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RBI's warning: Indian equities risk being overvalued, earnings may not justify prices
RBI's warning: Indian equities risk being overvalued, earnings may not justify prices

Time of India

time7 hours ago

  • Business
  • Time of India

RBI's warning: Indian equities risk being overvalued, earnings may not justify prices

Reserve Bank of India India's stock markets are showing signs of overvaluation, especially in the small- and mid-cap segments, the Reserve Bank of India (RBI) warned in its latest Financial Stability Report (FSR). The central bank's concerns come at a time when global economic growth remains uncertain, and corporate earnings may struggle to keep up with market expectations. The apex bank noted that current asset prices, both in India and globally, are running well ahead of economic fundamentals, driven by optimism that may not be justified in the present climate. To justify current valuations, corporate earnings will have to grow at a strong pace, which may be difficult in an uncertain economic environment, the report stated, quoted by ET. According to the FSR, while the Nifty Midcap 100 index is projected to grow at 17.4%, it would require a growth rate of 28% to fully support current valuations. Similarly, the Nifty Smallcap 100 is expected to grow at 16.9%, but needs a 30.6% expansion to be fairly priced. Nilesh Shetty, portfolio manager at Quantum Advisors, said valuations had already corrected earlier in the year but have since rebounded sharply. 'We are definitely seeing froth in the small and midcap stocks. The Indian markets did correct much before the tariff uncertainties and there was a significant correction in the small and midcap space, primarily because of valuations,' Shetty told ET. 'But there has been a significant rebound and we are very near to the all-time high, despite the global uncertainties. Earnings in Q1 could also be slower than expected.' Siddarth Bhamre, head of institutional research at Asit C Mehta, also noted that while midcaps are currently trading at a premium due to high growth potential, the sustainability of this growth remains in question. 'But is this growth high for just 1-2 years or in the longer term?' he said. He also flagged the limited availability of high-quality mid- and small-cap stocks as a reason for stretched valuations. 'People are ready to buy quality stocks at much higher multiples in the mid and smallcap segments and quality names here are not enough. There would always be some pockets and some names where we would find good value, but the job of identifying these names is getting difficult everyday,' Bhamre added. The RBI's report further cautioned that if earnings fail to meet expectations, or if valuations begin to revert, it could have a major impact on the market, particularly in the midcap space. The overvaluation risks aren't limited to India. The FSR also pointed out that asset prices in several global markets remain high relative to fundamentals. In the US, for instance, the Nasdaq is forecast to grow at 19.9% but would need to post 26% growth to justify current levels. 'Price corrections and elevated volatility of US equities can spill over to other markets, especially emerging markets like India,' the report said, highlighting the interconnected risks in the global financial system. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now

ICMR rules out Covid-19 link in young heart attack deaths, says lifestyle, previous conditions are triggers
ICMR rules out Covid-19 link in young heart attack deaths, says lifestyle, previous conditions are triggers

Indian Express

time15 hours ago

  • Health
  • Indian Express

ICMR rules out Covid-19 link in young heart attack deaths, says lifestyle, previous conditions are triggers

