Don't Be Mediocre!

Ever seen a ball falling, hit the ground, and bounce up a little, before it stops?

This actually happens in the stock market too, and it is known as Dead Cat Bounce. After a huge drop, a few stocks or indices like Nifty 50, tend to go up a little for a short span. This leads people to believe that things are improving. However, just like the ball, they continue to fall drastically, as the major trend still remains downward.

But here’s the million-dollar question: what’s really going on?

After a significant drop, some people believe that the worst is over and start buying stocks again. This causes prices to rise temporarily, but since nothing has fundamentally improved, the bounce is short-lived.

Recently, something similar happened with the Nifty 50, which analysts termed a "Dead Cat Bounce."

The index had been trending downward for a while, and on November 5, it experienced a slight uptick after hitting a low. Some investors bought it in the hope of a recovery, which caused this small rise. However, experts believe this increase won’t last because the trend remains downward. If the Nifty 50 cannot maintain levels above 24,500, it could start falling again.

Key Takeaway

Spotting such patterns can help investors understand short-term market changes and make more informed decisions, as the market is always unpredictable.

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MEME OF THE WEEK:

Market Kya Keh Raha Hai, Sir?

This week, something big happened that caught people’s eye and they started posting about their emotions and experiences. It was the closing of Vistara, a beloved airline known for its premium service. Yes, you read that right, almost after a decade of serving passengers with excellent hospitality, Vistara has merged with Air India.

So, why did Tata Group, a company known for its thoughtful decisions, decide to shut down Vistara? Let’s break it down.

A Look Back at Vistara’s Journey

Let’s rewind a little. Vistara started in 2015 as a joint venture between Tata Sons and Singapore Airlines. The goal was clear : to offer a premium flying experience to its passengers. Soon Vistara became a favorite for those who wanted a luxury flying experience.

But Tata Group’s connection with airlines dates back to 1932, when J.R.D. Tata (also known as the Father of Indian Aviation) launched Tata Airlines, which later became Air India and was sold to the Government of India due to aviation norms at that time. Tata always had a vision to bring world-class service to India’s skies, and the vision continues even today.

Fast forward to 2022; Tata Group made another major move, and they bought Air India back from the government. But why did the government sell such a legacy brand? Well, Air India was facing heavy losses of $2.6 million every day, and with that debt was piling up too. This money crunch caused operational inefficiencies in Air India. Privatization was seen as the only way to revive the airline and reduce the financial burden on taxpayers.

But hold on, the question still remains the same: why on earth did the Tatas discontinue such a legacy brand like Vistara? Is there some other picture behind the scenes? Let’s dive into it!

Challenges in the Airline Business

Now, let’s discuss India’s aviation industry, which is popularly known as the "graveyard of airlines" because of its challenges.

Vistara Brand Merges with Air India, Strategic Move?

• High operational costs: Airlines have to deal with fluctuating fuel prices, maintenance costs, airport fees, and salaries. Adding up all of those, operating two premium airlines would require double the costs.

• Competition: India’s aviation market is growing, but it’s also becoming increasingly competitive with both low-cost carriers and other full-service airlines. Vistara’s premium positioning was great, but Air India’s larger fleet and extensive network are better equipped to handle competition.

• Regulatory Challenges: The aviation industry is tightly regulated, with policies around fares, fleet size, and operations constantly changing. Merging the two airlines helps them better adapt to these changes and focus on growth instead of constant regulatory hurdles.

• Singapore Airlines’ Role: Singapore Airlines owned 49% of Vistara, and they agreed to the merger because it would help in creating a bigger and unified airline business.

The Aviation Boom in India

In recent years, the demand for air travel in India has been skyrocketing, and due to this, India is expected to become the largest air passenger market in the world by 2030. We’ve already surpassed the UK and are now catching up with China and the US.

Source: Statistica

• In 2013-14, only 60 million people traveled by air within the country, as flying was considered a luxury. By 2023, this number jumped to 145 million, showing how much more common air travel has become. By 2030, the number of domestic air passengers is expected to reach 300 million, driven by a growing middle class and increasing preference for air travel.

• The number of airports has also grown significantly. In 2014, India had just 74 operational airports, which limited connectivity, especially in smaller cities. By 2024, this figure has more than doubled to 157, making air travel easier for people in Tier-2 and Tier-3 cities. Looking ahead, the government aims to have 350-400 airports by 2047, ensuring even better regional connectivity and making flying a part of everyday life for millions.

• Fleet size has also kept pace with this growth. In 2014, Indian airlines had 400 aircraft, which grew to 720 by 2023. Airlines plan to add 1,400 more planes in the next five years. Interestingly, as per a report, over the next two decades, the total fleet size is expected to exceed 3,800 aircraft, solidifying India’s place as one of the fastest-growing aviation markets in the world.

This progress highlights how thoughtful planning and sustained efforts are revolutionizing India’s aviation industry.

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What More Caught My Eye:

1. 9 executives too see the biggest ESOP gains from Swiggy.

2. Rising speciality hospitals in India.

3. How did India help a Japanese billionaire who was hit by China?

4. Impact of rising stagflation.

5. Bain Capital is in talks with Mannapuram Finance.

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Recommendations:

In this digital era, it usually becomes very hard to organize our schedule and take charge of our time. Building a Second Brain is just the right self-help book that would help you fix your messed-up routines and improve your productivity. The book also helps in creating a practical mindset, which is much required for this age.

My next recommendation is a video that talks about the rise of Bank of America. It explores the strategies, bold moves, and even some controversial practices that shaped its journey to become a financial giant.

That's it for this week!

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Thanks for reading this weekend’s newsletter! I’d love to know what you think, so feel free to drop your comments below. Your feedback helps us improve!

Song of the Week:

This is Parth Verma,
Signing off.

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