Economy

The Union Budget 2025 has been unveiled, leaving many investors pondering: What lies ahead for the markets? Will the recent fiscal policies bolster economic growth or introduce new challenges? Let’s delve into the key aspects of the budget and analyze their potential impact on various sectors.

Personal Income Tax Reforms

A significant highlight of the budget is the reduction in personal income tax rates, aiming to enhance the spending capacity of the middle class. The tax exemption threshold has been raised from ₹6 lakh to ₹12 lakh, and tax rates for higher income brackets have been reduced. This move is expected to boost household consumption, savings, and investment.

Capital Expenditure and Infrastructure Development

The government has allocated ₹11.1 lakh crore for infrastructure projects, marking an 11% increase from the previous year. This investment will be directed toward improving roads, railways, airports, and other critical infrastructure across the country. The goal is to boost economic growth by enhancing connectivity and providing better facilities.

Sectoral Impacts

• Consumer Goods and FMCG: The increase in disposable incomes due to tax cuts is anticipated to drive demand in the Fast-Moving Consumer Goods (FMCG) sector. Companies like Hindustan Unilever and ITC may experience heightened sales as consumers have more spending power.
• Banking and Financial Services: The government’s plans to recapitalize public-sector banks and promote financial inclusion have made the banking sector a key area of focus. Institutions such as HDFC Bank and State Bank of India could see increased activity due to enhanced lending capacities and a broader customer base.
• Green Energy and Electric Vehicles (EVs): With a renewed focus on sustainability, the government has proposed new green energy and EV adoption incentives. Solar power, wind energy, and EV manufacturing companies will likely benefit. Prominent stocks in this space include Tata Power and Adani Green Energy.

Higher Credit Availability to Agriculture and MSME Sectors

The budget emphasizes increased credit availability to the agriculture and Micro, Small, and Medium Enterprises (MSME) sectors, which fall under Priority Sector Lending (PSL) regulations. Banks are mandated to allocate at least 40% of their loan portfolios to the PSL segment. 

However, this segment has historically exhibited a higher-than-average delinquency ratio and is politically sensitive. Consequently, markets may express concerns regarding the prospects of banking and financial sector stocks. 

Notably, these stocks command a 34.60% weightage in the broad-based Nifty50 index. Therefore, any negative sentiment in this sector could significantly influence broader market movements. Source: Mint

Government Borrowing and Fiscal Implications

The government has outlined gross borrowings of ₹14.82 trillion, with ₹11.54 trillion to be raised through dated securities. Some of these borrowings will be met through small and public savings schemes. Given the substantial amount the government intends to raise from the money market, questions arise about the Reserve Bank of India’s (RBI) capacity to implement aggressive rate cuts in the upcoming monetary policy meeting. 

Maintaining elevated interest rates while increasing market borrowings could lead to a weakening rupee and “imported inflation,” potentially impacting banking and financial stocks, which are significant components of market indices.

Change in Asset Prices 

Security	24 Jan’25	31 Jan’25	% Change
Nifty 50 (Spot)	23092.2	23508.4	1.80%
Bank Nifty (Spot)	48367.8	49587.2	2.52%
Gold (MCX)	79601	82100	3.14%
Silver (MCX)	91189	93465	2.50%
Crude Oil (MCX)	6476	6335	-2.18%
Natural Gas (MCX)	339.5	268	-21.06%
DXY	107.465	108.501	1.036
USDINR (NSE)	86.265	86.7725	0.5075
10 year Bond Yield	6.72	6.7	-0.02
NSE Market Cap	41677614	42122796	1.07%
MWPL	38.98	8.2	-30.79
DJIA	44424.25	44544.66	0.27%
Nasdaq	21774.01	21478.05	-1.36%
S&P 500	6101.25	6040.52	-1.00%

Know More:   SEBI registered investment advisory |  Stock investment advisory

Market Sentiment and Investor Behavior

Statistical data indicates that retail investors are optimistic, while institutional investors, or “smart money,” have not significantly increased their exposure. Post-budget periods typically involve a few days of detailed analysis before markets stabilize. In this instance, the specifics of the new Income Tax Act are pending, and the RBI’s interest rate decision is awaited. 

Public Sector Undertakings (PSUs) and Key Sectors Volatility:

• Public sector banks, power, infrastructure, defense, logistics, and energy stocks are expected to witness heightened volatility in the coming days.
• Market participants will closely monitor these sectors as they react to budget allocations and policy changes.
  

Industrial Metals and Mining Sector:

• Signs of profit-taking are emerging in industrial metals, which could lead to a decline in stock prices for metal and mining companies.
• Investors may see short-term corrections in these stocks due to shifting commodity market trends.
  

