How to ace Summer Internships from the lens of an ICICI PPO holder

The batch of 2020-22 is looking forward to their internships amid all the uncertainties around. Hopefully, this little helping hand from my experience and learnings of my internship with ICICI Bank Ltd. will help you plan your internship better, especially if you are looking to secure a PPO:

1. Understand your deliverables: Be clear with the deliverables and expectations of your project. It is better to know your focus areas in the deliverables.

2. Schedule to finish your SIP deliverables in 6 weeks: If you are on two months SIP, keep the last two weeks for any unforeseen issues, prepare your presentation, practice it and present it to your mentor before your final presentation.

3. Listen to as many employees as possible: You might be new to an industry and organization. It is tough without the experience of people inside to comprehensively complete your deliverables. Hence, listen to as many associated departments and employees as to widen your understanding. 

4. Let your guide keep track: Most of the time, your mentors might also be busy with their routine work. You must update your day-to-day work to them. You can share a tracker sheet where you can update your work regularly. Also, it is good practice to share your weekly reports and presentation.

5. Maintain your relations: While you connect to many employees in the organization, your approach, behavior, and people management are widely noticed and sometimes regarded above your work. Hence, maintain good relations with people around, especially with your guide and manager.

6. Keep your references handy: During your story creation, back your thought process with your research reference. It adds credibility to your ideas, highlights your understanding, and shows your work.

7. Focus on Story Line: During your final presentation, focus on your story and inferences along with relevant data. Try not to pack your presentation slides with data. Also, mention your challenges and learnings from your internship towards the end of your presentation.

With these tips, I wish good luck with your SIP to the whole of the bright minds of batch 20-22. Hope to see you all on the other side with a PPO.

About the Author:

Vineeth Rao Sudhati is a student of MBA, batch of 2019 -21 from IIM Kashipur with majors in Operations and Marketing. He is a part of various student bodies like the Alumni Relations Committee and Prep Cell. You can connect with him on LinkedIn.

Acing the Cases – From the Horse’s Mouth

Case competitions are an integral part of B School life- not only because you get a kind of exposure but also the enormous amount of learning involved with it. Undoubtedly, academics form the basic ingredient of B School but also fine-tune yourself by participating in several International, National & Corporate Competitions. In one such international competition I participated (Zurich Enterprise Challenge), we did not manage to get into the Semi finale stage, but the problem statement was what attracted us the most. The statement demanded the vision for businesses & multinational enterprises post-Covid world.

Amidst the cramped schedule of a B School life, you would not get the time to do all the cases and do proper justice to them. So, picking and choosing the cases becomes a key aspect. “Pick a case and absolutely slaughter it” – should be the mantra. This indeed goes a long way, as a proper approach to a case requires a lot of research and groundwork & it effectively drains out oneself. Picking up simultaneous case competitions will not be a smart choice as the effort gets divided. There’s no fixed one-size-fits-all for the competitions. The main aim of competition varies on a case-to-case basis – sometimes it’s the PPO/PPI/ personal brand building, sometimes it’s the brand and sometimes it’s just the learning one can get by participating in it.

During my 2 years in IIM Kashipur, one thing I effectively learned is “perseverance holds the key to success.” In the first year, I did not participate much effectively in competitions except the only one in which our team won the title of National Winners in IIM Trichy. I felt that with the second year in the fold, it was wise to participate in the competitions that were restricted only to the first years. 

In the second year, it becomes clearer as the domain gets selective – for example, in the second year, I mostly participated in Marketing, Consulting, and Strategy competitions. Moreover, you learn a lot from your mistakes, in fact, the bitter pills you swallow shape up for the upcoming ones. In one such corporate competition organized by Infosys, a minor mistake from our end did cost our entry to the next round. So, these competitions, indeed serve as a replica, to what one might expect from the corporate world – “there are no free lunches incorporated.” One great aspect of participating in various case competitions is that you get to know in-depth about specific sectors you work in while preparing for the cases. The cases are handpicked live industry cases where the participants work towards developing a feasible and sustainable solution.

Lastly, one key aspect of nailing case competitions is having a core team that is well aware of their capabilities & weaknesses. There would be issues cropping up, arguments but the key is the light at the end of the road – a potentially feasible solution. A good team can indeed be a game-changer. Everybody must have set, defined roles within the team.

