Week Ending 2nd March 2024

# 1 Markets

For most of the week, investors were indecisive about the continuation of the market rally but turned bullish on Friday with Sensex gaining 1245 points and Nifty settling above 22300 on impressive GDP Q3 data release, foreign fund flows. A rally in global markets added to the positive momentum in the markets. It is also gratifying to note that unique registered investors with NSE have crossed 9 cr with last one crore getting added in the past 5 months alone. US markets traded higher on Friday as the macro data releases –inflation on expected lines, personal consumption expenditure rising marginally at 0.4% supported bulls. Dow Jones ended lower for the week while Nasdaq and S&P ended with 1% weekly gains.

Bond markets traded within a narrow range of 7.60-7.65% with marginal softening on Friday in sync with G.Secs which also traded within 7.05-7.07% range. US 10T reflecting on the comments of Fed Member aligning with likely cut in rates, softened at 4.18%.

# 2 RBI

2.1 RBI last Thursday issued revised Bharat Bill Payment Systems [BBPS] Directions. Bharat Bill Payment System (BBPS) is an integrated bill payment platform which enables payment or collection of bills through multiple channels using various payment modes, like UPI, internet banking, cards, cash, and prepaid payment instruments. The channels include mobile apps, mobile banking, physical agents, and bank branches.

  • Changes aimed at streamlining the process of bill payments, enabling greater participation, and enhancing customer protection keeping in view significant developments in the payments landscape.
  • Revisions will be applicable from April 1, 2024, to banks, NPCI Bharat BillPay Limited and other non-bank payment system participants like of PhonePe, GooglePay.
  • Biller Operating Unit (BOU) will be responsible for onboarding billers to BBPS and ensuring compliance with due diligence requirements in respect of onboarding of merchants.
  • The Customer Operating Unit (COU) has been tasked to provide digital or physical interface to their customers, and also ensure that customers have access to all billers onboarded on BBPS.

This is a step aimed at significantly improving consumer experience with safety while making regular payments like electricity, DTH, recharges etc.

2.2 RBI on Wednesday has suggested financial institutions (banks and NBFCs, DFIs) disclose climate change risks, as RBI perceives climate change seen as significant risk for lenders, with metrics and disclosure effective FY28.

  • Aim is to aid customers, investors, and regulators in understanding risks better.
  • emphasizes importance of providing structured information
  • Disclosure to be integrated into financial results.
  • Guidelines to roll out in phases, starting with governance, strategy, and risk management from FY26.

Considered as a proactive measure, these disclosures are intended to facilitate early assessment of climate-related financial risks and opportunities, promoting market discipline. Implementation would be a challenge given operating difficulties.

2.3 As per RBI data released on Thursday,

  • Growth in bank credit to industry decelerated to 7.8 per cent year-on-year in January compared to 8.7 per cent in the same month last year.
    • growth in credit to ‘food processing’ and ‘textiles’ accelerated in January 2024 against the corresponding month of the previous year, while that of ‘basic metal & metal products’ and ‘chemicals and chemical products’ decelerated.
  • credit growth to agriculture and allied activities improved to 20.1 per cent (year-on-year) in January 2024 from 14.4 per cent a year ago.
  • advances to the services sector grew by 20.7 per cent in January 2024 against 21.4 per cent a year ago.
  • personal loan growth moderated to 18.4 per cent in January 2024 against 20.7 per cent a year ago.

Slower credit growth to industry is a cause of concern.

2.4 As per RBI data released last Wednesday,

  • Based on abridged Qly. results of 2842 private non-financial companies, sales grew 5.5 per cent in the three months ended December 2023 from abridged quarterly financial results of 2,842
    • IT sector decelerated with lower growth of 3.2 per cent from 5.9 per cent (q-o-q) in and 19.4 per cent a year ago.
    • Non-IT services companies recorded higher growth rising 12.9 per cent (q-o-q) vs. 19.9 per cent (y-o-y)
    • Operating profit margin of listed non-financial companies improved across major sectors and stood at 16.5 per cent in the 2023 December quarter vs 14.7 per cent in the third quarter of 2022-23.

The findings corroborate with analysis of 3478 BSE listed companies by Capitaline indicating that profitability has gone up significantly with 30.7% growth in net profit in Q3FY24 while the revenue went up by 8.4% (y-O-y).