Bullion Market Dynamics:

• Safe-haven buying in bullion is evident due to capital flight, driving increased demand for gold and silver.
• Investors will likely buy on price dips, further stabilizing the bullion market.
  

Futures Market Trends:

• The capital-intensive and high-volatility futures segment saw increased turnover contribution.
• Most of this activity is attributed to traders rolling over positions from the expiring series to the upcoming monthly series. The presence of dual turnover suggests firm conviction among traders.

Options Market Activity:

• The lower-risk index options segment experienced a sharp decline in turnover, reflecting the lowest level of risk appetite in derivatives trading. In contrast, stock options turnover saw an uptick as traders rolled over their positions, indicating a preference for higher-risk trades.
  

Banking Sector Performance:

• Banking stocks led the recent market rally, driven by expectations of personal income tax cuts and a possible RBI rate cut. Indian 10-year bond yields eased, providing a boost to banking stocks.
• However, the rupee depreciated against the US dollar, limiting market gains.
  

Market-Wide Position Limit (MWPL) and NSE Trends:

• MWPL fell routinely on expiry, reflecting adjustments in market positioning.
• The increase in NSE’s market capitalization suggests strong retail participation and investor confidence in select sectors.

Global Economic Context

It is essential to consider the global economic environment when evaluating the budget’s impact. International trade tensions and potential slowdowns in significant economies could influence India’s export-driven sectors. Additionally, fluctuations in global commodity prices may affect domestic industries. Investors should remain vigilant about these external factors, which can significantly impact market dynamics.

Conclusion

The Union Budget 2025 introduces measures to stimulate economic growth through tax reforms and increased infrastructure spending. While specific sectors stand to benefit, the overall market trajectory will depend on effective implementation and external economic conditions. Investors should stay informed and consider domestic and global policies when making investment decisions.

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Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

The Federal Reserve’s recent decision to hold interest rates steady has left investors reassessing their expectations. If markets were hoping for early rate cuts, Chair Jerome Powell clarified that they are not coming anytime soon. This shift in stance has forced global investors to recalibrate their strategies, as previous expectations of rate cuts starting in March now seem overly optimistic.

For Indian markets, the challenges extend beyond the Fed’s policy. Relentless foreign institutional investor (FII) outflows, a mixed corporate earnings season, and the upcoming Union Budget are shaping the near-term outlook. With limited policy flexibility, volatility will likely persist, and investors may need to adjust their expectations accordingly.

The Fed’s Stance: Strong Dollar, Weaker Emerging Markets

Powell’s firm stance on interest rates underscores the Fed’s commitment to cooling inflation before considering any cuts. A higher-for-longer rate environment strengthens the US dollar, reducing the appeal of emerging market equities—including India.

A strong dollar often translates to capital outflows from developing economies, as investors favor high-yielding, safer US assets. The impact on Indian equities is direct: capital flight by FIIs, increased volatility, and pressure on stock valuations.

Foreign Investors Exit 

Foreign investors pulled $8 billion from Indian equities in January alone. Concerns over high valuations and global yield movements have driven this withdrawal. As US bond yields rise, FIIs find better returns in developed markets, making India a less attractive destination.

Domestic Investors Step In (For Now)

Domestic institutional investors (DIIs) have been absorbing much of this selling pressure, preventing a sharper market correction. However, this trend may not be sustainable in the long run. If Powell delays rate cuts further, FIIs may continue selling, testing the resilience of DIIs and retail investors.

Since September, banking and IT stocks have shown resilience, but most other Nifty stocks have struggled. Mid- and small-cap stocks have been hit particularly hard, with 30-50% corrections. The buy-on-dips strategy is challenged as falling stock prices no longer guarantee attractive valuations, significantly when earnings growth is slowing.

Earnings Growth: A Reality Check

The Q3 earnings season has been mixed, with margin pressures and cautious management outlooks signaling tougher times ahead. Market valuations depend on earnings growth to justify stock prices. However, with corporate earnings slowing and no immediate rate cuts, the market may struggle to climb higher.

Nifty’s FY26 earnings growth is projected at 12%, but fund managers warn that downward revisions are possible. This makes the upcoming Union Budget even more crucial as investors look for policy signals to gauge future economic growth.
Source: Money Control

The Union Budget: Fiscal Discipline Over Hype

This year’s Budget is unlikely to bring sweeping policy changes, but a few key elements will be closely watched:

1. Fiscal Deficit Management – The government aims to maintain a fiscal deficit target of 4.5% for FY26, limiting room for aggressive spending.
2. Capital Expenditure—The capex target for FY25 is expected to increase marginally from ₹11.1 lakh crore. However, the actual spending gap could be significant, given the past differences in budgeted vs. actual expenditures.
3. Sector-Specific Incentives – Continued support for infrastructure and manufacturing could boost the market sentiment.