With this, I ended up with 2 National Winners, 2 Runners Up, 1 National Semi-finalist, and 3 National Finalists in my tally. Of course, you win some and lose some, but the key thing is “Never Stop, Never Settle.” The entire journey of participating in several competitions (National/ Corporate/ International) plays a pivotal role in shaping up one’s journey. For me, it was about going beyond the stereotypes, building and rebuilding myself. Always remember “What brought you here, won’t take you there.”

Each individual has a different story to tell, but selecting the right atmosphere is of utmost essential. I would like to thank IIM Kashipur and the stakeholders for putting up commendable effort and providing individuals with the right kind of atmosphere in which they can rebuild and transform themselves throughout their stay.

About the Author:
Rahul is an Electronics & Communication Engineer by qualification & completed his MBA from IIM Kashipur (19-21 batch). He has been recognized as the Top 100 Competitive Business Leaders’2021 by Dare2Compete and has been featured in Forbes India. He is an IT professional with 2 years of experience in Cognizant. In his past time, he likes solving puzzles & binging on OTT platforms. You can connect with him on LinkedIn.

FPM Perspective-Qualitative reflections of a Quantitative Researcher

Being a civil engineer who pursued an MBA in Operations Management, followed by enrollment as an FPM student in the Operations Management area, I had always classified myself as a person who was more (or only) inclined towards quantitative research. I always recognized and was fascinated by the power of numbers.  

Then, in January 2018, We, a group of 15 research students, entered the qualitative research methods class. Some of us were excited about the qualitative aspect of research, and some were absolutely disinterested; I am ashamed to admit that I, then, belonged to the second category. I later realized that I had been keeping a blind eye towards the ‘dark’ aspect of numbers. I, in no way, wish to belittle the quantitative – orientation of research, but qualitative research is beautiful in its own way. The qualitative research articles, if well written, provide a vivid image of the phenomenon that leads the audience to discover deep meanings of human experiences.  

I now understand that a good researcher should learn about both paradigms. The qualitative and quantitative approaches have distinct and complementary strengths. Both come with a different set of challenges and require different skills to overcome those challenges. For example, as a qualitative researcher, I can always adopt a grounded perspective where I do not need to identify the dependent and independent, nor do I necessarily need to propose hypotheses. My primary responsibility as a  qualitative researcher is to capture individuals’ hidden meanings and explore the phenomena’  possibilities, but it is easier said than done. The experience is like deep-sea diving; we know we are looking for something, but we do not actually know what we are looking for.  

During this journey, I came to realize the beauty and power of text. Sometimes I can feel the ‘dryness’  associated with the numbers in quantitative articles because numbers in no way explain the human feelings that should have been captured. I now recognize and appreciate the mental and emotional strength of qualitative researchers because I believe that risks and concerns are more significant in qualitative research, mainly because of the researcher’s level of involvement with the research process and the participants.  

If I am asked to clarify my stand regarding which type of researcher I would classify myself, I will find myself in a great dilemma. I would instead argue that one should appreciate the different values which are drawn out of the two different paradigms. A researcher who has familiarized himself with both the frameworks may develop a more profound intellectual capability. Reflecting on my learnings over the past years, I can conclude that I have developed more patience, and my inclination towards sheer objectivity has reduced. I have indeed developed slight but noticeable acceptance towards subjectivity and abstraction. I have grown to realize that there will always be things that can never be measured or analyzed quantitatively.  

Today, almost three years later, my qualitative exposure surely helps me reflect on the quantitative work better. 

About the author:

Taab Ahmad Samad is currently a Ph.D. Student (Operations Management) from IIM Kashipur. He is currently working in the field of crowdsourced logistics. You can connect with him on LinkedIn.

Acquiring PPO in Flipkart by acing Flipkart Wired 4.0

Corporate competitions had always been a key area of focus in my MBA journey as they gave me a platform to take my classroom knowledge to the real world. Having worked in a fortune 500 organization I was always fascinated with the use of technology to elevate the human experience and hence E-Commerce was a domain of my interest. When Flipkart launched its flagship B-School competition Wired I pounced on the opportunity to apply my acquired management knowledge backed up with my technical skills to solve challenges faced by a giant like Flipkart. Since I was preparing for this competition for a long time (and well yes, the chance of scoring a PPO made it more lucrative), I was closely following the developments in the E-Commerce supply chain industry regularly. After understanding that how crucial E-Commerce had become to an average Indian in the times of COVID-induced lockdown, I wanted to dive deep into the sector and develop models on how E-Commerce can penetrate in a challenging country like ours.

