India emerges as fastest growing large economy globally in CY2023-CY 2024: Report

Curated in collaboration with Investmentz.com by Asit C Mehta Investment Intermediates Limited, the report highlights the Global Economy Updates and Outlook, Indian Economy Outlook, Key Economic Indicators, Key Sectors that will grow in 2024, Key Policy Reforms and the IPO market Update from the lens of an Investment Bankers, Fund Managers, Venture Capitalists and Investment Interrmediates. 

The report states that Indian Equity Market has emerged as one of the best-performing market in the last two years. Moreover, the Domestic SIP inflows emerged as a key source of Retail inflows in equities, reaching INR 130 billion in FY2023 and is projected to reach INR 153 billion in FY 24.

Key highlights of the report

• Indian equity emerged as one of the best-performing markets in last two years.
• India's market cap is up 26% in the current calendar year to $4.2 Tn.
• India's market cap is up 26% in the current calendar year to $4.2 Tn. India added $900 Bn in market cap in 2023, equivalent to the entire market cap of countries such as Brazil, Sweden & Netherlands
• India has intensified its decarbonization initiatives amid shifts toward renewable energy, and aims to achieve 500GW of renewables capacity by 2030
• India’s green industry is expected to add 3.7 million jobs by FY 2024-25 to the current 18.5 million. The top sought skills are in renewable energy, environmental health safety, solar energy, corporate social responsibility, and sustainability.
• Emerging industries poised for investment-led growth in 2024 are battery energy storage solutions, green hydrogen, biotechnology, AVGC (animation, visual effects, gaming, comics), and semiconductor chip manufacturing, assembly, and design.
• In March 2023, the Central government sanctioned US$ 72.41 Mn under FAME India Scheme Phase II which has attracted Foreign Direct Investment equity inflow (FDI) (The FAME Scheme is extended for a further period up to 31st March 2024) for EVs.
• The renewable energy sector in India has made significant progress towards cleaner and sustainable energy sources. Around US$ 2.8 trillion has been invested in energy in 2023.
• The Production-Linked Incentive (PLI) schemes, particularly for Large-Scale Electronics Manufacturing (LSEM), have successfully attracted investments of US$ 726.77 Mn, resulting in a total production of US$ 33.55 Bn.

In 2023, the Indian equity market witnessed a phenomenal performance, as benchmark indices soared to unprecedented highs, with the Nifty and Sensex scaled milestones of 21,000 and 70,000 mark, respectively.

Indian equity emerged as one of the best-performing markets in last two years. Indian market fell relatively much lesser in CY 2022 compared to other global Markets.

On the other hand, broader indices outperformed, the NSE Midcap 100 and NSE Small-cap 250 advanced 40.9% and 42%, respectively in CY 2023. India's market cap is up 26% in the current calendar year to $4.2 trillion.

India added $900 Bn in market cap in 2023, equivalent to the entire market cap of countries such as Brazil, Sweden & Netherlands.

With an eye toward overall growth and development, the Indian central government pushed policies and initiatives in 2023 to strengthen a number of important economic sectors.

Special emphasis on manufacturing, fintech, green growth, and new technologies, the government is actively building both digital and physical infrastructure for businesses across sectors.

As a result, sectors such as Agriculture, Railway, Automobile, Defence, Telecom, Infrastructure, Capital Goods, Renewable Energy, Electronics Manufacturing Services (EMS) and Real Estate have become priority sectors. Government investment and policy reforms will be used to support these priority sectors in the coming years.

Key Policy Reforms that Changed the Game in 2023:

Production Linked Incentive for 14 key sectors to enhance India’s manufacturing capabilities and Exports.

Over 1,14,000 startups spread across all 36 States and UTs of the country create more than 12 lakh jobs.

Alternative Investment Funds (AIFs) invest Rs. 17,272 crores in 915 startups.

More than 2,55,000 approvals were facilitated through the National Single Window System.

Make in India 2.0 focusing on 27 sectors to make India a Manufacturing Hub

PM Gati Shakti becomes mainstream across the government.

Unified Logistics Interface Platform successfully integrates with 35 systems of 8 Ministries covering 1800+ fields.

Global Market and Economy Outlook:

After a sharp correction in global equity markets in CY2022, CY2023 proved positive for global equity markets, with the US market leading the charge.

There was a sharp recovery in USA equity markets in the second half before the final finish of CY2023.

Despite ongoing geopolitical tensions and economic uncertainties, investors remained optimistic, driving stock prices upward.

One notable development in 2023 was the significant rise in US 10-year G-Sec Bond yields.

These yields climbed to their highest levels in over 15 years, reaching approximately 5%. This increase reflected the market's anticipation of higher interest rates in the future, driven by the Federal Reserve's efforts to combat inflation.

The year 2023 was a period marked by the highest inflation and sharpest monetary policy tightening in four decades, led by global Central Bankers, especially the FED, ECB, and BOE.

The CPI is constantly moderating from the peak of 6.4% in January 2023. It came to around 3.10% for November 2023, very close to the FED target range of 2%. Softening of Commodity prices was also key to moderate manufacturing inflation & raw material costs in general for this year.

The FED Policy rate remained unchanged since June 2023. It's reached around 5.25 to 5.50 range. The situation has now reached pivotal levels, suggesting a potential pause in the policy rate hike cycle.

The US economy demonstrated resilience as wealth effects and full employment drove consumer spending.

The non-farm payroll data suggests a Monthly Average of addition of around 263000 jobs since January 2023 in the last 11 months. US personnel spending is showing a pick-up in the second half & positive trend indicating the resilience of the economy.

Unemployment levels are at 5 years low of around 3.7%. The market is optimistic because the FED has done its job of controlling Inflation by hiking interest rates without so far hurting the overall economy.

The cut in interest in CY2024 will further lead to overall growth of the economy, such optimism is reflected in the recent recovery of the equity market.