MARKET UPDATE: Uday Kotak steps down as Kotak Mahindra Bank MD & CEO
MARKET UPDATE
Uday Kotak steps down as Kotak Mahindra Bank MD & CEO
In a completely unexpected move, Uday Kotak, MD & CEO of Kotak Mahindra Bank, stepped down on September 2, 2023.Four months ahead of tenure-end; Tendering his resignation to the bank’s chairman in a handwritten letter, he said, “I have mulled over this decision for some time and believe this is the right thing for the institution”. Dipak Gupta is elevated as MD & CEO with RBI approval for 2 months starting September 2, 2023.
Indian equities stay a bright spot for FPIs among EM peers
The six-month rolling cumulative investment of foreign investors rose to $20.6 billion (₹1.69 lakh crore) – the highest in 28 months, data from NSDL showed. There are only nine instances in the last 15 years when the six-month rolling monthly investment rose more than $20.5 billion.
Apart from relative valuation support from Indian equities, encouraging earnings growth has continued to attract foreign investors. Overseas investors have been net buyers of equities for sixth month in a row. Indian equities are expected to grow 13% in 2023 – the highest among EM peers. This would be the third year in a row when earnings growth would be in double digits. In the June quarter, earnings growth of the Nifty index beat analyst’s expectations the highest in the last two years. The Indian market has delivered a return of 5% in the last three months – one of the highest among Asian peers.
India’s GDP at 4-quarter high, rises to 7.8% in Q1 FY24
The growth can be attributed to central and state governments opening up their wallets fro Capex, stronger consumption demand and higher activities in the services sector.
Consumer durables stocks look ready for a comeback
Investor appetite for consumer durable companies is showing signs of revival driven by expectations of a pick-up in capital expenditure cycle that could boost the revenues of these companies. With the festive season around the corner, analysts are expecting demand to surge over the next couple of months.
3M India, Crompton Consumer, Havells India, Orient Electric, Syrma SGS, TTK Prestige, Whirlpool, Symphony, Voltas, Polycab India, and KEI Industries are among the preferred consumer durable stock picks.
Instant settlement of Indian stock market trades to come in by October 2024
India’s market regulator expects instant settlement of stock market trades to be implemented by October 2024, a source from the regulator told Reuters.
Currently trades in India are settled in “T+1” or one day after the trades are initiated. Instant settlement would ensure trades are settled immediately. For foreign investors, the instant trade settlement would be optional and not mandatory, the source said.
To start, by March 2024, the regulator would implement settlement within one hour of the trade, with instant settlement coming some months later.
Currently, India is the second country after China which operates on a short settlement cycle of one day. In most other major economies trades are settled within two days.
G20 leaders lay down crypto regulation blueprint
India has been pushing for a global regulatory framework on crypto assets under its G20 presidency as it strongly believes they cannot be regulated in isolation by any single country.
SECTOR ANALYSIS
BANKING & FINANCIAL SERVICES
India recently crossed the UK to become the 5th largest economy in the world with a per capita income of $2000. The IMF expects the per-capita income to grow at 6% till March 2025 (FY25). At $2,000 levels, income crosses the minimum expenditure level & incremental income is used for spending & investments. India, the youngest country in the world with the largest population and one of the highest number of middle-income households, is experiencing a shift in its relationship with money. This shift is driven by a rise in per capita income and lifestyle improvement, which leads to a demand for bigger houses, cars, and electronics. There is a transition from ‘needs’ to ‘wants’ in New India, as it rapidly moves towards building financial assets vs just physical assets. Regulatory bodies, too, have played an impactful role in developing the financial ecosystem & making it more transparent. The shift from needs to wants alongside massive regulatory developments have acted as a catalyst in the growth of financial assets. A rise in financial assets means increased investor participation in capital markets, credit growth, and increased insurance penetration often termed as ‘financialization of savings’.
Within financial assets, managed investment solutions like MF, Pension & Insurance are growing faster than bank deposits as more & more investors are looking for products with higher post-tax yields.
OUTLOOK
BANKING & FINANCIAL SERVICES
Currently, India has an urban population of 35%, which is set to grow to 50% by 2050. Increasing urbanisation is likely to aid high consumer aspiration. As per-capita income & urban population grows, the middle-class population will also grow. Crisil expects middle-class households in India to grow from 4.1 Cr in 2012 to 18.1 Cr by 2030, which is 1.5 times the number of households in the US.
