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India’s sovereign gold bond (SGB) scheme – once touted as an innovative solution to curb gold imports – has come under sharp criticism from investor and academic Sanjay Bakshi, popularly known as Fundoo Professor. Taking to X, Bakshi called the scheme “one of the dumbest government borrowing programs in the world,” citing the high effective cost of borrowing and poor risk management that he believes was baked into its design.“The effective cost of borrowing is turning out to be more than 19% per annum,” he wrote, adding that “the individuals who designed this instrument should receive the award for creating one of the dumbest government borrowing programs in the world.”Bakshi drew parallels to the Foreign Currency Convertible Bonds (FCCBs) issued by Indian companies in 2008, noting how those issuers suffered massive losses when “the INR’s depreciation and stock prices collapsing” left them unable to hedge currency risk.He highlighted that while defaults are unlikely in the case of SGBs since “the issuer can print money,” the episode still represents “a great example of total ignorance of basic risk management.”This was in response to a separate post by Ritesh Jain, Founder of Pinetree, which explained why the scheme was conceived in the first place.He recalled that back in 2015, India’s trade deficit was rising as households were buying physical gold, putting pressure on the rupee.“Somebody in the finance ministry… decided to create a synthetic instrument to satiate the Indian appetite for gold via a structured product which was only backed by the confidence of Indian govt but did not have real gold to back the bond,” Jain said, describing how Indian households were effectively “going long on gold and on other hand Indian govt was going naked short on gold.”Bakshi’s post sparked reactions from market watchers. One user called it “FCCB 2008 déjà vu,” pointing out that “now govt never hedged GOLD risk. Effective 19% borrowing cost is INSANE for a sovereign instrument meant to reduce imports.”He added that “SGBs turned into a free call option for households, a bleeding liability for state” and warned that “unlike corporations in 2008, the government won’t default, but TAXPAYERS eat the loss… By not backing with physical metal, govt ended naked short. Now bond prices quadruple, fiscal cost balloons.”(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

Motilal Oswal Financial Services has initiated coverage on National Securities Depository Limited (NSDL) with a ‘Neutral’ rating and a 12-month target price (TP) of Rs 1,200, implying a potential downside of around 8% from current levels. This target is based on a valuation of approximately 45 times estimated FY28 earnings per share (P/E ratio). The brokerage firm believes that while NSDL operates in a favorable industry with strong fundamentals, its current stock price already reflects most of the positives.According to the report, NSDL is expected to deliver a compound annual growth rate (CAGR) of 5% in revenue, 14% in EBITDA, and 15% in net profit (PAT) over FY2025–28. Operating in a duopoly market with CDSL, NSDL enjoys superior pricing power and a strong presence in high-value accounts. Despite this, Motilal Oswal believes the stock is fairly valued and that further upside may be limited in the short to medium term.The broader opportunity for India’s capital markets remains significant, driven by the ongoing financialization of savings and relatively low demat penetration in India — currently around 15%, compared to over 60% in the United States. NSDL, being the first and one of only two depositories in the country, is uniquely positioned to benefit from this long-term structural shift. The company stands to gain from both the increasing participation of retail investors and the growing custody value from institutional and corporate accounts.NSDL commands a dominant position in the institutional, custodian, and large corporate segment, leading to revenue per active account of approximately Rs 157 in FY25 — nearly three times higher than its peer, CDSL. Furthermore, NSDL services over 70% of India’s unlisted corporates that are mandated to dematerialize their shares. This ensures a steady stream of recurring issuer charges and creates a sticky business model, as clients rarely migrate once integrated into the depository system. With the unlisted market in India expanding steadily, this segment offers substantial long-term growth potential.To further strengthen its retail footprint, NSDL has increased its focus on investor engagement and digital onboarding, particularly in Tier-2 and Tier-3 cities, through strategic partnerships with fintech brokers. These initiatives have begun to bear fruit, with NSDL’s share of new demat account openings rising from 10% in August 2024 to 17% in August 2025, reflecting growing traction among retail investors.Price range and market debutNSDL made its stock market debut on August 6, 2025, at an issue price of Rs 800 per share. The stock opened at a premium of Rs 880 and quickly climbed to an intraday high of Rs 943 on its listing day, reflecting strong investor enthusiasm. Since then, it has experienced a broad trading range, with a 52-week low of Rs 880 and a 52-week high of Rs 1,425, highlighting continued interest from the market.As of Wednesday at 11:20 AM, NSDL shares were trading flat at Rs 1,299.90, showing minimal price movement during the session. At this level, the company’s market capitalization stood at Rs 25,999 crore.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