Unlike previous years, there has been no pre-budget rally. Historically, markets tend to rise in anticipation of growth-friendly measures. This time, the subdued sentiment suggests that any positive surprises in the Budget could trigger a short-term rebound.

However, major tax cuts or stimulus spending are unlikely, as the government focuses on fiscal discipline rather than short-term market appeasement.

What Lies Ahead for Indian Markets?

With the Fed standing firm, FIIs continuing to sell, and earnings growth slowing, the Indian stock market will likely remain range-bound in the near term. In such a scenario, identifying money-making opportunities will be key.

• Banking and life insurance stocks appear reasonably priced and could offer stability.
• Stock selection will be crucial, as companies with strong earnings command premium valuations.
• Mid- and small-cap stocks remain vulnerable to corrections if earnings fail to meet expectations.

The Broader Global Context

The Federal Open Market Committee (FOMC) meeting did not have a significant impact, as investors await more definitive guidance. Instead, policy announcements from Donald Trump’s administration could emerge as a major driver of market sentiment.

The operating environment remains challenging, with elevated US yields and a strong dollar. The Federal Reserve must also consider the impact of Trump’s potential economic policies, including sweeping tariffs, tax cuts, and other inflationary measures.

How the Fed’s Cycle Could Shape Indian Markets

Historically, Fed rate cuts weaken the US dollar, making emerging market assets more attractive. Lower US interest rates also increase global liquidity, prompting investors to seek higher returns in riskier markets like India.

Powell’s cautious approach means rate cuts will only happen once inflation is under control. If the Fed turns more supportive, it could boost Indian markets. However, worries about a global slowdown might keep foreign investors away from riskier markets like India. Source: Economic Times

Powell’s Balancing Act Amid Uncertainty

Powell has acknowledged that forecasting inflation trends has become increasingly complex. Trump’s economic policies could further complicate matters by fueling inflation through protectionist measures.

The Fed may maintain restrictive rates for longer to keep inflation in check, making borrowing costlier and slowing down economic activity. Powell and his team must navigate these uncertainties carefully to balance growth and price stability.

The Bottom Line

The Fed is not rushing to cut rates, and FIIs are pulling out of Indian equities. The Union Budget will likely prioritize fiscal prudence over market-friendly measures, making easy gains difficult.

For investors, this is a stock-picker’s market. Companies with strong fundamentals will continue to attract premium valuations, while weaker stocks may face prolonged corrections. As the tide turns, only well-positioned portfolios will weather the storm.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

Introduction

The Unified Payments Interface (UPI) has revolutionized digital transactions in India, offering a seamless and instant payment experience. Since its inception, UPI has seen exponential growth, becoming the backbone of the country’s digital economy. In the first half of 2024 alone, UPI transaction volumes surged by 52% year-on-year, reaching 78.97 billion upi transactions.

The Upcoming Change: No Special Characters in UPI Transaction IDs

In a recent directive, the National Payments Corporation of India (NPCI) announced that, effective February 1, 2025, UPI transactions containing special characters in their transactions central system will decline UPI transactions with the central system. This move aims to standardize and enhance system efficiency and security. economictimes.indiatimes.com

Impact on Users and Payment Apps

While this directive is primarily targeted at payment service providers, it’s crucial for users to be aware of potential disruptions. If a UPI app continues to generate transaction IDs with special characters beyond the stipulated date, transactions initiated through such apps will be declined. Therefore, users must ensure that their preferred UPI applications comply with the new guidelines to avoid inconvenience.

If UPI payments decline due to regulatory changes, technical issues, or user resistance, it could have widespread effects across multiple sectors. Here’s how different industries could be impacted:

1. Digital Payments and Fintech Industry

• Revenue Drop: Payment service providers like PhonePe, Google Pay, and Paytm rely on high transaction volumes. A drop in UPI payments could affect their revenues, particularly from merchant transactions.
• User Friction: If users face declined transactions, they might switch to alternative payment methods, leading to customer dissatisfaction and potential churn.
• Increased Compliance Costs: Payment apps must ensure compliance with NPCI regulations, requiring additional backend updates and user education investments.