The Indian Council of Medical Research (ICMR) and National Centre for Disease Control (NCDC) have conclusively established that there is no direct link between COVID-19 vaccination and the reports of sudden deaths of young people in the country. The report assumes significance in the light of concerns over 18 heart attack cases in Karnataka's Hassan district within a one-month period, particularly among the young. The ICMR-NCDC studies affirm that COVID-19 vaccines are safe and effective with extremely rare instances of serious side effects. They say that COVID-19 vaccination does not appear to increase the risk and that the sudden cardiac deaths could have resulted from a wide range of factors, including genetics, lifestyle choices, and pre-existing conditions. Don't overlook lifestyle triggers, especially smoking Dr Ranjan Shetty, lead cardiologist and medical director at Sparsh Hospitals, Bengaluru, says that of all the risk factors, smoking and high blood pressure because of work stress are mostly responsible. 'Family history, cholesterol, obesity, diabetes, and alcohol are other triggers. Cigarette-smoking harms the entire cardiovascular system as it changes blood chemistry, thickens blood vessels. This causes the heart to race and the blood pressure to rise, accelerates blood clot and plaque formation. There is no benefit from cutting down cigarettes, you just have to give it up,' he says. He also warns that second-hand smoke poses the same risk to a non-smoker as it does to a smoker. The other big factors, he says, are poor sleep and high blood pressure. 'The body doesn't rest, the stress hormones are active, there is inflammation and high blood pressure. This in turn damages blood vessel walls, allowing for tears that dislodge unstable or even smaller plaques and encourage blood clots to form over them. To make matters worse, young people then subject their weakened arteries to gym workouts without proper sleep. That's why we are hearing of young heart attacks more,' says Dr Shetty. What were the studies about? The ICMR and NCDC have been working together to understand the causes behind sudden unexplained deaths, especially in young adults between the ages of 18 and 45 years. To explore this, two complementary studies were undertaken using different research approaches—one based on past data and another involving real-time investigation. The first study, conducted by ICMR's National Institute of Epidemiology (NIE), was carried out from May to August 2023 across 47 tertiary care hospitals in 19 states and Union Territories. It looked at individuals who appeared to be healthy but died suddenly between October 2021 and March 2023. The findings have conclusively shown that COVID-19 vaccination does not increase the risk of unexplained sudden death in young adults. The second study, titled 'Establishing the cause in sudden unexplained deaths in young,' is currently being conducted by AIIMS, New Delhi in collaboration with ICMR. This is aimed at determining the common causes of sudden deaths in young adults. 'Speculative claims without conclusive evidence risk undermining public confidence in vaccines, which have played a crucial role in saving millions of lives during the pandemic. Such unfounded reports and claims could strongly contribute to vaccine hesitancy in the country, thereby adversely impacting public health,' says the ICMR statement. So when should one do preventive tests? Dr Shetty says every young person with a family history should get tested in their early 20s and the rest definitely between 25 and 30. Apart from lipid profile and blood work, a calcium scoring test can map plaques while the high-sensitivity C-reactive protein (hsCRP), a blood component indicator of inflammation, can tell you if you are more prone to heart attacks. Then there is the treadmill test or TMT to map heart stress. Every diabetic should take a ten-year risk score.

Things you must know if you are thinking of getting a bank locker.
Things you must know if you are thinking of getting a bank locker.

Mint

time19 hours ago

  • Business
  • Mint

Things you must know if you are thinking of getting a bank locker.

MUMBAI : For many Indians, bank lockers, once the silent sentinels of family gold and property documents, represent not just a place to store valuables but also peace of mind. However, the process of getting one—and what happens afterwards—isn't always as straightforward as it seems. 'Jewellery is the obvious item people think of," said Adhil Shetty, chief executive of BankBazaar. 'But more people are now storing important documents, especially after facing losses in floods or house fires." Bank lockers are designed to provide protection against theft and environmental damage. But in metro cities, demand far exceeds supply, making lockers a scarce and highly coveted service. Also Read: Cracking the IPO code: Tips to secure allotments amid heavy oversubscription To rent a locker, a customer must complete full KYC (know your customer) documentation—the same as opening a bank account. Existing customers may have a faster process, while new customers must undergo more comprehensive checks. Locker allotment isn't automatic; banks are required to maintain a transparent waitlist and provide an acknowledgement with a reference number. Locker rentals are annual, and charges vary depending on the size and location of a locker. 'In most banks, small lockers can cost between ₹1,500 and ₹3,000 annually, while larger ones can go up to ₹10,000 or more," said Shetty. Some banks may require customers to open a fixed deposit as security, capped by the Reserve Bank of India at no more than three years' rent plus break-open charges. 'Even if you want to use the locker for a few months, you still pay the full annual fee," noted Abhijit Nair, a cost engineer from Nashik, who recently went through the process. The RBI mandates that banks execute a formal locker agreement on stamped paper. However, customers often face confusion over stamp duty and who pays it. In practice, different banks (and even branches) follow varying rules, leaving customers to navigate inconsistent and opaque processes. For example, Nair was first asked to get a ₹100 stamp paper and then a ₹500 stamp paper. Once assigned, access is granted only to the locker holder or a pre-authorized person. Each visit is logged with signatures and timestamps. 'At my bank, only one customer can be in the locker room at a time," Abhijit added. 'It's secure, but it can cause delays." Also Read: Groww's switch to demat MFs: What investors gain—and what they could lose Banks don't know what's inside your locker—and they're not supposed to. As per RBI rules, banks cannot be held responsible for the actual contents unless the loss occurs due to theft, burglary, fire, or staff negligence. Even then, the liability is capped at 100 times the annual locker rent. So, if your locker rent is ₹5,000, the compensation maxes out at ₹5 lakh. 'Since the bank doesn't know what you've stored, it's on you to get your valuables insured," explained Shetty. What are the requirements? When Nair tried to secure a locker closer to his parents' home in Nashik, he was asked to make a fixed deposit, even though he was already a preferred customer. Later in Bengaluru, things escalated. 'A private bank offered me a locker only if I bought a ₹2 lakh-a-year insurance product," he said. 'When I refused, they followed up multiple times, even reducing the premium to ₹1 lakh." Kapil Marwah, a business analyst from Noida, had a similar experience. After being denied lockers repeatedly by private banks unless he bought high-premium insurance, he finally opted for a public sector bank. 'A state-run bank finally agreed to give me a locker after I bought a one-time insurance policy of ₹1.5 lakh for my wife," he said. 'It wasn't ideal, but after being stonewalled by six other banks, I was desperate." Pune-based software professional Bhavik Shah never expected that getting a bank locker—something that should be a routine banking service—would turn into a year-long ordeal involving three branches and multiple follow-ups. Despite this, most banks either cited 'long waiting lists" or promised to call back but never did, Shah recalled. When Shah visited a newly opened branch on its opening day, he was still told that lockers were already allotted. 'I was told that if I deposited ₹5-10 lakh, my waiting status could be bypassed. The more you deposit, the faster things move," he said. 'Banks are clearly using locker scarcity as a pressure tactic. It's become a sales funnel disguised as customer service," he claimed. 'Any such practice can be reported directly to the bank's grievance cell or escalated to the RBI's Banking Ombudsman," said Shetty. 'Customers have a right to a locker without being coerced into buying products. Banks are required to maintain a public list of available lockers and share waitlist numbers transparently," he added. From a physical security perspective, bank lockers are robust. The RBI mandates CCTV surveillance—footage must be kept for 180 days—secure access control, fire-resistant vaults, and natural disaster readiness. But that doesn't mean lockers are invincible. Also Read: The silent tax: How inflation erodes , and what investors can do about it 'Losing the key is a nightmare," said Nair. 'You have to pay break-open charges, and you must be physically present during the process." If a locker is unused or uncontactable for seven years, the bank has the right to break it open and dispose of the contents after following strict procedures. Customers are encouraged to nominate someone for easier succession. In case of the holder's death, lockers are released to the nominee or legal heirs within 15 days, assuming proper documents are submitted.