# 3 SIDBI-CIBIL Report

As per report released on Wednesday,

  • The overall commercial credit portfolio grew 11 per cent in the September 2023 quarter to Rs 28.2 lakh crore showing improved lender confidence.
  • The delinquency rate at the end of September quarter dropped to the lowest in the last two years. The overall balance-level delinquencies, measured as 90 days-past-due to 720 days-past-due and those reported as ‘sub-standard’, have improved to 2.3 per cent as of end-September from 3 per cent in the year-ago period, the report said.
  • The medium enterprises segment, where the exposures are in the range of Rs 10-50 crore, saw a degrowth in both value and volume terms, while both micro and small enterprises reported.
  • The manufacturing sector accounts for 37 per cent of the value originated and has the largest share, followed by the trade sector at 28 per cent share, the report said, adding that the professional services and other sectors together account for the remaining 35 per cent share.

Compared with credit growth figures released by RBI for Q3, increase in commercial credit is quite comforting.

# 4 SEBI

4.1 SEBI in a communication sent to Association of Mutual Funds in India (AMFI) on Tuesday evening, asked fund houses to list the steps they are taking to protect investors in small and mid-cap schemes in next 21 days. Trustees of MFs to establish a framework for the purpose.  In India, small-cap stocks are defined as those with market capitalization of less than ₹5,000 crore while mid-cap stocks are those with market values of between ₹5,000 billion and ₹20,000 crore.

  • The heightened regulatory scrutiny comes in the wake of concerns that these share segments are overheated, while investor flows into these schemes continue unabated.
  • SEBI is looking at whether local mutual fund schemes investing in small and mid-cap stocks would be able to withstand sharp falls in stock prices or sudden outflows.
  • A SEBI request to review the results of funds’ stress tests is rare. While SEBI has completed one round of stress test reviews, it wants funds to test for more adverse scenarios.

It’s time for SEBI to take a review as AUM of small cap schemes hit a record ₹2.48 lakh crore in January 2024, almost 83% of the AUM of the large cap scheme category of ₹2.99 lakh crore; Similarly, AUM of midcap funds rose to ₹2.9 lakh crore at 97% of the large-cap scheme AUM.

4.2 Corporate Bonds getting big lift as AMC Repo clearing [ARCL], saw monthly trade volumes top ₹10,000 crore for the first time in February amid efforts to bring in more participants.

  • The total value of trades on the AMC Repo’s tri-party repo platform were at ₹10,524 crore in February, much higher than ₹2,432 crore in the previous month.
  • ARCL has made an effort to bring down the cost of transactions by increasing the maximum order size from ₹50 crore to ₹200 crore thereby reducing the brokerage cost (in terms of basis point) for the market participants,
  • More borrowers are joining the platform. NBFCs, corporates and primary dealers are primary borrowers.

In the last few months, more mutual funds are actively participating, and multiple mutual funds are lending daily certainly adding depth to the corporate bond market. Markets still feel that unless RBI accepts corporate bonds in its repo with banks greater depth could not be achieved.

# 5 India – growth unabated!

5.1 GDP Q3FY24

India’s economy put on an unexpected spurt in the October-December period as it expanded 8.4%, a six-quarter high, vastly outstripping expectations. The Q3 growth figure is almost twice as fast as the 4.3% recorded in Q3 of FY23.

  • The manufacturing sector, which accounts for about 17% of the economy, expanded 11.6%.
  • Gross fixed capital formation (GFCF), an indicator of the level of investments in the country, picked up pace at 32.4%
  • Agriculture sector growth receded 0.8% due to uneven monsoon in parts of the country, though continue to remain one of the top 3 contributors.
  • Share of exports stood at 22.2%.
  • Financial services, one of the focus sectors of TVS Capital Funds, once again remained the top contributor, followed by trade and hotels.
  • private consumption growth in India leaves much to be desired, having grown 3.5 per cent in Q3.

Should we worry?

 Huge divergence between GDP at 8.4% and GVA 6.5% do not reflect balanced growth, attributed to high indirect tax growth (unsustainable 6 quarter high of 32%) and reduced transfer payments.

  1. In fact, GVA has slowed down from 8.2% in Q1FY24. The gap between GDP and GVA had averaged 20 bps in the last eight quarters has now widened to 190 bps this time around.
  2. Decline in agriculture, uneven private consumption, and increased reliance on public capex is cause of concern.