2. E-commerce and Online Retail

• Cart Abandonment: UPI is a preferred payment method for online shoppers due to its ease of use. A decline in transactions could lead to increased cart abandonment rates.
• Shift to Alternatives: Users might revert to credit/debit cards, wallets, or cash-on-delivery (COD), increasing operational complexities for e-commerce companies.
• Merchant Adaptation: Small merchants, especially those relying solely on UPI, may face cash flow disruptions.

3. Small and Medium Enterprises (SMEs)

• Cash Flow Issues: SMEs and local businesses depend on UPI for fast and seamless transactions. A decline could slow down payments and impact working capital.
• Reluctance to Go Digital: If transactions frequently fail, some merchants may reconsider relying on digital payments, slowing financial inclusion efforts.

4. Banking Sector

• Higher Load on Card Networks: With fewer UPI transactions, banks may see an increased reliance on traditional card transactions, with higher processing costs.
• Customer Support Overload: Banks may experience a surge in customer queries and complaints regarding failed transactions or non-compliant apps.
• Impact on Financial Inclusion: UPI has been instrumental in bringing millions into the formal banking system. A decline could slow down financial inclusion initiatives.

5. Consumer Behavior & Economy

• Reduced Digital Payment Adoption: Trust in digital transactions may decline, leading to a shift back to cash-based transactions in specific sectors.
• Slowdown in Transaction Growth: India’s digital economy has been thriving due to UPI. A decline in UPI transactions could slow the pace of digital financial adoption.
• Potential Impact on GDP Contribution: With India aiming to reach a $3 trillion digital economy, any slowdown in UPI usage could affect digital transaction volumes, impacting overall economic activity. 

Steps to Ensure Seamless UPI Transactions

1. Update Your UPI App: Regularly update your UPI application to the latest version, as updates often include compliance with the latest NPCI guidelines.
2. Verify App Compliance: Check with your UPI app provider to confirm they have implemented the necessary changes to exclude special characters from transaction IDs.
3. Stay Informed: Keep abreast of communications from your UPI app and the NPCI regarding any further updates or changes to the UPI system.

Conclusion

While the upcoming changes will enhance security and efficiency, ensuring smooth implementation and clear communication will be crucial to prevent declining transactions. Regulatory bodies, fintech players, and businesses must work together to maintain consumer trust and digital payment momentum.

On January 29, 2025, at precisely 6:23 AM, the Indian Space Research Organisation (ISRO) achieved a monumental milestone with the successful launch of the GSLV-F15 rocket, carrying the NVS-02 navigation satellite, from the Satish Dhawan Space Centre in Sriharikota (India TV News). 

This event marked ISRO’s 100th mission from this iconic spaceport, underscoring India’s significant space exploration and technology strides. 

Experience the rapid time-lapse footage!

GSLV-F15, fully integrated up to the Cryogenic Upper Stage was transported to the Second Launch Pad.

Hours of meticulous preparation condensed into mere seconds. #GSLV #NAVIC #ISRO pic.twitter.com/CTjPzKhdOQ

— ISRO (@isro) January 25, 2025

A Glimpse into ISRO’s Journey

Established in 1969, ISRO has evolved from launching modest satellites to executing complex interplanetary missions. The organization’s commitment to self-reliance and innovation has positioned India as a formidable player in the global space community. 

From the groundbreaking Mars Orbiter Mission to the Chandrayaan series exploring the lunar surface, ISRO’s endeavors have consistently showcased India’s scientific prowess.

The Significance of the 100th Launch

The GSLV-F15 mission is not merely a numerical milestone; it represents decades of dedication, research, and technological advancements. The NVS-02 satellite aboard this launch is a part of the Navigation with Indian Constellation (NavIC) system, India’s indigenous regional navigation satellite system designed to provide accurate position information services to users in India and the surrounding region (The Hindu).

Enhancing India’s Navigation Capabilities

NavIC aims to offer two types of services: the Standard Positioning Service (SPS) for all users and the Restricted Service (RS) for authorized users. Including the L1 band in the NVS-02 satellite aligns with frequencies used by global systems like the U.S. Global Positioning System (GPS), enhancing compatibility and broadening the scope of applications, including integration into wearable technology and smartphones (Republic World).

Implications for Industries and India’s Space Program

The successful deployment of the NVS-02 satellite bolsters India’s autonomy in navigation services, reducing reliance on foreign systems. This self-reliance is crucial for various sectors:

Defense & Security:

• The NavIC system will help to ensure secure and precise navigation for military operations and improve surveillance, reconnaissance, and tactical planning. It will enhance border security, missile guidance, and strategic deployments, reducing dependence on GPS controlled by foreign entities.

