Q1 of FY 2024-25. The situation largely saw cut-copy-paste in the first week of September as well, with loans registering a 13.3% YoY growth during the period, while deposits rose only 11.1%. This gap has only been widening for the last 3 years. Since deposits are how banks gather assets to further lend and earn interest income as a consequence, even a slight dip could set the alarm bells ringing for banks, and rightfully so. And truth be told, mutual funds are indeed taking on bank deposits in a big way. Per a report by Franklin Templeton, in August 2024, the AUM (assets under management) of Indian mutual funds, or the total funds managed by them, stood at 31.3% of total bank deposits in the country, up from 24.20% during the year-ago period. As of August 2024, the AUM of mutual funds stood at Rs 66.17 lakh crore, an all-time high. But all said and done, is this really the reason why the rate of bank deposits is falling behind? SBI has dismissed this to be a “statistical myth”, and experts point out that since equity and fund houses also keep the cash in their respective bank accounts, there’s no cause for concern. So, is financialization really to be blamed for the trailing tempo of deposits? Or is something else happening behind the scenes? We take a closer look: <h2>First, are household deposits really slowing down? And is that a cause of concern?</h2>Data from Motilal Oswal suggests the contrary. Deposits grew by around 10.4% between March 2020 and August 2024. Data from RBI also highlights that as of August 9, 2024, bank deposits witnessed a YoY growth of 10.8%. The loan-to-deposit ratio for the retail segment, which indicates what percentage of its total deposits the banks lend out as loans, has stayed at 77.5%, above the 77% mark for the tenth straight month. <div type="image" title="Yes, household deposits (as % of total deposits) have dipped, but the drop is far from significant" msid="113663882" hostid="261" sizebytes="306706"></div> Also, we can’t forego the fact that the share of Indian households in bank deposits has indeed slowed down. However, data from Axis AMC shows that the dip is marginal—from 63% in 2022 to 62% in 2023 and 61% in 2024. What has slowed down even more considerably is the share of government deposits in the aggregate bank deposits, which has dipped from 14% in 2018 to 9% in 2024. So, it's not just household deposits, you see. Moreover, as of March 2024, the collective CASA ratio (current and <keyword id="114757" type="General" weightage="20" keywordseo="savings-account" source="Orion">savings account</keyword> deposits) of all commercial banks in India stood at 41.00%, down from 43.1% in March 2023 and 45.2% in March 2022, marking a nearly 5% point decline over the past year, while still staying over the 10-year average of 39.2%. This implies that Indian banks are relying more on higher-cost funds (savings accounts), which can limit their profitability. <h2>What is this financialisation of savings we are talking about?</h2>Then again, there is no doubt about the growing affinity of Indians towards mutual funds and stock markets. Recent data from CBDT (Central Board of Direct Taxes) highlights that India’s net direct tax collection surged by around 22%, driven exclusively by the significant uptick in the collection of Securities Transaction Tax (STT), which doubled to Rs 26,154 crore, from Rs 13,352 crore in the year-ago period. Why does this matter? STT is levied when you buy or sell equity shares on stock exchanges, sell <keyword id="6361918" type="General" weightage="20" keywordseo="equity-mutual-funds" source="Orion">equity mutual funds</keyword>, and trade in futures and options in the equity segment. Such taxes, including the multiple other taxes in equity market investments, are considered as leakages as the money moves out of the economy into government coffers. Data from a ValueQuest report explains that over the last 20 years, the markets have handsomely rewarded the investors, generating over $900 billion in incremental value for them. This is the major driver behind the dramatic rise in investment flowing towards the equity markets. There’s further proof of this budding romance, if you check the demat pudding. The number of demat accounts, which are a primary requisite for participating in the stock markets, also burgeoned by 42.3 lakh in August 2024, taking India’s total tally of demat accounts beyond 17 crore. To put this in perspective, this is almost equivalent to the population of just 8 nations in the world, including China, the US, Brazil and more. Vivek Iyer, Partner, Grant Thornton Bharat thinks it's rather important, as well. “Financialisation of household savings in India is an indication of deepening capital markets in the market, especially from a retail investor standpoint. Bank deposits with a modest rate of return are no longer the only option for savings for investors. Investors today have more avenues for wealth creation in the form of public capital markets, which have democratized wealth creation and provided equality of opportunity to retail investors”, he says. Yes, Indians are investing more and more in the markets, and in mutual funds. But is it a sin to look out for inflation-beating returns, which the stock markets offer, and vanilla bank deposits don't? After all, the allure of 12-13% annual returns offered by <keyword id="45369" type="General" weightage="20" keywordseo="equities" source="Orion">equities</keyword> can certainly pale the stability offered by good old deposits, which generally do not go beyond 9% when it comes to annual returns. But all of this is not what is behind the slowdown. India is still a toddler in the school of savings financialization, with less than 10% of the population holding a demat account, and less than 5% of us saving in equities. That's a drop in the ocean of deposits, far inadequate to trigger a tsunami. <h2>Tell me why lagging deposits have nothing to do with Indians investing more in mutual funds!</h2>Says Shweta Rajani, Head - Mutual Funds, Anand Rathi Wealth Limited, “Households' equity holdings composition grew from 11.1% in FY 23 to 14.7% in FY 24. This trend reflects a growing awareness of investment options, empowering individuals to take control of their financial futures. Despite this transition towards equities, banks still hold a significant share of household financial savings—33.5% in FY24 compared to 34.9% in FY23”. Also, household savings and their subsequent financialization do not have much to do with deposit creation, which is entirely made by banks. What actually drives increased deposits is credit growth or increased lending. When interest rates are eased, people tend to borrow more and spend more, which circulates more money in the economy. For the past 4 years, RBI has been tightening the screws on interest rates, which raises the cost of borrowings, and makes it more expensive to take loans, putting a dampener on credit growth, but effectively curbing inflationary pressures. The last time RBI cut the repo rate by 40 basis points was back in May 2020, 4 years ago. The lag in <keyword id="19998084" type="General" weightage="100" keywordseo="deposit-growth" source="keywords">deposit growth</keyword> we’re witnessing is almost 3 years old. Coincidence much, or just good old economics at work? But with the Fed recently setting a rate cut precedent by slashing 50 bps off its interest rate, RBI is expected to follow suit in the next MPC (Monetary Policy Committee) meeting, scheduled for November 2024. A rate cut would ease the aforementioned high cost of borrowing, and increase loan-taking for corporates and institutional investors, thereby stoking consumption in the economy. And then, deposit creation in banks is likely to return to its former glory. If not, then that would be a curious case to unravel! But that worry is for another day. Do you have insights or personal experience to share on your personal finances or money? Contact us at <a target="_blank" class="c-link" href="mailto:businessinsider@timesinternet.in">businessinsider@timesinternet.in</a>.

You Searched For "bank holidays in november 2023" and got 7 results

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Stock market holiday on Diwali: Is the stock market open or closed on the 30th and 31st October?

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Loan-to-deposit ratio will subside on its own in coming months, notes Motilal Oswal report

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Rs 2,000 notes: 97.96% returned; Rs 7,261 crore worth notes still with public

PTI

Simply Put: A Deposit Dilemma — What's the fuss about a crisis in Indian bank deposits? Are mutual fund investments to blame?

Ira Alok Puranik

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