Week ending 7th Jan 2024

India basks in Sun’s glory as its first Solar observatory, Aditya reaches the Lagrange point L1 on Friday, where gravitational forces exerted by Sun and Earth balance, to provide uninterrupted view of the Sun with no occultations. Truly, another landmark in ISRO’s tryst with space with through maiden solar mission.


Stocks declined to give back a portion of past weeks’ gains and interest rates moved higher last week, ending the S&P 500’s nine-week winning streak. Conversely, a slide in Apple shares following an analyst downgrade weighed on the large-cap, technology-heavy Nasdaq Composite Index.

In India markets moved in a short range and failed to make decisive stride as BSE’s Sensex settled at 72,026.15 and NSE’s Nifty50 ended the week at 21,710.80 on Friday.

In Fixed Income, while 10Y G Sec remained steady and moved by 2 bps to 7.23%, surprisingly, 10Y corporate bonds softened by 25 bps to 7.64% expecting rate cuts this year.

# 1 RBI

1.1 CP/NCD issuance

RBI issued revised CP/NCD (tenure < 12M) guidelines on January 3, 2024. Key changes:

  1. Settlement is changed from same day to maximum of T+4.
  • This will help improved pricing of transactions to reflect market risk correctly.
  • For making this possible, redemptions are also allowed till 3 p.m. as against current timing of just 1 p.m.
  1. Buyback can now be made after 7 days from issue date instead of earlier 30 days.
  • With this flexibility usage will certainly go up as corporates and NBFCs will be able to make use of liquidity and working capital drawings could come down.
  1. Higher disclosures brought in for benefit of retail investors.
    • Long term and unaccepted rating to be disclosed in offer document.
    • Exact end use other than financing current asset and operating expenses needs to be clearly mentioned
    • Disclose information on any default in payments through various channels.
  2. Retail investors’ investment in primary issuances of non-convertible debentures and commercial papers are limited to a quarter of the total issuance to minimise investors’ losses in case of default.
  • So far, there was not any such limit for individual investors’ investment.
  1. Eligible issuers list expanded to include Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs), co-operative societies and limited liability partnerships with a minimum net worth of ₹100 crore


1.2 Dividend Rules

RBI has proposed last week, new rules for dividend declaration by banks, aligning with Basel III standards and updating its guidelines that had not been revised for nearly two decades.

Key changes

  • The dividend payout ratios linked to net non-performing asset (NPA) ratios, replacing the previous grid-based framework based on capital adequacy levels and net NPA ratios.
  • Banks with a net NPA ratio under 6% can declare dividends, compared to the previous threshold of 7%.
  • Banks must meet capital requirements for the past three financial years instead of single year, and the minimum total capital adequacy for commercial banks is 11.5%. Small finance banks and payment banks require 15%, while local area banks and regional rural banks need 9%.
  • The ceiling on dividend payout ratio can go up to 50% if the net NPA is zero, as opposed to the earlier limit of 40%. Those with 1-2% NPA can offer maximum 35% and banks with 4-6% NNPA levels an offer maximum of 15%.
  • Ad hoc dividend payments are no longer allowed.


  • As most banks are still focused on capital consumption, and their net NPA ratios are already low, the proposed guidelines are not likely to have a significant impact on the dividend practices of Indian banks.
  • But this is certainly going to help Govt as PSBs all comply with the revised norms and thus could get 50% dividend instead of 40% as hitherto.

1.3 Unclaimed / Inoperative Accounts

RBI last week has extended the deadline kept earlier, for the 100 days 100 pays scheme, under its comprehensive review of guidelines for unclaimed or inoperative accounts, from September 8, 2023, till April 1, 2024.

  • Banks were supposed to trace and settle the top 100 unclaimed deposits of every bank in every district.
  • The guidelines also state that zero balance accounts cannot be classified as ‘inoperative’ if they remain unused for more than two years.
  • Banks are required to conduct concurrent audits and monitor reactivated accounts for at least six months.
  • Amounts in inoperative accounts or unclaimed deposits that are reactivated will be subject to these rules.
  • Accounts not operated for 10 years are classified as unclaimed deposits and transferred to the Depositor Education and Awareness (DEA) fund maintained by RBI.
  • Activation of such accounts can simply be done by re-submission of KYC details, including video identification, if required, across branches including non-home branches.
  • Banks are not allowed to charge a fee for activation of inoperative accounts.


# 2 SEBI

SEBI on Friday has reiterated its existing rules and tightened regulations in its Master Circular, regarding short selling and securities lending and borrowing.

  • SEBI will allow investors from all categories to engage in short selling.
  • Naked short selling (selling a stock the seller does not own) NOT
  • All stocks in the futures and options (F&O) segment are eligible for short selling. Institutional investors are not allowed to engage in day trading wherein they square off transactions intra-day; they need to disclose upfront whether the transaction is short sale.
  • SEBI may review the list of eligible stocks for short selling periodically.

The move comes after SEBI was asked by the Supreme Court to investigate allegations of stock market rule violations by the Adani Group made by US short seller Hindenburg Research.

# 3 Economy – Last week snippets

3.1 PMI – Services

The HSBC India Services Purchasing Managers’ Index rose to 59.0 in December from November’s one-year low of 56.9. With this, India’s services activity index has expanded for 29 straight months and is well above the 50-mark reading which separates growth from contraction. Services activity witnessed increase driven by demand, job creation and business optimism.