Transportation & Logistics:

• The enhanced navigation system will significantly improve route planning, fleet management, and maritime, aviation, and road transportation efficiency. Airlines will benefit from accurate flight navigation, shipping industries can optimize cargo routes, and logistics firms could use it for real-time tracking to improve their deliveries.

Agriculture & Rural Development:

• The improved positioning system will aid in precision farming, enabling better land surveying, irrigation planning, and automated machinery guidance. Farmers would better utilize resources, leading to higher yields and sustainable agricultural practices, which would aid India’s agrarian economy.

Disaster Management & Emergency Response:

• NavIC’s precise positioning will help with real-time disaster monitoring, search and rescue operations, and the quick deployment of relief measures. It can also offer reliable navigation systems for coordinating rescue missions and supplying aid in flood-prone areas or earthquake-affected zones.

Telecommunications & Financial Services:

• NavIC provides highly accurate timing information, crucial for synchronizing mobile networks, banking transactions, and stock market operations. Reliable time stamping reduces discrepancies in high-frequency trading and ensures seamless financial operations.

Smartphone & Consumer Technology:

• Integrating NavIC in mobile devices will expand the consumer navigation market, offering domestic users an indigenous alternative to GPS with better accuracy. This will strengthen India’s digital infrastructure and support navigation, gaming, and augmented reality apps.

India’s Booming Space Industry

India’s space sector is experiencing rapid growth. This year, the government allocated nearly 130 billion rupees to the space department. Per Reuters, the ISRO anticipates a 20% to 30% increase in its budget over the coming years, focusing on developing a heavy-lift booster rocket and other ambitious projects such as crewed spaceflights (Times of India). 

The $630 billion global commercial space market is expected to be worth $1.8 trillion by 2035, according to McKinsey & Co. India’s share of the commercial space market is $8 billion today, with aims to reach $44 billion in the next decade. The government plans to establish a space station by 2035 and a manned moon mission by 2040. 

Additionally, it will set up a 10 billion rupee venture capital fund to support its space sector, which has been liberalized to attract 100% foreign investments in manufacturing satellite systems without official approval, easing the rules for launch vehicles.

ISRO’s Future Endeavors

Following this landmark launch, ISRO is gearing up for several ambitious projects. The agency is focusing on developing a heavy-lift booster rocket, further lunar explorations, and Mars-bound missions. ISRO is also working on the Gaganyaan mission, India’s first human spaceflight program to send astronauts into low Earth orbit. The organization also collaborates with private firms to bolster commercial satellite launches, aiming to make India a leading global launch hub.

Social Media Celebrations

The historic launch garnered widespread attention on social media platforms. Dr. Jitendra Singh, Union Minister of State for Science & Technology, congratulated ISRO, stating, “Congratulations to @isro for achieving the landmark milestone of 100th Launch from Sriharikota. This is a testimony to India’s growing prowess in space technology.”

Enthusiasts and citizens shared images and videos of the launch, expressing pride in India’s scientific community. The hashtag #ISRO100thLaunch trended on X (formerly Twitter), with users highlighting the event’s significance and its impact on India’s future in space exploration.

Looking Ahead

As ISRO celebrates this centennial milestone, the organization remains committed to pushing the boundaries of space science. Future plans include developing more advanced satellites, exploring missions to Mars and beyond, and initiatives to foster international collaborations. The 100th launch from Sriharikota is not just a reflection of past achievements but a beacon guiding the path to future discoveries.

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Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

Know More:  
SEBI registers investment advisory |  Stock investment advisory

The inauguration of Donald Trump as the 47th President of the United States has set the stage for significant economic and policy shifts. As the world watches, markets have already started responding, and Indian professionals in the US are bracing themselves for potential changes in trade, regulation, and immigration policies. But what does this mean for global markets, especially India’s economy? And how will Trump’s policy agenda impact Indian professionals working in the US?

Market Reactions to Trump’s Inauguration

Indian stock markets opened on a positive note ahead of Trump’s swearing-in ceremony. The Nifty 50 index opened at 23,290.40 points, gaining 87.20 points (0.38%), while the BSE Sensex surged by 359.20 points (0.47%), opening at 76,978.53. Market experts suggest that investors are keenly observing Trump’s first executive orders, which will provide insights into his economic agenda for the upcoming term.

Sectoral Impact:

• While sectors such as Nifty Auto, FMCG, and Metal faced declines, others gained traction. Nifty Private Bank surged by 1%, with Kotak Mahindra Bank leading the rally by jumping 7.5%, supported by a 10% rise in quarterly profit. Similarly, Wipro rose 7% after exceeding third-quarter revenue and profit expectations.

