Technical Analysis of Indian Equities by Nooresh


Flipkart does 600 crores sales on Big Billion Day. HDFC Bank should make some money !!

Everybody has been shouting, cursing, writing about the The Big Billion Day Sale of Flipkart.


So let me add some more bullshit on this πŸ™‚ Also after a 5 day weekend its anyways tough to focus on markets right away πŸ™‚


I believe a lot of us have HDFC Bank Credit Cards. Every now and then you see cash back offers/discounts and so on to make you spend via the credit cards.


For the last few years they also have a 3 month payment holiday on retail transactions specifically over-lapping the festival/spending season.


Even Parag Parikh a seasoned investor wants to spend in this season. A nice article by him -  This season is wasteful ( but fun) 


This article by Livemint gives a good de-jargonizes the Payment Holiday Concept– Link


As a loyal HDFC Bank customer i have been using this facility to get an ego trip by redeeming some gifts and money from the bank.


How do i and other customers make money ?


-> Make all my purchases through credit card instead of netbanking.

-> Load up on a lot of redeemable reward points.

-> Keep a Fixed Deposit for the amount payable for 1-3 months.

-> Make the payment on time.

-> Redeem the reward points for some good gifts. ( If only they would add better things in the rewards catalogue )


How does the Bank make money ?


-> Customer makes a lot of purchases online with the discounts/cash back by the bank and even with Festival sales.

-> Customer forgets the payment.

-> Customer does not have a cash flow to make payments. Makes minimum payments.

-> Customer has no idea the interest rate is 3.25% per month.

-> Customer has some EMI payments which are not under the scheme.


There could be more in the terms and conditions – A older link to the terms 


As we all know Flipkart loses money – Flipkart 2013 loss at 281 crores but HDFC Bank has a better chance of making profits if people use their credit card.


All the ecommerce companies are working on the same thought process that we Indians are a sucker for Discounts. We love to bargain and get an ego trip :). I have never seen a day when there is no sale on the ecommerce sites. At least the normal retailers keep sales only in festivals, end of season.


I am also an Indian and a sucker for discount buying. So i go to Croma check the laptop, come home and order it on flipkart/amazon or even the product website. ( i recently did so for an Intel Laptop for more than a 10-15% lower price online).


A lot of investors keep doing the same stuff in markets. Keep looking for discounts just by price and not by real value or risk.  A stock down from 100 to 50 is cheaper than one which has gone from 100 to 150 irrespective of what the company is πŸ™‚ . This i believe is a good way to lose money ( Aur kitna ghirega strategy)


Now how does Flipkart lose money and HDFC Bank make money ?


-> A good customer like me can make some money in the holiday period but the Annual Interest Rate for FDs is 8-9%.

-> HDFC Bank charges a nice 39% per annum , plus the late fee , plus compounding and so on.

-> Also i believe HDFC Bank makes some money from the vendors as payments or not instant but over weeks/months ( if you have the time do some work on it )


So even HDFC does not mind me skimming some of that money but all it needs is a few customers to forget or miss the payment.

Also they would love the flipkart/amazon/snapdeals to have such 600 crore days as HDFC Bank has a 20-25% market share in credit cards. Every such sale increases HDFC Banks chances of making money.


People can write all shit about how Venture Capitalists / P-E Funds and other people funding this ecommerce websites are stupid, bla bla. I believe its good for all us end users.


Some of us would learn how to spend a lot of money on bullshit and help grow the economy or will learn how to value things.


Bottomline –


I love #HDFC Bank for giving me discounts/cash backs/ payment holidays.

I love #flipkart, #amazon, #Myntra, #Jabong, #snapdeal and every ecommerce website giving discounts and dropping my stuff home nicely packed with no extra charge.

I love the #VCs.#P-Es, #Angels who fund these e-commerce companies and hope they also make a lot of money in at least a few of them so they keep doing some bullshit consistently.


( The bold shows my love )

Article by Nooresh Merani

Nooresh has written 2665 articles.

You can follow Nooresh Tech on Facebook and Twitter here.

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