A combination of a growing middle class, high aspiration & increasing income levels is a favourable combination for the ‘financialisation of savings’ theme as it will continue the momentum of high credit growth, increasing insurance coverage and investor participation in capital markets. The financial services sector will likely reap most of the benefits from such a shift and S&P BSE Financials ex Bank 30 Index helps investors benefit from such a theme.
Examples of returns:
| 1 year | 3 year | Since inception | |
|---|---|---|---|
| Nippon India Banking & Financial Services Fund | 20.55 | 31.4 | 10.24 |
| Aditya Birla SL Banking & Financial Services Fund | 20.54 | 26.43 | 9.93 |
| Sundaram Fin Servc Opp Fund | 23.72 | 27.15 | 13.99 |
WHAT IS RETIREMENT PLANNING AND WHY IS IT IMPORTANT?
Retirement planning means preparing today for your future life so that you continue to meet all your goals and dreams independently. This includes setting your retirement goals, estimating the amount of money you will need, and investing to grow your retirement savings.
Every retirement plan is unique. After all, you may have very specific ideas on how you want to spend your retired life. This is why it’s important to have a plan that is designed specifically to suit your individual needs
Why plan for retirment?
You retire from work, not life. You may have a new set of dreams for your post-retirement life. At the same time, you may also want to maintain your day-to-day lifestyle without worrying about expenses.
Here is how retirement planning can help you:
- To maintain the standard of living you are used to
- To Fight Inflation
- To Fulfill Retirment Goals
- To be emergency ready
Options for investing for retirement
Many investment options can help you save for retirement. Some options may attract higher risks; others may help you protect your wealth.
- Annuity Plans
- SIPs Through Mutual Funds
- Customised Plans to Suit your needs
Factors to keep In mind while planning retirement
- Start as early as possible
- Invest First, Spend later
- Check for Tax Efficiency
- Keep paperwork ready and involve family
- Choose the right advisor who understands your needs and requirements that they can guide you towards your retirement goals.
G20 HIGHLIGHTS
In a major diplomatic win, India managed to hammer out a ‘New Delhi Leaders’ Summit Declaration’ with “100 per cent” consensus on all developmental and geo-political issues on the very first day of the G20 Summit despite differences over Russia-Ukraine war issue.
Other major developments followed including induction of African Union as a full member of the G20, launch of a global biofuel alliance with India, the US and Brazil as founder-members, and announcement of the India-Middle East-Europe Economic Corridor which can make trade between India, the Gulf and Europe faster by an estimated 40 per cent.
On the financial front, the declaration endorses FSB (Financal Stability Board) recommendations for crypto regulation, capital adequacy framework for multilateral development banks, early debt resolution for Sri Lanka and better use of digital public infrastructure.
The leaders of 20 developing and developed nations have reaffirmed the commitment to continue cooperation towards a globally fair, sustainable and modern international tax system appropriate to the needs of the 21st century.
The G20 member countries have agreed to support policies that promote trade and investment as engines of growth and prosperity. They emphasize the importance of a rules-based, fair, and transparent multilateral trading system with the World Trade Organization (WTO) at its core.
For the first time, the declaration contained no footnote or Chair’s Summary.
KANIKA’S KORNER
What type of investor are you?
The reason why this question matters is because aspects such as your personality type, investment goals, your ability to weather losses, and the potential impact this may have either personally or professionally, can determine what investments and investment strategy are currently right for you.
A. The Defensive: What is most important to you is a secure investment, preferably without risk and fluctuation.
B. The Conservative: The distribution of investments is conservative with a pinch of risk.
C. The Moderate: You are rather courageous and like to take the occasional risk, but also have grounded investments.
D. The Balanced: You Like a balance of both and want best of both the worlds!!
E. The Aggressive: High returns and risks simply belong together. And you love risks! Full risk!
No matter your investing style, there are a few habits nearly all successful investors practice.
Set a goal. Understanding why you’re investing is crucial to guiding the appropriate investment strategies.
Discipline. Being disciplined about implementing your plan can help you avoid mistakes.
Patience. Avoid investing based on emotions or in reaction to market changes, either bad or good, and don’t try to time the market. Investing is about time in the market, not timing the market.
Diversification. A portfolio made up of a variety of investments can lend some protection from market volatility.
Flexibility. Changes in life might mean you need to alter the course of your investment strategies so you need to work with your investment advisor to make adjustments based on sound advise.