Asian markets

• have also shown optimism, driven by hopes of a US-China trade deal and the Israel-Hamas ceasefire being implemented. The Nifty smallcaps and midcaps indices rose by 0.3% and 0.6%, respectively, indicating a broader market uplift. Asian equities climbed in early Monday trading, tracking US peers following a positive conversation between Donald Trump and Chinese leader Xi Jinping ahead of the US President-elect’s inauguration. 

• Shares in Australia, Japan, and South Korea gained, while a gauge of US-listed Chinese shares jumped 3.2% on Friday as Trump described the talk between the two leaders as “very good.” US futures were slightly lower in Asian trading with Wall Street closed on Monday due to a holiday. Source: The Tribune

Trump’s Economic Policy Agenda

Trade and Tariffs

Trump’s “America First” policy emphasizes protectionism, focusing on domestic job creation and reducing trade deficits. His proposed tariffs include universal duties ranging from 10% to 20% on all imports, with up to 60% tariffs on Chinese goods, and 25% tariffs on imports from Mexico and Canada. These measures are expected to have far-reaching consequences:

• Increased inflation and a stronger US dollar make exports less competitive.
• Pressure on global supply chains, especially in the automotive and technology sectors.
• Potential market volatility as investors weigh long-term consequences against short-term gains.

Analysts expect a phased implementation to allow businesses to adjust, though concerns remain regarding the speed and scale of execution.

Regulatory Changes: Energy and Financial Sectors

One of the key focus areas of the new administration is deregulation, which is likely to impact both the financial and energy sectors significantly.

• Financial sector: Trump is expected to roll back stringent regulations imposed under the previous administration. This move is anticipated to benefit banks by reducing compliance costs and increasing profitability. Investor optimism has already rallied financial stocks, reflecting positive sentiment around the sector’s growth potential.

• Energy Sector: Trump’s policies may include easing restrictions on oil and gas exploration on federal lands, lifting a pause on liquified natural gas (LNG) exports, and scaling back environmental regulations. These measures could make operations more cost-effective for energy firms, boosting US energy exports. However, long-term sustainability concerns remain.

• Cryptocurrency Market: The cryptocurrency market is closely watching Trump’s administration. There are expectations that executive orders may introduce crypto-friendly policies, providing much-needed regulatory clarity. If implemented effectively, this could lead to increased investment in the crypto market, though some experts remain cautious about speculative volatility. Source: Business Insider

Immigration Policies and Impact on Indian Professionals

A major area of concern for Indian professionals in the US is the anticipated shift in immigration policies. Key areas of impact include:

• H1B visa policies: Potential tightening of eligibility criteria and prolonged processing times.
• Green card approvals: Increased uncertainty surrounding backlog reduction and priority allocations.
• Work visa extensions: Stricter compliance checks may add challenges for existing visa holders.

With growing uncertainty, many Indian professionals are exploring alternative destinations such as Europe and Canada. Despite concerns, industry experts suggest that Indian IT firms have been proactively strengthening their local hiring strategies to minimize risks associated with policy changes. In the long run, while challenges exist, the Indian IT sector remains confident in adapting to the evolving landscape. Source: Economic Times

Cryptocurrency: The Rise of $TRUMP Coin

In an unexpected move, Trump has ventured into the cryptocurrency market by launching the $TRUMP coin. The digital asset debuted with a market capitalization of $9 billion, peaking at $15 billion, with the price surging over 300% within days of its release. Currently valued at around $46, the meme coin is hosted on the Solana blockchain, with an initial supply of 200 million tokens is expected to expand to 1 billion over the next three years. While excitement is high, market analysts remain cautious about its long-term viability. Source: Forbes

Looking Ahead: Challenges and Opportunities

As Trump’s policies take shape, their impact on the global and domestic markets will become clearer. Investors are closely watching trade, immigration, and financial regulation changes to assess long-term economic prospects.

For Indian professionals in the US, the evolving policy environment presents challenges and opportunities. While sectors such as technology and finance may find new avenues for growth, concerns over stricter immigration policies persist. The road ahead remains uncertain, but adaptability and strategic planning will be key to navigating these changes.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

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The wedding industry in India, a billion-dollar ecosystem, continues to thrive despite economic ups and downs. Known for its grandeur and cultural significance, the sector evolves with changing consumer preferences while remaining deeply rooted in traditions. 

With the conclusion of Kharmas, an inauspicious period that began on December 15, 2024, the stage is set for the resumption of auspicious activities, including weddings. Starting January 16, the wedding season will officially kick off, featuring 75 auspicious dates throughout 2025. This season of auspicious dates will culminate with Shivratri this year.