3.2 PMI – Manufacturing

The HSBC Purchasing Managers’ Manufacturing Index (PMI) came in at an 18-month low of 54.9 in December, down from 56 in November. A combination of unfavourable factors played spoilsport for manufacturers and the pace of increase in new orders was the slowest as new export sales and output were muted.

3.3 Capex

As per CMIE report released last week,

  • There are signs of revival in the investment cycle.
  • During the December-ended quarter, new project announcements worth ₹2.1 trillion increased by nearly 15% compared to the previous three months.
  • Private companies led this growth, with notable projects like JSW Neo Energy’s power project and Welspun New Energy’s Green Ammonia manufacturing unit project.


3.4 GDP

  • India’s economy is projected to grow at 7.3% in FY24, as per the initial advance estimate report released by the National Statistical Office (NSO) on Friday. This is higher than 7% growth estimated by RBI.
  • At that pace, India will retain its crown as the fastest-growing major economy, following its 7.2% GDP growth in FY2022-23.
  • In nominal terms, though, the projected growth for FY24 is 8.9%, a notable deceleration from the 16.1% recorded in the preceding financial year.
  • Gross Value Added (GVA) growth of 6.9% for fiscal year 2024 is expected, slightly lower than the 7% recorded in fiscal year 2023.


# 4 Data – India leads both soft and hard!

As per Cushman and Wakefield report last week,

  • India’s data centre capacity in top 7 cities will exceed 1 gigawatt by 2024, a 3-fold increase in 4 years, due to increased user base of 5G impact (100 million now), smartphone data consumption, favourable regulations and data privacy law.
  • Domestic & international companies entering with greenfield projects, challenging existing dominance.
  • Mumbai Leads with 50% share, major expansions planned.
  • India now ranked 3rd biggest APAC data centre market.
  • Noida is emerging fast, likely to surpass Bengaluru and reach Chennai’s co-location capacity.

# 5 Tech Startups Landscape

  • As per NASSCOM ZINNOV 2003 REPORT released last week, the key takeaways:

The Indian tech start-up landscape has grown upwards of 15X in the past decade, with over 950 new one bringing total count to 31,000.

  • They have cumulatively raised over USD 70 Bn+ in funding since 2019.
  • 40% of all tech start-ups in 2023 originated from emerging hubs, making them fertile grounds for disruptive innovation.
  • Late-stage investments bore the brunt of the funding value drop in 2023, with a 71% drop.
  • 82% of start-ups stated that longer sales cycles were affecting their growth in 2023. –
  • Nearly 60% of start-up founders reported an increase in revenue and profitability in 2023.
  • 25% of the tech start-ups founded in 2023 leveraged DeepTech, compared to ~12% in the last 2 years. –
  • India has 100+ Generative AI start-ups, focused on building horizontal and vertical applications.
  • India has 16% of the world’s AI talent, positioning it perfectly to become a global innovation hub.


5.2. As per Redseer report released last week, key takeaways:

  • the Indian tech industry is growing rapidly and becoming more valuable.
  • the total value of tech companies in India could reach $1 trillion by 2033.
  • there will be many new tech companies going public (IPOs) in the next decade, which is a sign that investors have confidence in the industry – but need to overcome inefficient processes and market conditions.
  • companies often rely on strategic advisors to help them with credibility, due diligence, and market feedback. Overall, the report highlights the potential for growth in the Indian tech industry but also the need for careful planning and expertise to succeed.
  • Trillion value trajectory is projected as under:
  • Top of Form
Market cap 2023` 2028 2033
Traditional 99% 94% 90%
Tech companies 1% 6% 10%
Total market cap $4.3 trn $ 7 trn $10 trn


5.3.Inc 42 tech startups report 2023

  • 60% YOY decline in fund raise at $ 10 bn
  • 70% decline in seed stage funding, 60% decline in growth/late
  • 5 startups listed. 1500 investors participated (down from 2500 last year). 23 mega deals (6 year low)
  • TVS Capital in the top 10 funding rounds of 2023 (PhonePe and Insurance Dekho)
  • Tech startups to grow from 68K to 1.8L in 2030


5.4 Indian Fintech Funding Summary (2023):

  • Funding dipped to $2 billion in 2023, down 63% from 2022 and 76% from 2021.
  • High interest rates and macroeconomic factors led to investor scepticism.
  • Only 5 rounds crossed $100 million, with drops in all funding stages.
  • InCred became the only unicorn, while IPOs fell from 5 in 2022 to 2 in 2023.
  • Long-term growth expected due to expanding customer base and government initiatives like data protection law and banking sector digitization.
  • Alternative lending, payments, and banking tech, with BNPL showing strong growth amongst funded startups.
  • Indian fintech’s offering personal and consumer durable loans saw rapid growth after the pandemic.
    1. Their loan volume is still small compared to traditional banks, but the number of lenders has doubled since 2018.
    2. Focus is on specific loan types like BNPL, making up 97% of their portfolios, unlike banks with more diverse offerings. However:
    3. Profitability remains a challenge, highlighted by global financial institutions.
  • FinTech’s need to find ways to diversify and optimize operations for sustainable success.
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