The Federal Reserve may be about to stimulate an economy growing at more than 3%, where stocks are at record highs and inflation remains above target. The problem is that no one knows for sure how far the U.S. central bank can go before it trips that wire. Putting aside the intense political pressure, the fundamental arguments for Chair Jerome Powell to resume Fed rate cuts this week rest on the softening U.S. jobs market and ongoing problems with housing affordability, as well as concerns that the economy could head south by this time next year. The extent of the jobs trouble is debatable, however, due to a halt to immigration and the 'weakness' may have as much to do with labor supply as demand. The housing market also remains slightly distorted because the extraordinary drop in mortgage rates during the COVID-19 pandemic is making homeowners loath to sell. On the flipside, U.S. retail sales are still booming at an annual rate of 5%, the stock market has roared to record highs, broad financial conditions are the loosest in three years and inflation continues to run hot above target - whatever one assumes the enduring impact of trade tariffs. Given this mixed bag, the Fed's best course of action may be to shift to neutral - a rate that neither spurs nor inhibits the economy. But, as ever, determining precisely where that holy grail may be is a complex and wonky task. By some measures, a quarter-point cut this week would already push the Fed close to or even below neutral territory. A 50-basis-points (bps) move today, or the second 25-bps move in October that is currently 80% priced into markets, could already move the Fed into stimulative mode, raising questions about whether White House demands are already trumping traditional Fed assessments. If only it were that simple. SPECIAL GUEST STAR A long-standing Fed model for determining the notoriously elusive neutral real rate - the Laubach-Williams gauge jointly developed by New York Fed boss John Williams - estimates this figure, dubbed 'R-star', is currently 1.37%. If the midpoint of the Fed target range were to fall 25 bps to 4.125% later today, then the prevailing real funds rate based on the most recent core PCE annual inflation rate from July would fall to 1.225% - so mildly prodding but not super stimulative. However, if consensus forecasts for core PCE in August play out at 2.7%, then the resulting real funds rate would remain a drag at 1.425%, reinforcing calls for more cuts. But doves point to a revised R-star model from 2023 that is adjusted for pandemic-related supply distortions. It puts the neutral rate as low as 0.85%. Indeed, Williams himself recently suggested 'growth-adjusted' R-star may still be stuck around pre-COVID levels as low as 0.5%. Assuming the revised Holston-Laubach-Williams estimate is the more correct reading, then policy would still be restrictive by at least 50 bps following a quarter cut today - and two more similar cuts by year-end would only then bring it back to neutral. What's more, if something close to the Fed policymakers' median core PCE forecast of 2.2% for next year pans out, then a further 50 bps of easing would be warranted in 2026 just to remain neutral. In total then, some 125 bps of cuts through the end of next year would likely do the trick. Markets are priced for 150 bps, suggesting they assume the Fed will move into a stimulative mode by then. So two models, and two very different narratives. FED PLOTLINES So much for the models. Watching what Fed policymakers themselves think may be more important - not least with changing personnel on the central bank's board. With the caveat that the Fed's 'dot plot' predictions will be updated later today, the standing view from June's forecasts shows that Fed officials anticipated two cuts this year. Their equivalent 'neutral' long-term policy rate is 3%, translating into a 1% 'R-star' estimate. Much of the focus on Wednesday will be on whether the median projection goes to three cuts from two this year - as markets are not yet fully priced for that shift. But as it stands, a 1% long-term real neutral policy rate assessment is higher than the HLW model and that part of dot plot may well have an impact on market thinking today too. With politics weighing heavily over the central bank, all this 'science' may end up being beside the point. President Donald Trump's eye-popping demand for 1% policy rates suggests he has little time for models. Either that or he really meant to say 1% real rates, which would instead mean he thinks rates should really move quickly to 3.7%. If that were true, then perhaps he's not so far off from market pricing or the Fed's direction of travel - but that's a very big "if".The opinions expressed here are those of the author, a columnist for Reuters