Latest news with #AndyMukherjee
Mint
12 hours ago
- Business
- Mint
Devina Mehra: How derivative dreams can turn into nightmares but still lure investors
We hear a lot about the Securities and Exchange Board of India's (Sebi) finding that about 93% of all participants in the futures and options (F&O) market lose money. Given the peculiarities of the human mind, everyone seems sure that they will be among the 7% who are winners. In this belief lies a business opportunity for those offering derivative training courses. Of course, anyone who has a magic wand that can make 1% everyday in financial markets can turn ₹1 crore into ₹20,000 crore in five years and has no economic reason to sell you a course for a few thousand rupees. But the point is not just that 93% lose money, it is who the losers and winners are. Sebi data is clear: those losing money are individuals and another category of 'others,' under which NRIs, trusts, etc, are clubbed. Those making money also are in two categories. One is of foreign portfolio investors and the other is called 'proprietary.' These are large Indian set-ups that are probably using algorithmic trading or some other systems to trade. Interestingly, there are only a few hundred players registered under the proprietary and foreign portfolio investor groups, whereas those in loser categories number almost 10 million. Also Read: Andy Mukherjee: Jane Street's secret sauce for Indian markets should be tested out My own October analysis based on Sebi data ( showed that the few who profit are mostly institutions or sophisticated players. Retail traders, especially those from non-metro, lower-income or less-educated backgrounds, are the worst hit. Let's not glorify outliers. Clearly, when you pit human traders against machines, especially highly sophisticated algorithms, it's an uneven fight. Even without manipulation, the odds are stacked against retail traders. You're playing a zero-sum game where the big guys have better tools, data and speed. Even when some make money, it's peanuts. NSE data shows that among retail traders whose trading activity was profitable, the median annual gain was just ₹60,000. That's less than what a gig job earns. Even the late Rakesh Jhunjhunwala, when asked, 'Why do you ask people not to trade when you yourself made your initial capital as a trader?" had said, 'I smoke but I tell my children not to." Plus, when people like him and other big names in the Indian market made their money through trading, it was a different time and place, with many market inefficiencies leaving opportunities to be exploited, including some simple ones like the differential in prices of the same stocks across exchanges. That is no longer the case, with sophisticated real-time trading systems in place. Also Read: Jane Street: Gaming an outdated system is not necessarily illegal in India However, the Jane Street issue goes deeper into actual manipulation. With most trading strategies, the bigger you become, the harder it is to get returns. In fact, most people in the trading or algorithm business talk in terms of limits on how much money a strategy can be used for. Unlimited money cannot be deployed in normal opportunities to exploit market inefficiencies. But Jane Street was not only making more money as its size grew, its strategy was dependent solely on its volumes being large enough to move the market. That's a red flag. The Sebi order shows how it might have used its size to extract unfair profits. The game's profitability increased with scale, which shouldn't be the case in a competitive market. Some people think that if norms are tightened on derivatives trading, it will reduce volumes. Whether or not that happens, it's clear that volumes do need to be curbed. Derivatives trading volumes in India, after peaking at 400 times the cash market, are still about 230 times—more than five times the ratio in any other market in the world. India's market capitalization is less than 5% of the world's but the country accounts for about 60% of global derivatives volumes. Now we get to the interesting part. The high trading volumes in derivatives is a profit gravy train that a range of players over and above the traders themselves will find hard to get off. The higher the trading volumes, the more the profits for stock brokers and tech platforms. Then, with stock exchanges being listed or nearly listed, there is profitability pressure on them, which makes it tempting for them to keep trading volumes high. This creates a conflict of interest, as stock exchanges are the first-level regulators in the market. In a Jane Street type of scenario, a handful of entities displaying a pattern of actions at particular times on certain days should have first been visible to stock exchanges. Also Read: Sebi's Jane Street interim order made India's stock market sit up for good reason Not just capital market participants, even government coffers have been boosted by F&O volumes. As I wrote during the budget in February: India's personal income tax mop-up is expected to grow 14.4% in 2025-26, faster than nominal GDP. Corporate tax and GST are expected to grow 10.5% and 10.9%, respectively, which is why the budget projects an acceleration in personal income tax collections despite a cut in tax rates. And while Sebi might be trying to curb speculation, the government appears to be banking on it. It is easy to blame the regulator for not acting quickly. But in any case of manipulation, a detailed case has to be built that withstands legal scrutiny. Action can rarely be taken in real time. The author is founder of First Global and author of 'Money, Myths and Mantras: The Ultimate Investment Guide'. Her X handle is @devinamehra
Bloomberg
08-07-2025
- Business
- Bloomberg
India's Richest Man Is Making a US Energy Bet
Billionaire Mukesh Ambani is pivoting his petrochemicals empire toward US ethane in a move to replace Chinese buyers, explains Bloomberg Opinion columnist Andy Mukherjee. (Source: Bloomberg)
Bloomberg
03-07-2025
- Politics
- Bloomberg
Would Mamdani Win in Gujarat? Probably Not.
