Week ending 28th July 2024

Markets: Indian markets recovered on Friday from the Union Budget 2024's capital gains tax hike and STT increase, with the Nifty 50 touching new peak. ?Despite less favorable global cues and foreign investor pullout, the market rebounded. The fiscal deficit is expected to decrease, and bond markets responded positively with lower yields.

RBI: The RBI proposed revised LCR guidelines for banks, effective April 1, 2025, to enhance liquidity resilience. These changes account for increased digital transactions and require higher liquid securities as a buffer. Additionally, new norms mandate banks to record recipients of cash pay-out services, effective November 1, 2024, to prevent fraud and money laundering.

SEBI: SEBI proposed summary proceedings for certain securities law violations, aiming to expedite case resolutions. This process excludes personal hearings and focuses on efficiency, aligning with global standards.

Economy: The HSBC Flash India Composite Output Index showed private sector activity at a three-month high, with the manufacturing PMI also rising. An Oxfam report highlighted significant wealth accumulation among the world's richest 1%.

PE/VC: Private equity and venture capital investments in India rose 8% year-on-year to $31.5 billion in H1 2024, with a 30% increase compared to the previous six months. The number of deals also increased significantly.

Budget Analysis and Key Announcements:

The Budget 2024 focuses on nine key priorities, including agriculture, employment, MSMEs, and infrastructure. It emphasizes productivity in agriculture, employment-linked incentives, support for MSMEs, and a uniform LTCG tax rate for financial assets. The budget also includes a venture fund for the space economy and measures to enhance tax compliance and international taxation certainty. The fiscal consolidation and investment growth agenda are key focuses, with a substantial budget outlay for various sectors. Please see detailed blog for our analysis with focus on “problems” and “solutions’ in 7 key areas of relevance from a Fund Manager’s perspective.

?Economic Survey Highlights:

India's GDP grew by 8.2% in FY24, with stable consumption and investment demand. Exports grew slightly, and the current account deficit fell. The survey also highlighted significant growth in MSMEs, IT and computer services, global capability centers, and tech start-ups, along with improvements in credit growth and financial services performance. Key takeaways are highlighted in the detailed blog

Suggest reading detailed blog with data points and comments >> https://bit.ly/Weekending27thJuly