Now, let’s look at the statistics. According to the Confederation of All India Traders (CAIT), India is expected to witness approximately 4.8 million weddings between November 2024 and March 2025, covering the latter half of 2024 and the early months of 2025. This will drive economic activity worth $6 trillion.

Source: Business Standard

Globally, India is the second-largest wedding market, trailing only the United States, underscoring its immense economic influence and rising global recognition. 

The Wedding Services Market has showcased impressive growth in recent years, expanding from USD 267.08 billion in 2023 to USD 284.87 billion in 2024. This upward trend is set to continue, with the market projected to grow at a robust CAGR of 7.02%, reaching an impressive USD 429.56 billion by 2030.

Key Sectors Benefiting from the Indian Wedding Boom

According to industry experts, the ongoing wedding boom in India is expected to benefit both the goods and services sectors significantly. Here’s a breakdown of the key areas poised to gain from this surge in celebrations.

Goods Sector

A substantial portion of wedding spending is allocated to goods, with clothing and jewelry dominating the list.

• Clothing and Apparel (10%): Sarees, lehengas, and other traditional attire remain top priorities for couples and families.
• Jewelry (15%): Gold, diamonds, and traditional ornaments are essential in Indian weddings.
• Electronics and Consumer Durables (5%): Home appliances and gadgets are popular wedding gifts.
• Dry Fruits, Sweets, and Snacks (5%): These are staples in gift hampers and for guests.
• Groceries and Vegetables (5%): Catering to large wedding feasts involves considerable spending in this category.
• Gift Items (4%): Personalized and traditional gifts hold a significant share.
• Other Goods (6%): Miscellaneous items such as wedding favors also contribute to the spending.

Source: Business Standard

Services Sector

The spotlight falls on venues, catering, and decorations in the services sector.

• Banquet Halls and Wedding Venues (5%): Booking premium venues is a key expenditure.
• Event Management (5%): Professional planners ensure the smooth execution of grand events.
• Tent Decoration (12%): This includes elaborate setups for outdoor or semi-outdoor functions.
• Catering Services (10%): High-quality food and diverse menus are non-negotiable for Indian weddings.
• Floral Decoration (4%): Fresh flower arrangements add charm and elegance to the celebrations.
• Transportation (3%): Logistics for guests and the wedding party require meticulous planning.
• Photography and Videography (2%): Capturing memories professionally remains essential.
• Orchestras and Bands (3%): Musical performances set the tone for celebrations.
• Light and Sound (3%): Professional setups enhance the ambience.
• Other Services (3%): Additional services like make-up artists and live entertainment are also in demand.

Source: Business Standard

Rising Trend: Social Media Services

There has been a notable increase in spending on wedding social media services. Couples opt for curated digital coverage to showcase their special moments online, reflecting a growing trend towards personalized and technology-driven celebrations.

Matrimonial Dynamics in 2024

As wedding trends continue to evolve, let’s take a closer look at the latest changes in the industry. WedMeGood conducted a comprehensive survey, collecting insights from over 3,500 couples planning their weddings between April 2024 and March 2025. Additionally, feedback was gathered from more than 500 wedding vendors, including planners, photographers, makeup artists, and venue providers.

The 2024 trends show a growing preference for later marriages, with the average age for love and arranged unions at 28. Bumble, Hinge, and Shaadi.com remain top choices for serious dating and matrimonial matches.

Wedding Financing

Wedding financing in 2024 reflects millennials’ active role in financial independence. Over 80% of wedding expenses were covered through personal or family savings, while around 12% relied on loans and 6% liquidated assets, mainly to fund high-cost categories. While jewelry remained the top expenditure, venues, catering, and décor also constituted a significant portion of the spending.

Source: wedmegood.com

Rising Costs and Preferences in Indian Weddings

The cost of weddings in India rose significantly in 2024, with expenses increasing by an average of 7% compared to 2023. This surge was largely driven by the hospitality industry, including venues and catering, which raised their prices by over 10%.

The average budget for a traditional Indian wedding stands at ₹36.5 lakh, while destination weddings demand a higher average expenditure of ₹51.1 lakh. These figures reflect the increasing trend of couples opting for grand and memorable experiences, pushing the boundaries of wedding planning. Source: wedmegood.com

Growing Trend of Destination Weddings

Destination weddings continue to gain popularity among Indian couples, with a steady rise in demand for picturesque and unique locations. Traditional favorites such as Rajasthan, Goa, and Kerala remain the leading choices for domestic destination weddings. However, newer locales like Daman, Khajuraho, and Mussoorie have emerged as fresh options in 2024, offering distinct charm and appeal.

