Sovereign Wealth Boost, Paytm Decline in Market share, SBI & AI, Microsoft In India, Etc

Market Briefs

Main Briefs

Sovereign Wealth Funds Boost Investments in India:

Significant Growth in India Assets:

• Sovereign wealth funds' holdings in India surged by almost 60% in the year ending April 2024, reaching Rs 4.7 lakh crore, as per NSDL data.

• In contrast, overall foreign portfolio investors (FPIs) saw a 40% growth in assets during the same period, totaling Rs 69.5 lakh crore.

Preferred Destination for Global Investors:

• India's robust growth potential and improved ease of doing business attract sovereign wealth funds, making it a preferred investment destination.

• Government initiatives like eased compliance processes and special tax exemptions for select funds further bolster India's appeal to foreign government funds.

Key Players in Indian Market:

• Major sovereign funds like Government of Singapore, Abu Dhabi Investment Authority, Kuwait Investment Authority, and Norwegian pension fund are prominent investors in India.

• Notable investments include Government of Singapore's stakes in Reliance Industries and HDFC Bank, Abu Dhabi Investment Authority's holdings in IPCA Laboratories and Avas Financiers, and Norwegian pension fund's shares in Axis Bank and Bajaj Auto.

Government Policies Driving Investments:

• Tax exemptions and relaxed KYC norms for sovereign wealth funds facilitate easier asset allocation and investment processes.

• Recent budget announcements extending tax holidays underscore the government's commitment to attracting substantial investments, especially in the infrastructure sector.

Diverse Investor Landscape:

• Apart from sovereign wealth funds, India also witnesses strong interest from other foreign government institutions like central banks.

• These entities collectively own assets worth Rs 17.2 lakh crore, reflecting a significant portion of overall FPI assets under custody.

Outlook and Growth Prospects:

• The surge in asset allocation by sovereign wealth funds underscores India's growing prominence as an attractive investment destination, with continued government support expected to sustain this trend in the future.

Paytm's UPI Market Share Declines by 5 Percentage Points in One Year:

Market Share Drop:

• Paytm's UPI market share has decreased by nearly 5 percentage points over the past year, dropping to 8.4% in April 2024 from 13.3% in April 2023, based on transaction volume data from NPCI.

Challenges Faced by Paytm:

• The decline in market share is attributed to the Reserve Bank of India's restrictions on Paytm Payments Bank Limited (PPBL), impacting Paytm's ability to onboard new customers.

• Paytm had to transition its UPI service to a third-party app model after RBI's actions against PPBL, leading to challenges in maintaining market share.

Transition to Third-Party App Model:

• Paytm's UPI service, previously powered by PPBL, transitioned to a third-party app model, resulting in the drop in market share.

• The company aims to accelerate the migration of existing UPI customers to bank UPI handles, collaborating with Axis Bank, Yes Bank, SBI, and HDFC Bank as its payment service provider (PSP) banks.

Impact on Gross Merchandise Value (GMV):

• Paytm generates around three-fourths of its GMV from UPI, making it crucial for the company to maintain its position as the third-largest player in the payments platform.

PhonePe's Market Share:

• PhonePe, the UPI market leader, has seen a slight increase in its market share, maintaining over 50% market share in UPI transaction value since February, with a 49% market share in April.

Future Outlook:

• Paytm's efforts to adapt to the new regulatory environment and collaborate with PSP banks signify its determination to regain lost market share and sustain its relevance in the UPI ecosystem.

PSBs to Embrace Generative AI Systems: A Roadmap Unveiled:

Strategic Deployment:

• Public sector banks (PSBs) are gearing up to implement generative AI systems with a comprehensive strategy and pilot programs planned for the fiscal year, according to informed sources.

• These initiatives are integral to the reform agenda of state-run banks for 2024-25, focusing on capability development, AI-friendly policies, and governance systems.

Role in Banking Operations:

• GenAI applications are expected to play a pivotal role in various areas including credit modelling, data analytics, and cybersecurity, enhancing operational efficiency and risk management for PSBs.

State Bank of India's Initiative:

• India's largest bank, State Bank of India, is exploring the development of its own large language model to harness its vast data resources, reflecting the proactive approach towards AI adoption within the banking sector.

Bank-Specific Strategies:

• Each PSB will devise its own strategy for AI implementation and explore potential collaborations to leverage expertise and resources.

• These initiatives will be evaluated as part of the year-end assessment of banks, indicating the importance attached to AI adoption in achieving organisational objectives.

Use Cases and Potential Impact:

• Generative AI systems hold promise in enabling banks to develop digital marketing tools, enhance customer acquisition, and track brand perception and market share through social media analytics.

• These new-age models empower banks to adapt to evolving customer preferences and market dynamics, fostering innovation and competitiveness in the financial sector.

Briefs, You Can’t Miss:

1. Adani Green Secures 20-Year Agreement with Sri Lankan Government for Wind Power Stations.

2. NCLAT Begins Hearing Google's Appeal Against Rs 936 Crore Antitrust Penalty.

3. UK Court Rejects Nirav Modi's Fresh Bail Plea, Citing 'Real, Substantial Flight Risk'.

4. Walt Disney Records Over $2 Billion Goodwill Impairment Charge Linked to Star India in Q2.

5. Microsoft Acquires Land in Hyderabad for Rs 267 Crore to Construct Data Centre.

6. Brazilian Payment Firm Ebanx Set to Launch Operations in India with Yes Bank.

7. EMotorad, Backed by MS Dhoni, Nears Completion of E-Cycle Gigafactory.

8. Telecom Department Blocks Mobile Handsets, Disconnects Numbers Involved in Frauds.

9. Reliance Jio, Airtel, and Vodafone Idea Apply for Upcoming Rs 96,317 Crore Spectrum Auction.

World Briefs

• The US-Saudi alliance could bring significant changes to the Israel-Palestine issue.

• The latest iPad Pro boasts the Ultra Retina XDR display, compatibility with the new Apple Pencil Pro, and is driven by the innovative M4 processor.

• TikTok and ByteDance face legal action to prevent the enforcement of a US law aiming to force the sale or ban of the app.

• Sri Lanka maintains its policy of offering free tourist visas to India and six other countries amid ongoing controversy.

AI Briefs

• Google introduces the Pixel 8a in India, offering "premium" AI capabilities. Learn about its price and key features.

• Amazon unveils Bedrock Studio, aimed at streamlining the development of generative A

  I applications.

• LTIMindtree partners with IBM to establish a joint Generative AI Center of Excellence (CoE) in India, aiming for global impact.

• GitHub's mobile app rolls out Copilot Chat, now accessible to all users.

Company Of The Day

Company Name: Walt Disney World

Founder: Roy O. Disney, Walt Disney

Year Of Foundation: Oct 1, 1971

Headquarter: Lake Buena Vista, Florida, United States

Industry: Walt Disney World, a renowned media and entertainment enterprise, provides resort options as an affordable means to experience a magical vacation.

Why Is It in the News?

On February 28th, Reliance Industries and The Walt Disney Company announced a merger of their Indian television and internet streaming assets, forming a new company valued at over $8.5 billion. Reliance Group will hold a 63% stake, with Disney owning the remainder.