The case competition required us to develop a model using which Flipkart could cater to the Tier 2 Indian customers with their day-to-day purchase needs. Understanding the importance of this problem statement in the context of Flipkart’s business situation and the national lockdown scenario, our team’s objective was to design an easy to implement supply chain model that could be easily replicated across the country within a time frame of 1 year. After clearing a series of rounds our team had the absolute delight to reach the national semifinals of this coveted competition. The very fact that this competition provided me with a platform to present my solutions and ideas to the top leadership of a dynamic organization like Flipkart tremendously added to my learning curve.

Having missed a chance to be a part of the National Finals, I was overwhelmed when I was called up for an interview with Flipkart in the form of a pre-placement interview (PPI). Well as Flipkart rightly claims “Ab har wish hogi poori” they certainly fulfilled my wish by providing me a chance to kick start my career with an organization like theirs. The interview process which had three rounds (a general aptitude test followed by 2 rounds of interviews) gave me enough opportunities to understand how I as an individual could contribute to Flipkart (technically and behaviorally). The interviewers were very keen on understanding what skill sets I bring to the table and what do I look for in terms of growth and opportunity. After those three rounds of virtual interactions, I finally got to experience that most sought-after day of MBA life when finally Flipkart offered me THE job!

The entire experience of participating in corporate competitions, learning bit by bit in each of them is a continuous journey. A journey that I believe is different for every individual. I cannot be thankful enough to be a part of an institute like IIM Kashipur where the entire atmosphere focuses on making you ready for real-world challenges. With competitions taking the center stage of academic focus it was my institute that played the pivotal role in grabbing my dream job opportunity.

About the author :
Pranav Bhardwaj is currently pursuing MBA from IIM Kashipur, with majors in Analytics and Marketing. He is a part of various student bodies like the The Consulting & Strategy Club, TEDx IIM Kashipur and Prep Cell. You can connect with him on LinkedIn.

Journey of winning ‘ICICI Bank Beat the Curve 2019’ – A step towards being 4th in D2C Competitive B schools 2021

From the beginning of the campus rounds, we focused on the aspect of bringing the youth’s (millennial) perspective to our case solution. For the competition, ICICI Bank Beat the Curve 2019, we chose to suggest an innovative product that will help attract people from 20 to 30 years of age towards the services of the Bank.  

The Challenge

We started by gathering a lot of primary data by getting responses from more than 1000 individuals of varied age groups and localities. The competition had three stages – a campus round, Stage 2 (semi-final), and a Final round. We spent close to 20 hours on the semi-final and the final rounds. The mentorship provided during the semi-final round was particularly very useful. There we understood what aspects of our solution we need to focus upon.

The Winning team – Team Ideates

There were 6 teams who made it to the Grand finale of the competition. They were from institutes like IIFT, FMS, JBIMS, IIM R, etc. During the presentations of the final round, we particularly felt that the team from JBIMS had put in a lot of research in building their solution. But we were confident about our solution as well as the presentation. Both Shubham and I were part of a winning team even in the first year of our MBA. The experience and learning during that competition certainly helped us here. We had confidence in each other. While preparing for the presentation, we helped each other out in finding faults critically and correcting each other. One of us was a late-night worker and the other was an early bird. Instead of quarreling over finding a common time to work, we took it as a plus point. We worked over this across time, building on each other’s work and just cross-checking before submitting the work when we were short on deadlines!

The moments that mattered

The panel of judges was from the leadership team at ICICI Bank. The competition had a unique and amazing judgment criterion. Along with the jury panel, the audience that comprised 50 senior-level executives of ICICI Bank, scored the different teams on 4 parameters. It was based on parameters like research depth, presentation quality, innovation of the solution, and the QnA round. One key learning in this competition was that the delivery of your presentation is as important as the hard work done while building the solution. Also, it is important that you look at your solution from the audience’s perspective. This helps you judge your own presentation before anyone else does! Well, there were two amazing moments for us. One was during the QnA, where we could justify a question put up by a senior executive sitting in the audience. Later, when we took our seats after the presentation, he came to us and praised our solution. That was really reassuring. The second was obviously during the declaration of results when our team, ‘Team Ideates from IIM Kashipur‘ was announced as the National Winners of ICICI Bank Beat The Curve 2019 and we were called on stage!