Indian stocks at risk of overvaluation amid low-growth environment, warns RBI
Indian stocks at risk of overvaluation amid low-growth environment, warns RBI

Economic Times

timea day ago

  • Business
  • Economic Times

Indian stocks at risk of overvaluation amid low-growth environment, warns RBI

The Reserve Bank of India (RBI) has cautioned about overvaluation risks in Indian stocks, particularly in the small and mid-cap segments, amidst a low-growth global environment. Market experts, including Nilesh Shetty from Quantum Advisors, echo these concerns, noting that current valuations may not be justified by expected earnings growth. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Mumbai: Indian stocks face evident overvaluation risks in an expectedly low-growth world, the central bank said in its latest financial sector assessment, with several market experts concurring that earnings may have run well ahead of asset prices in certain vulnerable pockets - particularly small- and mid-cap shares."We are definitely seeing froth in the small and midcap stocks. The Indian markets did correct much before the tariff uncertainties and there was a significant correction in the small and midcap space, primarily because of valuations," Nilesh Shetty, portfolio manager, Quantum Advisors told ET."But there has been a significant rebound and we are very near to the all-time high, despite the global uncertainties. Earnings in Q1 could also be slower than expected," Shetty a broader level, the central bank's Financial Stability Report (FSR) highlighted the potential valuation risks emanating from geopolitics and tariff-related trade displacements, and the current stock prices may not adequately reflect the globally, FSR said, asset valuations in several markets have stayed high relative to fundamentals, despite the recent market turmoil. To justify current valuations, corporate earnings will have to grow at a robust pace, which may be difficult in an uncertain economic environment, FSR to the FSR, the Nifty Midcap 100 is expected to grow at 17.4%, but would require a growth of 28% to justify current valuations. Similarly, Nifty Smallcap 100 growth is expected at 16.9%, but would require a growth of 30.6% to justify the earnings forecast updates more slowly than market prices, stock prices are yet to reflect the prevailing geopolitical tensions and elevated uncertainty about the direction of tariffs. Therefore, the current valuations may not be reflecting the extent of overvaluation, FSR to Siddarth Bhamre, head of institutional Research at Asit C Mehta, midcaps now command a higher valuation premium because there is high growth. 'But is this growth high for just 1-2 years or in the longer term?' he asked. Significant capital inflows into mid and small cap mutual funds have been observed, and there is limited availability of high-quality stocks here. Due to this scarcity, investors are likely to pay premium valuations for quality names.'People are ready to buy quality stocks at much higher multiples in the mid and smallcap segments and quality names here are not enough. There would always be some pockets and some names where we would find good value, but the job of identifying these names is getting difficult everyday,' Bhamre told contribution of equity risk premium to returns remains high for midcap stocks. Hence, between earnings revisions and valuation cuts, market impact could be significant in the event of adverse shocks, according to RBI's with domestic markets, global asset valuations in several markets have also stayed high relative to fundamentals, despite the recent market turmoil.'Price corrections and elevated volatility of US equities can spill over to other markets, especially emerging markets like India,' the report said. These risks have been concentrated with exposures to a few large technology firms. US Nasdaq is estimated to grow at 19.9%, however, it would require a growth of 26% to justify the valuations.

