Namaste, Sat Sri Akaal, and Salaam. 🫡

Happy morning folks. Hope all is well.

Today we’re diving into -
- the scary rise of retail options trading in India,
- quick-commerce and it’s dopamine-driven growth,
- and Harley Davidson’s healthy demand problem.

Our read time today is 4 minutes and 55 seconds - faster than Orry goes through new phone cases…

Let's dive in. 👇

Market Vibe Check

20-somethings start YOLOing into options… 🙈

TLDR -
- Indian retail traders lost $5.4bn on options in the last year.
- This came out to an average loss of $1.4k/trader, which is pretty large compared to India’s GDP per capita of $2.5k
- Options trading is surging, with over 85.3b contracts exchanging hands last year - 8X the same number in the US

When they say that the stock market is satta bazaar, this is what they mean…

While India’s rapidly expanding middle class has long-stashed it’s savings in ‘boring’ assets like gold and fixed deposits, an options trading boom is taking Young India by storm.

Options trading volume on Indian markets hit over 85 billion unique contracts last year, which is almost 8X the amount in the US.

Around 45% of this volume comes from retail traders, or in other words, your average Joe with a brokerage account. Institutions and conglomerates make up a good chunk of the remaining 55% as part of their routine hedging activities.

When you look closer at the behavior of the retail segment though, the first thing that pops out is the average time held - which in our case is less than 30 minutes! This is less investing and more gambling, and the numbers say so too.

Retail traders lost over $5.4 billion collectively last year, and the average loss per trader came to ~$1.4k, which is no small number for a country with a GDP per capita of ~$2.5k.

There’s a lot of people to blame here, but one group of people that keeps coming up is finfluencers - short form for finance influencers.

These people have the same business model that your average ‘dropshipping guru’ does -
- portray a dream life on social media (private jets, lambos, dripped out in designer)
- sell a course showing a get-rich-quick scheme
- tie-up with brokers to get commissions when people sign up using their link
- wait for the money to start rolling in

SEBI was intent on bringing the hammer down on these bad actors, but it’ll be quite a while before we see some serious action being taken. Crazy stuff.

Quick-commerce starts making inroads beyond Tier-1 cities. 🛵

TLDR -
- Quick-commerce is catching on very well with Indian consumers - something about ‘paying for convenience’ is working very well.
- Indian players have managed to make the model work in a way that foreign markets simply can’t handle, and it’s probably because of scale.
- Retention rates are also insane, with over 45% of customers repeatedly ordering 30-40 times a month.

While the trend of 15-min delivery fades across the developed world, India seems to be a striking outlier of a country where this model actually works.

The biggest “quick-commerce” players - Blinkit, Swiggy, and Zepto are reaching an estimated 25 million households, who usually spend an average of 4,000 to 5,000 rupees ($48 to $60) per month.

Most regular customers have crazy high retention, with mean repeat rates weighing in around 45%. This screams to the world that “people will pay for convenience,” because the numbers definitely say so.

While all this is great, profitability is still top-of-mind for these companies’ investors. Zomato’s Blinkit is hunting for breakeven by first quarter of 2025, while Zepto has set its sights on EBITDA profitability as early as Q4 of this year.

Swiggy is also focusing on profitability, with the parent company indicating that the peak of investments in the business is now behind them - and they can now spend their time cutting costs and getting lean.

Harley Davidson finds ‘too much demand’ in India. 🙈

TLDR -
- Harley Davidson is racing to keep up with their Indian orders.
- 26,000 customers have fully paid them in cash for a bike that’s set to be produced.
- 65% of these 26k customers opted for the 2.7L-priced highest end model.

2 years back, Harley-Davidson left India because of “low demand” and “sluggish growth”.

Yesterday, they were forced to stop orders for their new India-focused bike because there was more interest than they could possibly handle.

Long story short -

• Hero Motocorp teamed up with Harley to create a bike for the Indian market

• It’s gonna be a Harley-branded, Hero manufactured vehicle

• Pricing is gonna still be premium (gotta stay Harley)

In the last month, they’ve received just under 26,000 customers who have paid fully in cash for their new Harleys.

The crazier part - of these 26,000, 65% of the orders are for the highest-end model - weighing in at 2.7L INR ($3.3k).

This tells us two big things.

1 - You can build a multimillion dollar business by servicing India’s 1%

There are tons of brands out there who’ve managed to carve themselves a niche by exclusively pricing themselves out of reach for 99% of the market.

India isn’t a ‘poor’ country per se - there’s a very large, very affluent chunk of the population hidden behind a low median per capita income.

2 - There is still CRAZY appetite for luxury in India

‘New money’ is very hot to the market, and it attracts flashy, cool, and chic-looking products.

Almost every big luxury retailer is ramping up their locations in India, with resale markets ticking up in value by the day.

Insane…

In other news… ☕

Abu Dhabi’s sovereign wealth fund boosts it’s private credit bets (BBG)

US inflation charges higher to 3.2% (FT)

Uber CEO drops plans to increase access to EVs (TC)

T8 goes to jail again (CNN)

Electric automakers start selling customer driving data to insurance companies (NYT)

And that’s the tea the chai for today.

Thanks for reading, and we hope you enjoyed it.

Lots of ❤️,

Team CC