In this week's wrapup, we talk about Jio Financial Services, ICOR, central banks, Zerodha’s mutual fund and PMJDY

For the markets edition this week, we have a story about Biocon, which recently closed its Viatris business acquisition. And since this was its biggest purchase to date, we thought it would be a good time to look at what the biopharma biggie has been up to. You can read the story here.

Meanwhile, here’s a recap of what we wrote this week.

The index fund attack on Jio Financial Services is over. Almost.

When Jio Financial Services (JFS) first hit the stock market, it kept dropping 5% every day. Here’s why.

See, there are funds in the market that mimic indices such as the Sensex 30 and the Nifty 50. They're called index funds. They don’t have a fund manager at the top and just follow the index. That’s why when the Sensex decided to drop JFS from its index, index funds had to dump it too. You could say that these index funds were actually forced to sell it, pulling down its stock price.

But could this stock price spiral be a blessing in disguise for other actively managed funds in the stock market? Head here to find out.

Forget GDP. Look at ICOR.

If you were to look at one number to figure out the country’s economic progress, you’d probably choose GDP or Gross Domestic Product. It’s simply a sum of all the economic activity happening due to the production of goods and services. So if it’s inching upwards, you know we’re heading in the right direction. And it also helps us compare our growth with other countries.

But what if we tell you that this number could be missing one key trait?

Yup! GDP might not be the most efficient way to measure economic growth. Because that could even come from simply pumping up capital or investments. It doesn't tell us how productive the capital is. So what could we look at alternatively?

Well, there’s ICOR (Incremental Capital Output Ratio). It looks at how much money is being put towards fresh investments. And then adjusts it against the actual economic growth.

If you’re interested to know more about ICOR and its ability to determine growth, you can read our Tuesday’s newsletter here.

Do we really need central banks???

Central banks are quite crucial for the economy. They keep prices stable and grow the economy steadily, while also ensuring financial stability by monitoring banks so that they don’t make any rash decisions.

But in Wednesday’s newsletter we wanted to explore the utility of central banks and pop the controversial question “Do we really need them?” And if you think that's interesting, you can read it here.

Can Zerodha* disrupt the mutual fund industry?

On Monday we told you about index funds and how they imitate the moves of major stock market indices. And yet, on the face of it, they seem to be rewarding. In the sense that most actively managed funds that pick stocks of large companies are simply unable to beat the index.

So, when the news about Zerodha Mutual Fund filing a draft with the SEBI for its 2 new index mutual funds broke out, we had to write about it. We talk about why both these funds focus on the Nifty LargeMidcap 250 index and how Zerodha could make money from them. If you want to know the answers to these questions too, then you can read our story on it here.

*Zerodha, through its Rainmatter Fund, is an investor in Finshots

An explainer on financial inclusion in India

A couple of days ago the Pradhan Mantri Jan Dhan Yojana (PMJDY) turned 9. It’s a simple scheme that offers a ‘No Frills’ account to the unbanked, with simplified KYC norms, no initial deposits or minimum balance compulsions. They even come with free RuPay debit cards and access to a whole lot of financial products like pension, insurance and overdraft facilities for the underprivileged.

And with the scheme hitting the 50 crore bank accounts milestone, the headlines were applauding it for its commendable financial inclusion efforts. But how do we look at financial inclusion beyond bank accounts? And what could India do to further boost it? That’s what we look at in Friday’s newsletter. You can click here to read it.

Adani Group’s New Controversy

Before you leave, you might want to check out what we had to say about the Adani saga. Last week we had a new report coming out castigating the company once again and while we haven't covered the story in our newsletter just yet, we have a fact-based explainer on the whole matter on our YouTube channel. Link here.

Have a lovely weekend! Until then...

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