Indian stocks at risk of overvaluation amid low-growth environment, warns RBI
Indian stocks at risk of overvaluation amid low-growth environment, warns RBI

Time of India

timea day ago

  • Business
  • Time of India

Indian stocks at risk of overvaluation amid low-growth environment, warns RBI

Mumbai: Indian stocks face evident overvaluation risks in an expectedly low-growth world, the central bank said in its latest financial sector assessment, with several market experts concurring that earnings may have run well ahead of asset prices in certain vulnerable pockets - particularly small- and mid-cap shares. "We are definitely seeing froth in the small and midcap stocks. The Indian markets did correct much before the tariff uncertainties and there was a significant correction in the small and midcap space, primarily because of valuations," Nilesh Shetty, portfolio manager, Quantum Advisors told ET. "But there has been a significant rebound and we are very near to the all-time high, despite the global uncertainties. Earnings in Q1 could also be slower than expected," Shetty said. Play Video Pause Skip Backward Skip Forward Unmute Current Time 0:00 / Duration 0:00 Loaded : 0% 0:00 Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 1x Playback Rate Chapters Chapters Descriptions descriptions off , selected Captions captions settings , opens captions settings dialog captions off , selected Audio Track default , selected Picture-in-Picture Fullscreen This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Text Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Transparent Caption Area Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Drop shadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. At a broader level, the central bank's Financial Stability Report (FSR) highlighted the potential valuation risks emanating from geopolitics and tariff-related trade displacements, and the current stock prices may not adequately reflect the risks. Even globally, FSR said, asset valuations in several markets have stayed high relative to fundamentals, despite the recent market turmoil. To justify current valuations, corporate earnings will have to grow at a robust pace, which may be difficult in an uncertain economic environment, FSR said. Live Events According to the FSR, the Nifty Midcap 100 is expected to grow at 17.4%, but would require a growth of 28% to justify current valuations. Similarly, Nifty Smallcap 100 growth is expected at 16.9%, but would require a growth of 30.6% to justify the valuations. Agencies 'Earnings Must Improve' Since earnings forecast updates more slowly than market prices, stock prices are yet to reflect the prevailing geopolitical tensions and elevated uncertainty about the direction of tariffs. Therefore, the current valuations may not be reflecting the extent of overvaluation, FSR said. According to Siddarth Bhamre, head of institutional Research at Asit C Mehta, midcaps now command a higher valuation premium because there is high growth. 'But is this growth high for just 1-2 years or in the longer term?' he asked. Significant capital inflows into mid and small cap mutual funds have been observed, and there is limited availability of high-quality stocks here. Due to this scarcity, investors are likely to pay premium valuations for quality names. 'People are ready to buy quality stocks at much higher multiples in the mid and smallcap segments and quality names here are not enough. There would always be some pockets and some names where we would find good value, but the job of identifying these names is getting difficult everyday,' Bhamre told ET. The contribution of equity risk premium to returns remains high for midcap stocks. Hence, between earnings revisions and valuation cuts, market impact could be significant in the event of adverse shocks, according to RBI's FSR. Along with domestic markets, global asset valuations in several markets have also stayed high relative to fundamentals, despite the recent market turmoil. 'Price corrections and elevated volatility of US equities can spill over to other markets, especially emerging markets like India,' the report said. These risks have been concentrated with exposures to a few large technology firms. US Nasdaq is estimated to grow at 19.9%, however, it would require a growth of 26% to justify the valuations.

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