Week ending Dec 17, 2023


Sensex rallied close to 6000 points in a month crosses 71000, on closing Friday, driven by falling rate of inflation, strong buying by foreign funds, a relatively stable rupee, sliding crude oil prices an robust corporate earnings by most of the large companies. Latest trigger was from Fed about possibility of rate cuts in 2024.

It took 27 months and 551 trading sessions for BSE Sensex to reach 70,000 from 60,000 and the listed government assets appear to be biggest winner. The marker cap of PSUs more than doubled to Rs, 46.40 lakh cr during this period.

Incidentally, India surpasses Hong Kong as the world’s seventh-largest stock market, with the National Stock Exchange valued at $3.989 trillion compared to Hong Kong’s $3.984 trillion. It’s another matter, the Chinese equity market is in reverse gear – The SSE Composite index trades at 2991 – the same level it dabbled with 14 years ago. Similar is the case with Hang Seng, the Hong Kong equity index. It has hit the 2006 level.

While it was RBI last week, this week belonged to Fed Reserve which held rates steady at 5.25%-5.5% on Wednesday (for a third straight time) and Members expect rates to be 4.6% by end 2024 and 3.6% by end 2025 which implies three quarter point rate cuts in 2024. On cue, Dow closed above 37000 for the first time. Markets chose to ignore caveats that the fight against inflation was not over and further hikes could not be ruled out.

# 1 RBI

RBI issued circular on Dec 11, 2023, a first of its kind in 75 years post-independence.

  • Circular is against misleading advertisements offering loan waivers by charging service/legal fee.
  • Some entities seem to be actively promoting many such campaigns in print and social media platforms.
  • “Debt Waiver Certificates” are also being issued by such entities.

How is this any way possible by entities other than lenders? We only hope detailed enquiries are made to nip in the bud such campaigns.

# 2 SEBI

2 a. As per SEBI consultation paper floated last week, following changes are proposed for deepening of bond markets.

  • Minimum issuance value of Rs, 1 lakh on Non-convertible Debentures [NCDs] and Non-convertible Redeemable Preference Shares [NCRPS] reduced to Rs, 10,000; Merchant banker made compulsory for private placement of such NCDS for due diligence.
  • Such instruments only to be interest or dividend bearing instruments with simple structures.
  • Fast tracking framework for public issuances and listing debt securities.
  • Framework for issuance of subordinate units in REITs, and InvITs with inferior voting rights.

This will certainly help promote participation from non-institutional investors in the corporate bond market.

2 b. As per reports appearing last week, SEBI may take a relook at the maximum investment that an angel fund can make in a single company. At present the investment limit, capped at ₹10 crore, may be at least doubled, according to fund and startup industry circles. Probable reasons:

  • The early-stage seed and pre-seed investments from VC funds have almost dried up and the number of new startups has dramatically reduced.
  • Angel investments have grown in size over the last few years, and when the definition of start-up was revised to Rs, 100 cr., this was not revised.
  • An angel fund can be at a disadvantage when the investee company is acquired in a stock deal. In such a transaction while startup promoters can receive stocks on the acquirer, the fund can’t readily swap even if the lock-in period is over without chipping in ₹25 lakh, the minimum investment amount.

Unlike other AIFs, which are typically blind-pool funds, angel-fund managers follow a deal-by-deal structure, raising money by showcasing a specific company and investment opportunity to investors.

# 3 IRDA

Insurance Regulatory and Development Authority of India (Irdai) has released a set of draft product regulations that includes amongst other things, changes in surrender value rules for non-linked life insurance policies.

What is the big change?

  • The existing framework aims to provide only a percentage of surrender value based on the premiums paid. The customer gets smaller percentage of premiums paid for early exits as life insurance is long term. Balance constitutes surrender charges for insurer.
  • Under the proposed draft regulations on non-linked insurance products, surrender values are determined based on a percentage of premiums paid by the policyholder, which increases with the number of premiums paid.
  • It’s also proposed that surrender charges to be imposed only up to a threshold limit of premium to be defined for each product and beyond this no surrender charges can be charged by insurer and entire balance of premium to be refunded.
  • For instance, surrendering the policy in the first year yields no surrender value, but it increases to 30% for the second year, 35% in third year and so on.
    • For instance, a non-par policy with an annual premium of ₹1 lakh for the first three policy years. Assuming a threshold limit of ₹25,000 per year, the surrender value % (35% for third year surrender) based on the year of surrender will be applied only up to ₹75,000 (₹25,000*3) and 100% of the premiums in excess of ₹25,000 per year would also be paid as surrender value. This could increase the guaranteed surrender value for customers.
    • Illustratively speaking surrender value of policy of Rs 1 lakh would be in

2nd Year – Rs. 1.65 lakhs as against Rs. 60,000

3rd year – Rs. 2.51 lakh as against Rs. 1.05 lakh

4th year – Rs. 3.5 lakh as against Rs. 2 lakh.