About the Author:
Chirag Dixit, MBA from Indian Institute of Management Kashipur and currently works with Bloomberg in their Financial Products team.
He has also been a part of the Placement Committee of the institute for both years and has worked in fostering relationship between the institute and industry on various levels. You can connect with him on LinkedIn.



IIM Kashipur emerges as a rising star in the Dare2Compete Awards 2021!

“Reach high, for stars lie hidden in you. Dream deep, for every dream precedes the goal.”  – Rabindranath Tagore 

Let’s start with the journey of a student who gets admission in a prestigious institute like an IIM after persistent preparation and trading off career opportunities. With dreams of flying higher and higher, this student has a feeling of great achievement and an equivalent responsibility to do justice with this success. He sees a glorifying career ahead in the upcoming two years and is highly enthusiastic about making the most of his MBA life. But how does he paint the canvas of these two years? Which hues does he select? This entirely depends on his strong will and determination towards learning clubbed with the opportunities and motivation offered by his institute. 

IIM Kashipur takes pride in playing a phenomenal role in the life of this student who enters the institute with the thirst for knowledge and the zeal to realise his dreams. During two years of post graduation, the institute instils in the students the feeling of “never settling down”. One of the integral parts of the culture is motivating the students to participate in case study competitions. IIM Kashipur faculties, the Placement Committee and Team Corpus leave no stones unturned to cultivate this culture of corporate and B-school competitions in the current and upcoming batches. They dedicatedly work round the year in this direction to bring the institute to unfathomable heights.

With these constant efforts, the institute has exceptionally performed in Dare2Compete (D2C) Awards 2021 securing 4th rank in D2C Competitive B-Schools 2021 Rankings.

Achieving this milestone, IIM Kashipur has joined the league of other older prestigious institutions like IIFT, IIM Ahmedabad, IIM Bangalore and IIM Kozhikode that appeared in the top 5 ranks. Not only this, IIM Kashipur has become the only 2nd generation IIM to have made its place in the top 10 ranks.  

This remarkable success is a reward for the diligence and determination of the students. Each and every honest participation and winning has contributed to the achievement. Throughout the year, students of both the years have meticulously planned for the competition season burning the midnight oil in the quest for their holistic development. Team Corpus created Corpus Community – a student group that dedicatedly works together to discuss and ace in the case study competitions. This community boosts collaboration among the students and with the resources as well as mentorship provided by them, it helps in optimising the hard work of all the participants. This creates a competitive environment and acts as a continuous source of motivation for the students. Also, viewing it from the other lens, Dare2Compete provides an excellent platform to the students to hone their skills in various domains by giving them a chance to participate in real-life case study competitions floated by eminent institutes and reputed companies. Hence, there is an air of unstoppable learning and fuelling the competitive spirit surrounding the student community. 

The enthusiasm of the students can be reflected in the level of participation in a large number of competitions ranging from B-school to corporate. With these sincere initiatives, IIM Kashipur has got 8 National Winners, 5 National Runners up, 4 National 2nd Runners up, 24 National Finalists and 12 Semi-Finalists throughout the competition season who have bagged positions in reputed competitions like L’Oréal Sustainability Challenge, Xiaomi Mi Summit 2.0, Virtusa Business Cipher Challenge, CarEasy Spark, TVS Credit Analytics challenge, and many more. These competitions encompass different domains of management and thereby help the students to develop various skills like problem-solving, teamwork, creative thinking, fact-finding, and mental agility, especially relevant for employability.

Also, it is a moment of pride for the institute to see 9 Champions from the institute who have secured positions in the Top 100 Dare2Compete Competitive Leaders 2021. Shubham Vispute, Rahul Choudhary, Deepansh Goyal, Prajwal Vaichalkar, G Prashanth, Vishesh Jain, Himanshu Singasene, Abhinav Yadav and Udit Arunav have exhibited a commendable performance and their relentless hard work has helped the institute in accomplishing new heights. 

IIM Kashipur is soon going to complete its 10 glorious years of establishment. This achievement has added to the magnificence of the celebration and has entrusted bigger responsibilities upon the fraternity.

This recognition is just the beginning of an extraordinary journey that will go on and on adding colourful feathers to the hat of laurels!