Most voters in New York don't focus on Zohran Mamdani's Muslim identity. But in India, religion matters a lot in politics. So: Would Mamdani become mayor in Gujarat? Probably not, explains Bloomberg Opinion columnist Andy Mukherjee. (Source: Bloomberg)
Mint
01-07-2025
- Business
- Mint
Financial stability must deliver service efficiency
Systemic risk is not a concern, going by the Reserve Bank of India's (RBI) latest Financial Stability Report. As its systemic risk survey conducted in May reveals, 'medium risk" is seen in all major risk groups, with 92% of respondents expressing a level of confidence in India's financial system that's either higher than or similar to the last round's. Also Read: Andy Mukherjee: India's economy needs a revival of 'animal spirits', not cheaper credit As the report notes, corporate balance sheets are healthy, as are those of banks, which have taken their non-performing loan ratios to a multi-decadal low and reported strong earnings, even as stress tests have affirmed the adequacy of their capital buffers. Also Read: Mint Quick Edit | India's economy: The case for cautious optimism Mutual funds and clearing corporations are resilient too. While high equity valuations and global trade uncertainty pose some risks, India's financial system seems in good shape overall. As a macroprudential exercise, such sector-wide scans are important. Also Read: Dynamism at work: India's economy has led Nestle out of the Sensex Yet, as RBI Governor Sanjay Malhotra says in the report's foreword, 'Financial stability, like price stability, is a necessary condition, and not a sufficient one to boost India's potential growth." His note ends with a mention of the need for service efficiency. A stable base, after all, is just a foundation for economic success.
Mint
05-06-2025
- Business
- Mint
Jagdambika Pal: Minimize food wastage for the sake of our planet and its people
Food loss and waste is a global concern that represents not just economic loss, but also the environmental and food security crisis. To put it into perspective, if food waste were a country, it would be the third-largest emitter of greenhouse gases in the world, surpassing the US and China. Food waste accounts for nearly 8-10% of annual global greenhouse gas emissions, which is nearly three times the total emissions from the aviation sector. Decaying food emits methane, a greenhouse gas about 80 times more potent than carbon dioxide. Food production and its inputs emit climate-harming gases too. Paradoxically, while nearly 20% of all food produced is wasted or lost, around 783 million people are grappling with hunger and about 150 million children under the age of five are suffering from stunted growth due to lack of proper nutrition. Also Read: Andy Mukherjee: Watch out for food and fuel volatility in India-US trade talks Tackling food loss and waste is essential for us to address food and nutritional security challenges and significantly reduce greenhouse gas emissions. The pressing need to tackle the problem is articulated in India's commitment to Sustainable Development Goal (SDG) 12.3, which sets an ambitious target of reducing per capita global food waste at the retail and consumption levels and significantly cutting food loss along supply chains by 2030. As estimated, even if just a quarter of all the food binned by households globally is edible, the equivalent of 1 billion meals of edible food is being wasted every single day by homes worldwide. The United Nations Environment Programme's Food Waste Index Report 2024 states that up to 17% of food wastage occurs between the retail and consumption levels. This presents substantial opportunities for targeted intervention at these points, such as sustainable packaging solutions that may prolong the shelf-life of food, thereby providing a practical solution to the issue. We also need to improve infrastructure and include practices to preserve nutritional value and reduce wastage. Also Read: Food security: Let clean-tech innovation lead the way While only 21 countries had included food loss or waste reduction in their national climate plans (or Nationally Determined Contributions) by 2022, India has taken great strides to mitigate the same through coordinated measures at every stage of the supply chain by implementing schemes like the PM Kisan Sampada Yojana and production-linked incentive scheme for the food processing industry. These government programmes focus on modernizing infrastructure, adopting advanced preservation and packaging technologies, reducing wastage and enhancing supply chain efficiency. Programmes for the creation of backward and forward linkages and the creation of food processing capacities have been designed to drive infrastructural improvements that reduce spoilage and strengthen farm-to-market supply chains. Additionally, the Integrated Cold Chain and Value Addition Infrastructure Scheme provides fiscal support for upgradations with the aim of preserving nutritional value, increasing shelf life and raising food quality. Also Read: Rice fortification can help tackle our problem of hidden hunger While addressing the crisis we face requires a collaborative approach in favour of a circular economy that integrates sustainable methods in all operations, it is equally important to ensure that food reaches consumers more efficiently. According to the Food and Agriculture Organization, up to 30-40% of food production in developing regions is lost before it even reaches the market, largely because of gaps in post-harvest storage, processing and transportation. Food processing capabilities must be upgraded for food safety and shelf-life extension, among other objectives. Improved storage facilities and eco-friendly packaging are crucial to this endeavour, even as innovative means of food preservation need to be explored. Harnessing the potential of sustainable solutions like aseptic packaging with recyclable and eco-friendly materials would help reduce the ecological footprint of the processed food industry. Generating awareness among consumers of responsible and eco-friendly practices through public-private partnerships and public campaigns can be of help in this exercise. Successfully addressing the crisis of food loss and waste needs dedicated efforts by the entire ecosystem of producers, suppliers and consumers. Food loss and waste must be minimized across the supply chain from end to end. By doing so, countries and communities will benefit from increased food security, better access to healthy diets and reduced malnutrition, while decreasing their greenhouse gas footprints. The author is a member of the Lok Sabha.