5.2 Other data releases

  • The HSBC India Manufacturing PMI strengthened to a five-month high of 56.9 in February buoyed by a rise in new export orders and sustained domestic demand. In January, Manufacturing PMI was at 56.5.
  • Goods and services tax (GST) collection surged 12.5% to ₹1.68 lakh crore while auto firms posted their highest monthly sales.
  • India’s core sector expanded 3.6% in January, (4.9% in previous month and 9.7% last year) its slowest pace in 15 months, weighed down by a high base and mixed performance across sectors.

5.3 Household Expenditure Survey 2023

The statistics ministry last Saturday released a teaser of the much-awaited data on the consumption expenditure survey held between August 2022 and July 2023.

NITI AAYOG was quick to jump claiming only 5% of the country lives below the poverty line now.

Is the claim valid?

First, let’s briefly review the results of survey:

  • Average monthly per capita spending was ₹3,773 in rural India and ₹6,459 in urban India for 2022-23.
  • Adjusted for inflation, rural and urban household budgets grew at an average pace of 3.1% and 2.7% per year since 2011-12.
  • In 2011–12, rural households used to allocate nearly 53% of their expenses to the food basket — for buying cereals, veggies, fruits, milk, eggs, etc. But that has fallen to 46.4% in 2022–23.
  • Even in urban India, the share of food in overall spending has dipped from 42.6% to 39.2%.
  • The share of household spending on food declining below 50% indicates rise in income as per Engels law. It’s actually the first time in the history of the survey that this number has fallen below the 50% mark.
  • While urban India spent 84% more than their rural counterparts in 2011–12, it’s just 71% higher now. That means rural India is quickly catching up.


  1. SBI Research was quick to endorse last week that rural poverty declining to 7.2% from 25.7% in 2011-12 and urban poverty down to 4.6% – SBI researchers estimated the new poverty line at Rs. 1622 for rural areas ad Rs, 1929 for urban areas, derived from Tendulkar report in 2011-12 adjusting for inflation.
  2. World Poverty Clock also showed that India has managed to bring down ‘extreme poverty’ below 3 per cent of its population as per its latest data published last week. It has stated that the no has fallen from 7.59 cr in 2016 constituting 5.7% of 132.37 cr of population, to 3.44 cr constituting just 2.4% of 143.48 cr of population (source: Worldpoverty.io


  1. No reasons attributed in the survey, excepting for possible urban migration – comprising 30% of remittances.
  2. Imputed value for freebies like free foodgrain, laptops etc increasing effective consumption – not a permanent feature.
  3. Comparisons between the 2022-23 and 2017-18 surveys are inappropriate due to significant changes in data collection methods.
  4. While the average rural MPCE comes in at ₹3,773, this can be skewed. For instance, 5% of the rural folks have an MPCE above ₹10,500 resulting in higher average and inequality need to be reckoned.


From an inflation standpoint, basis survey, lower weightage for food in the inflation basket (from 54% in CPI currently to 46%) could be possible, which could make headline inflation less volatile. CPI gives cereals in rural India a weight of over 12% which could be lowered as less than 5% in rural India is spent on cereals as per survey.

5.4 As per study publication by National Family Health Survey released last week,

  • Indian women, despite constituting 48% of the population, contribute only 18% to the gross domestic product (GDP)
  • In 2023, women made up nearly 53% of employable population.
  • Bridging the gender gap in employment could potentially lead to a 30% increase in the country’s GDP, as per the study.
  • Another study, by McKinsey Global Institute (MGI), said advancing women’s equality could lead to a $28 trillion increase in the global GDP.

# 6 India –now a land of millionaires?

As per Knight Frank Wealth Report 2022 released last week,

  • The number of ultra-high-net worth-individual (UHNIs), having net assets of USD 30 million (about Rs 226 crore) or more, in India increased 11 per cent last year to 13637 (highest growth in APAC) while globally UHNWIs increased by 9.3% (610569 nos).
  • While the no. of UHNIs globally is expected to grow by 28.1% to 8.02 lakh by 2028, it is projected to go up by 50.1% to 19908 in 2028.
  • India ranked third in billionaire population globally in 2021 with 145 billionaires, trailing behind US with 748 billionaires, Chinese mainland at 554 billionaires.
  • As per the report, around 69 per cent of the super wealthy individuals in India are expected to witness an increase of over 10 per cent in their net worth in 2022.
  • Globally, it is estimated that 135,192 UHNWIs are self-made and under the age of 40, accounting for around a fifth of the total UHNWI population. India has ranked 6th in percentage growth of the UHNWI population that is self-made and under the age of 40 years


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