Journey in IIM Kashipur

“Leadership and learning are indispensable to each other.John F. Kennedy 

I came across this quote by Kennedy as a part of a case study in our management curriculum. At that point in time, this quote did not mean as much as it does now, as I retrospect on what has been the most crucial learning curve in my life. 

Readers of this article would associate with terms like ‘rigor‘, ‘job opportunities‘, and ‘return on investment‘ with an MBA degree. While all these terms are equally important, there is so much more propagated here in the Red-brick campus of IIM Kashipur that leave an everlasting impact in honing your skills and abilities, all the while accelerating your growth as a manager worthy of the title of an MBA.

Speaking from experience, the culture here at IIM Kashipur is structured in a manner to promote hands-on learning through the functioning of various student bodies, which has helped many students like me to improve our soft skills, learn how to delegate and prioritize pending work, how to respect deadlines and most importantly, how to push the boundaries of what is considered impossible through sheer hard work, resilience, and dedication. 

Yes, at times things can get difficult, but here at IIM Kashipur, we believe that it is our network that defines our net worth. It is this thought process that has enabled me to meet different kinds of people, learn their ways of handling difficulties associated with different problem statements, and ultimately pull through, no matter the novelty of the challenge.  

My greatest learning at IIM Kashipur has been to not get overawed by what all needs to be done in a short period, that too at a breakneck speed. Yes, it involves a mountain of work with hurdles aplenty, but when you surmount the peak, the view is beautiful from atop. 

These invaluable additions to my skillset lead me to believe that my two years worth investment at IIM Kashipur will remain etched in my mind as a bunch of happy memories, replete with learnings, challenges, and victories galore. 

About the Author:
Sahil Sondhi is currently pursuing MBA from IIM Kashipur, with majors in Marketing and Analytics. He is a part of various student bodies like the OYM-The Marketing Club and Team Insite-Admissions Support Body. He is fond of playing the guitar, going for long drives and reading novels in his spare time. You can connect with him on LinkedIn

Probable impact of US Elections on global supply chain post-Covid

As the entire world went into the first-ever lockdown of the century, all except the medical staff were confined to their homes. This ensured that everyone stays safe, but every sector of business went into a state of despicableness.

Reason? SUPPLY CHAIN DISRUPTION!

Such is the power of supply chain network especially in this era of Globalization! Any wrong decision can lead to a world full of chaos and violence.

Fortunately for us, the world leaders ensured there was enough supply of essentials required for survival. And now that Covid-19 vaccine shots are being administered, the hopes of Supply chain normalcy seem to be cropping up.

However, one major event that took place towards the fag end of 2020 that could potentially change the way International trade and supply chain worked until now was the U.S. Elections.

As I write this article, Joe Biden is the president-elect and what could it mean to the Supply chain?

During the Presidential debate, Joe Biden emphasized negotiating with the Pacific nations to restructure the international trading rules in order to reduce dependence on China. This would help other Asian & Arabian Countries to improve their economy as they would have the liberty to export more with limited competition from China.

Joe Biden is particularly wanting to support the United States-Mexico-Canada Agreement (USMCA) so that the United Nations’ powers in terms of framing laws for international Supply Chain & International Trade are strengthened. The manufacturing sector in this region will see a boost as North American Countries are given incentives for Automobile manufacturing, especially that of Trucks & cars. With strong agricultural laws, the farmers will get access to the markets in all three countries.

Manufacturers in the US who offshore production and sell the products or services back in the US, have to pay a heart wrenching cumulative tax of 30.8%, to solve this issue. Biden’s policy focuses on local manufacturing, he promised to direct $400 billion in federal procurement towards manufacturing and emphasized on Made in America label.

The federal department many times in the past has claimed that manufacturing certain products is not feasible in America and that has given a huge market to other countries. Biden, while addressing this point, stressed using IT Technology to publish it on a specific website built for the same purpose. Once such requirements are posted on this website, tenders can try their hands on producing such products thus getting eligible for the 10% advance tax credit policy.

During almost all his campaign rallies, Biden mentioned the need to directly support small manufacturers, especially those headed by women, this would ensure the creation of jobs and keep the national per capita income increasing. Biden said he would direct $300 billion towards R&D of electric vehicle technology, 5G, Artificial Intelligence – this ensures procurement of parts required for the same and to ensure smooth supply chain, he promised to amend Custom laws and make it easier to buy.