# 4 Logistics or Statistics?

 The logistics cost in India ranged from 7.8% to 8.9% of GDP in 2021-22, (and not 14% as per Economic Survey 2023-2024) as per report released by National Council of Applied Economic Research on Wednesday. NCAER is also developing a framework to calculate credible logistics cost estimates. As per the report, logistics costs in India are reducing, from 8.8-10% of GDP in FY13 to 7.8-8.8% in FY17.

Why this is important?

As per Economic Survey 2023-24, Govt indicated that National Logistics policy aims to reduce logistics cost, from current 14-18% of GDP to global benchmark of 8%.

It appears we have already achieved this.

 Remembering Mark Twain – Lies, damn lies and Statistics!

# 5 Tech Market – Prognosis

  • A report by market research company 1Lattice and Google predicted the overall Indian consumer internet segment or consumer tech market to roughly triple from its current size to $300 billion by 2027, driven by fashion, mobility and media segments.
  • Joint report by Bain & Co and Flipkart has predicted online retail industry to top $160 billion by 2028, recording annual growth rate of ~25%.
  • On e-tail, still a long way to go compared to China.
    • Online shoppers as % of internet users is 30-40% compared to 80-90% in China
    • E-tail penetration against overall retail market is 5-6% compared to 35-37% in China.
  • Impact investor – impacted?
  • Omidyar Network India is exiting India after over a decade of investing in the country.
  • Exit of Omidyar with a track record of 13 years and portfolio of 120 firms does not augur well for the Indian startup ecosystem, which is going through a harsh funding winter.
  • Omidyar has a portfolio that includes unicorns such as DailyHunt and Vedantu. One of its investee companies, Zest Money,shut shop last week. Doubtnut underwent a fire sale, while Bounce pivoted its business. Vedantu has been struggling while DailyHunt burns a lot of cash.
  • In June this year we saw Sequoia Capital, marquee Silicon Valley investor breaking away from its India and China partnerships and Indian operations rebranded as Peak XV Partners.

Is there more in the queue? Time will tell.

# 6 Its economy: – Stupid!

6 a, IIP, Trade, Inflation and Capex

  • India’s industrial production in October rose to a 16-month high of 11.7 per cent in October 2023 against a contraction of 4.1 per cent in the same period a year ago, as per data released by MOSPI on Tuesday. Obviously pick up in investment is evident. In September, it had grown by 5.8 per cent.
  • the manufacturing sector’s output grew by 10.4 per cent in October 2023 after witnessing a contraction of 5.8 per cent in the same month last year. In September, it had grown by 4.5 per cent.
  • Within Manufacturing 14 out of 22 sectors registered positive growth.
  • India’s mining sector output saw an increase of 13.1 per cent in October against a growth of 2.6 per cent in the same period last year. Output in September saw a growth of 11.5 per cent.
  • The electricity sector witnessed a growth of 20.4 per cent in October as compared to 1.2 per cent in the same month a year ago.
  • India’s retail inflation however, inched up to a three-month high of 5.6% in November from 4.9% in the previous month, aided by a festive surge.
  • India’s goods exports slipped back into contraction in November, recording a fall of 2.83% to $33.9 billion, but a sharp drop in imports narrowed the trade deficit to a three-month low of $20.58 billion, official data released on Friday. This was surprising that Trade deficit had touched an all-time high of $31.5 billion in October on the back of rise in gold, petroleum and electronic goods.
  • Exports rose 0.98% month-on-month in November by clocking $34.89 billion of goods exports in Nov 2022 while Imports shrank 4.3% on-year in November to $54.48 billion. 15 of the 30 key export sectors grew in November, led by gems and jewellery, pharmaceuticals, fruit and vegetables while 15 of 30 sectors in imports declined substantially like Petroleum and Fertiliser etc.
  • The capex of 118 companies (top 150 by revenue, excluding financial firms) crossed $80 billion in FY23 as per data compiled by Bernstein Research –
  • A record, this was nearly four times the past five-year average.
  • Further, loan sanctions by banks to the private sector for capex rose 80% YoY to ₹3.5 lakh crore in FY23 — a 12-year high, shows RBI data.
  • Private sector capex announcements stood at ₹6.2 lakh crore in the first half of FY24, as per Avendus, 40% higher than the last ten years’ average in the same period.

6b.  Cementing story – India vs China

As per Fitch report released last week, some divergent trends seen in growth of Cement industry principal component of industrial production between India and China


  • Struggling property market leading to weak cement demand.
  • Infrastructure investments also slowing down.
  • Cement producers facing profit margin pressure due to debt burdens.
  • Capacity cuts expected in 2024, leading to smaller player exits.


  • Strong GDP growth driving steady 6-8% annual cement demand increase.
  • Government spending on infrastructure and affordable housing boosting demand.
  • Housing market booming with record sales and rising affordability.
  • Second phase of capex expected, doubling new capacity in 5 years.
  • Consolidation through M&As predicted with recent major acquisitions.

Key takeaways:

  • China’s property woes dampen cement demand, while India’s economic boom fuels it.
  • India poised for sustained cement demand growth and industry consolidation.
  • Both countries likely to see capacity adjustments in the coming years.

No doubt cement stocks are surging in India

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