Morning Scan: All the big stories to get you started for the day

The battle of market sentiment between the client category, which comprise wealthy and retail investors, and institutional investors has spilled over to the new year. The client category has taken a bearish stand on index futures, but the latter have taken a bullish tone. The short positions of client and proprietary traders have been rolled over from the previous month, while overseas investors have rolled over long bets and added fresh ones. Domestic institutions have also rolled over their bullish bets.

Why it’s important: The conflicting sentiments between the two classes of investors could result in choppy markets after a stellar rally last month. January is traditionally a weak month for equities.

#3. Gold, realty and crypto asset classes spelled gains for investors in addition to equities

Equities were not the only asset class that did well in 2023; gold, real estate and bitcoin also gave double-digit returns. After a rough 2022, bitcoin gained 156 percent last year, topping all key asset classes. Gold, based on MCX spot prices, appreciated 15 percent. Housing prices in the top seven cities rose 10-24 percent last year, mainly due to higher input costs and stronger demand.

Why it’s important: Investors have been singing all the way to the bank as India remains in a sweet spot due to macroeconomic stability, cooling commodity prices and momentum in corporate earnings.

Also Read | MC Markets Poll: 2024 to be another year of bulls, largecap stocks to rally

#4. New-age start-ups to test market waters as macroeconomic headwinds calm down

Even as equity markets are touching record heights, a wave of new-age startups is setting sights on initial public offering in 2024, with as many as 12 firms firming up plans to go public in the new year. In 2023, five companies went public, up from three the previous year. Following the successful IPOs of companies like Mamaearth in 2023, several startups are hoping to replicate this success in 2024.

Why it’s important: It is expected that improved market conditions, demand for stable capital and a growing appetite for new-age technology businesses would drive optimism for public market debuts.

#5. IPO investors delighted as 55 of 59 issues provide an average return of 45 percent

In a year when equity gauges smashed records and rallied nearly 20 percent, making investors richer by close to Rs 82 lakh crore, IPO investors have been delighted as 55 of the 59 issues provided them handsome returns of 45 percent on an average. In fact, 2023 turned out to be an outlier for primary market investors when 59 companies hit the street, raising Rs 54,000 crore, according to exchange data.

Why it’s important: A listing spree in domestic markets made Dalal Street the second best in the world in the year after China. The spate of IPOs could very well continue in the new year as well.

#6. Government to soon launch national e-commerce policy to level playing field

The Prime Minister’s Office is understood to evaluating the national e-commerce policy to understand its potential impact on domestic retailers and small companies. Many relaxations suggested for firms that operate on e-marketplace business models such as Amazon and Flipkart may not make it to the final policy given that e-commerce is highly contentious, and relaxations are opposed by conventional retailers.

Why it’s important: The current e-commerce ecosystem has an uneven playing field, particularly for smaller firms. The government would seek to correct that as online commerce gains in importance.

#7. Significant increase in speculative trading may have sparked curbs on unsecured loans

An unusually sharp spike in certain activities such as cryptocurrency trades, equity derivatives and online gaming in the past 12 months may have alerted the Reserve Bank of India to look into unsecured loans being used for these activities. The banking regulator’s move to increase risk weights in unsecured loans in November could is seen as a step towards curbing such speculative trades.

Why it’s important: Speculative trading could have been fueled by using borrowed money and the Reserve Bank has done well to place strictures to contain the unreasonable exuberance.

Also Read | Financial Forecast: Four changes to watch out for in January

#8. Corporate India expected to boost investments and increase recruitments to grow faster

CEOs of India Inc are planning to hire and invest more in the new year as they expect the economy to post healthy growth in the 2024 election year. A poll of nearly two dozen chief executives shows that an overwhelming majority of business leaders expect a revival in rural consumer spending and a rise in foreign direct investment inflows as global companies increase their presence in India.

Why it’s important: Private sector capex has been muted in the past few years and hiring has stumbled as well. A reversal of these trends would be welcome.

#9. Arvind Panagariya appointed as chairman of 16th Finance Commission

A month after the Union cabinet approved the terms of reference of the 16th Finance Commission, the government appointed former NITI Aayog vice-chairman Arvind Panagariya as the panel’s chairman. It however didn’t appoint other members of the commission, which may further delay its functioning.

Why it’s important: The commission is expected to devise a formula for distributing net tax proceeds between the central and provincial governments as well as among states and local bodies.

#10. India’s growth to be powered by both government and private investments

Both private and government investments are likely to be the primary driver of economic growth in 2024, backed by improving prospects of rural consumption with colling retail inflation and increased spending in an election year, economists said. Most business sectors over the past few months have recorded an 80-90 percent capacity utilization, which is likely to be a trigger for initiating fresh investments.

Why it’s important: Signs of investment recovery were already visible. Gross fixed capital formation, a proxy for investment, rose in double digits in the three months to September, outpacing consumption growth for the fourth straight quarter.