He said & I quote “While medical supplies and equipment are our most pressing and urgent needs, US supply chain risks are not limited to these items. The US needs to close supply chain vulnerabilities across a range of critical products on which the US is dangerously dependent on foreign suppliers.” This prepares the U.S to be ready for a probable 2nd wave of Covid-19 & any kind of crisis in the future.

Biden spoke about how supply chains laws and the federal Government’s purchasing power can ensure smooth manufacturing of critical parts used in the United States’ defence systems. In this way, not just the end product but also the supply chain of manufacturers receives a boost. Biden mentioned the need to be environment friendly and has pledged to utilize the $500 Billion federal government spends on Zero Emission & 100% clean energy vehicles. This would again create more manufacturing & thus more jobs & thus a bigger growth in the US economy. He also mentioned he would bring in stricter laws that would govern the readiness of environment-friendly technologies in all infrastructure projects, thus, giving opportunities for renewable energy innovation & thus impacting supply chain networks.

All in all, most of Biden’s policies focus on reducing the dependence on China for products & supply chain services. This would only help America as they are moving towards becoming leaders in Mass production, Supply Chain services.

We’ll have to wait & watch how the American labour class reacts to this, since the labour costs are higher in America and the Chinese workforce is almost 5 times larger than in the U.S, the next 4 years is expected to witness intense geopolitical tensions. All the countries that are in Joe Biden’s good books might receive some goodies. In the Post Covid-19 era, America might overpower China on these lines & India must continue to maintain cordial relations with them by being diplomatic on issues & at the same time strive hard to increase in-house production of goods & services through schemes like Atmanirbhar Bharat.

Sumanth S (MBA Batch 2020–22)

The irrationality of human behaviour in the Finance world

A career in MBA Finance is one of the lucrative and sought-after opportunities in the business world. But the irony in India is that when we go back into a student’s education journey, commerce subject which deals with all the basic nuances of finance & accounting is still not preferred as the desired subject as compared with science stream.

We often tend to confuse Finance with just accounting and calculations. But, the application of real finance is not just about numbers and calculations. It’s much more beyond that. It requires you to have: 

  • Strong calculative abilities of Commerce
  •  Analytical thinking process of Science 
  •  And behavioral understanding of Humanities 

This third aspect of finance which is been ignored for decades but recently is becoming one of the hot topics for researchers. Due to the complexity and irrationality of human behaviour, it becomes difficult to take this factor into consideration for organized analysis. But this factor builds up the basis of most of the previous innovations in finance. Behavioural finance is like salvation to mathematical finance just like Friction is to Newton’s forces. For example, the birth of one of the major financial instruments in history is Insurance which is a result of irrational human behaviour explained by Kahneman and Tversky in terms of Prospect Theory.

When the fear of loss and uncertainties prevail, insurances emerged as a strong instrument for risk management. Thus, encouraging people to take risks and invest, leading to an increase in the liquidity of markets. It clearly explains human behaviour in cases of profits and losses.

Prospect Theory of Finances

The Prospect Theory graph clearly depicts that when we lose Rs. 100, our pain would be much more in comparison to the happiness in gaining Rs. 100. Thus, the magnitude of happiness and pain doesn’t vary linearly with the amount of money.

On the basis of this human behaviour, insurance policies proved to be very successful in monetizing the irrationality of human behaviour. There are various other such phenomena in human behaviour like social contagion, cognitive dissonance, anchoring, overconfidence, etc. which answer the events like the randomness of the stock market, people’s decisions and other such cases of the finance world.

Out of the 74% literacy rate in India, only 24% have finance literacy which is one of the major factors responsible for the economy of any nation. When people lack the ability to manage their own personal finances, how can we expect a nation to have a strong economy? Many people are still unaware of the power of compounding, time value of money, credit opportunities, etc. to make use of it for their improvement of financial status. Thus, it becomes very necessary for financial managers, strategists, and policymakers to discover innovative ways to bridge this gap. It is high time that we move away from the narrow approaches of finance and introduce new frameworks in the correlation between accounting and behavioural finance which will include markets, people and their behaviour.

There lies a lot of opportunities in the domain of financial risk management using behavioural finance. Though the implication of this concept has various challenges due to randomness and complexity yet it can be accomplished when the researchers and corporate leaders will work together in the right direction. We are heading towards a more complex world where simple answers are not suitable anymore. We will have to develop an ecosystem to sustain and grow in future.

One can refer to works of researchers like Professor Robert Shiller, Daniel Crosby, Kahneman and Tversky, etc for more understanding on the subject and topic of behavioural finance. This is a potential field waiting to get explored to its core. A lot of new developments can be seen in this direction in the upcoming time.

Raksha Agrawal (MBA Batch 2020–22)

Demystifying Stock Market and Economics

Few lingering questions which every common investor has in his mind are how can the stock markets and the economy growth move in the opposite direction? Will the market crash due to poor economic growth anytime?

While the Covid-19 pandemic forced all economic activities to a total halt, pushing major economies into a recession, the markets around the world on the other hand had a mixed response showing a steep fall during the initial pandemic breakout and steadily recovering over time to race all-time highs in Indian and US exchanges.

The empirical analysis of the annual GDP growth rate and the historical market performance of leading stock exchange indices of major countries such as USA, Japan, China, and India respectively over the decade show little correlation between the growth of countries’ GDP and performance of stock markets.

Japan faced one of the worst decades of economic growth battling recession and unemployment having a maximum GDP growth rate of a mere 2% in the last decade. While Nikki_225, the benchmark index of the Tokyo Stock Exchange had lost more than 60% of its value over the decade, sharp falls in the index during this period was the result of external events such as Fukushima’s nuclear crisis and the European Sovereign Debt crisis in 2011. The rally in 2013 which surged more than 70% due to the weakening of Yen and expansive economic policy was short-lived as the market plunged by ~60% at the end of 2013 due to the weak GDP growth of China and quantitative easing of US Federal Reserve during the same period.

Though China’s economic growth declined gradually from 10% to 6% over the decade, it was still having the highest growth rate among the developing countries. The Shanghai composite index grew a mere 16% over the decade despite the country having the highest GDP growth among the major economies. The Chinese exchange majorly influenced by the domestic investors who were largely inexperienced and traded using borrowed capital persuaded by the Chinese state-owned media during the period of 2015, saw a bubble in the market with the index soaring more than 150% over the previous year despite the country having poor manufacturing and economic growth. However, the bubble was short-lived and consequently busted as it lost 40% of the value in the month of June and continue to fall subsequently due to the devaluation of Yen.

The turbulence of Chinese stock markets combined with slowing growth of China’s GDP, falling oil prices, and weakening of the Japanese Yen against the US dollar and Brexit event resulted in a global sell-out during the period of 2015–16 which impacted all major stock markets around the world including US and India. 

Despite having low GDP growth of around 2% over the decade, US markets have continued to grow over where the leading indices such as Dow Jones Industrial average, S&P 500 and NASDAQ Composite have yielded returns of over 200% primarily driven by innovation and technology. FAANG companies due to the power of the platform model, network effects have had a compounded annual return of more than 20% individually over the decade. Markets also saw an emergence of new business models and sunshine sectors such as electric vehicles, e-commerce, AI & Cloud computing, alternative energy, OTT etc which continue to have positive investor sentiments.

Globalisation and foreign trade are also important factors to consider why the performance of the Indian stock markets has little correlation with economic growth as the manufacturing sector contributes only ~15% of total GDP compared to China and Japan which has ~ 30% and ~20% respectively. The major sectors such as IT, Pharma, Breweries and Distilleries, Precious Metals, Automobiles are export-oriented which relies on the US and the global economy. Sectors such as Refinery, Paint, Aviation are highly dependent on the price of crude oil as India is one of the major importers.

FII also has a significant factor to play in controlling the direction of the stock markets. Indian equities saw a record inflow of $23 Bn (Rs. 1.6 Lakh Crore) in 2020 as the global investors were optimistic about the strong economic recovery, vaccine progress and low mortality of Covid-19 in India compared to western countries. This liquidity provided by FII continues to drive the market sentiments forward leading the prices to soar all-time high across multiple sectors.

The performance of the stock markets does not rely only on the economic growth of the country. Other factors such as the nature of its constituents, the impact of FII, technology & innovation and global events can also impact the markets. Markets can be both forward-looking and reactive to economic events and will correct themselves in the event of any bubble during times of weak economic growth.

Arjun R. (MBA Batch 2020–22)