On the international front, Thailand, the UAE, and Italy are the most sought-after destinations for Indian weddings. These destinations are renowned for their exotic settings and hospitality. Istanbul has also seen a surge in popularity, attracting couples seeking a blend of culture and elegance.

Source: wedmegood.com

Growth Drivers for the Wedding Industry

Cultural Trends Shaping Preferences

The demand for unique and personalized wedding experiences is rising, driven by evolving cultural trends. Couples increasingly seek celebrations that reflect their individuality, making customization a significant growth factor.

Post-COVID Resurgence in Spending

As economies recover from the pandemic, a noticeable uptick in wedding-related spending has occurred. This resurgence provides an opportunity for businesses to cater to clients eager to celebrate in grander ways after years of restrictions.

Technological Advancements

Technologies like virtual reality are transforming how couples plan their weddings. From immersive venue tours to AI-driven personalized planning, these innovations enhance customer experiences and streamline the planning process.

Growing Popularity of Eco-Friendly and Destination Weddings

Sustainability is becoming a priority for many, with eco-friendly weddings gaining traction. Additionally, destination weddings remain popular, offering couples and guests memorable, travel-centric experiences.

Opportunities for Growth in the Wedding Industry

Comprehensive Service Packages

Bundling services into all-in-one packages can capitalize on the desire for convenience and simplicity, appealing to modern couples who value efficiency in planning.

Embracing Cutting-Edge Technology

AI and machine learning offer immense potential for personalized planning, helping businesses deliver tailored solutions that resonate with clients’ preferences.

Expanding into Emerging Markets

Emerging markets with rising disposable incomes present new growth opportunities. Targeting these regions can unlock untapped spending power.

Catering to Specialized Niches

Targeting niches such as LGBTQ+ weddings or offering customizable virtual services can help businesses stand out in a competitive market. These segments represent significant areas of untapped potential. Source: wedmegood.com

Trends to Watch

Wedding planning apps are leveraging AI to provide seamless services. Tools that offer budget management, vendor comparisons, and guest list tracking are game-changers. While grand physical gatherings dominate, virtual participation for overseas guests is still relevant. Hybrid weddings combine the best of both worlds. Themes reflecting cultural heritage, modern aesthetics, or favorite movies are becoming standard. 

Planners are tasked with bringing intricate ideas to life. Highlights include curated menus featuring regional delicacies, fusion dishes, and exotic beverages. Specialized chefs and mixologists are in demand. Floral installations remain a classic choice, but there’s a notable shift toward using recycled and reusable materials for decorations.

Challenges in the Wedding Industry

Inflation and fluctuating costs of raw materials impact budgets, leading to cost-conscious decisions. Coordinating with multiple vendors while ensuring quality remains a logistical challenge. The wedding sector’s heavy reliance on seasonal muhurats creates operational bottlenecks. Balancing traditional expectations with modern desires requires adaptability and innovation.

Looking Ahead to Shivratri 2025

As we approach Shivratri 2025, the wedding industry stands resilient, driven by cultural fervor, technological advancements, and evolving consumer preferences. With auspicious muhurats providing momentum, this period promises a celebratory high and economic vitality for numerous allied sectors. Whether embracing sustainability or curating unique experiences, the “I Do” industry will make headlines.

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Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

FAQ

How does a spiritual gathering transform into an economic powerhouse? What makes the Maha Kumbh, a centuries-old tradition, such a significant contributor to the economy? The Maha Kumbh, often described as the largest human congregation in the world, is not just a religious or cultural event—it is a financial catalyst with far-reaching implications.

The Historical and Cultural Significance of Maha Kumbh

The Maha Kumbh Mela, rooted in Indian mythology and tradition, occurs once every 12 years at one of four locations: Prayagraj, Haridwar, Ujjain, and Nashik. According to Hindu astrology, this massive pilgrimage is linked to the celestial movement of Jupiter, the Sun, and the Moon. It symbolizes spiritual cleansing and attracts millions of devotees, saints, and international visitors seeking divine blessings and cultural experiences.

In 2025, the Maha Kumbh at Prayagraj is expected to set new records. With preparations underway, the focus is on its spiritual aspects and its profound economic impact.

Economic Impact of Maha Kumbh

Revenue Projections and Job Creation

According to Uttar Pradesh Chief Minister Yogi Adityanath, the 2025 Maha Kumbh is projected to generate revenues of up to ₹2 lakh crore. This figure underlines the event’s capacity to significantly boost the state’s economy. The scale of economic activities surrounding the Maha Kumbh is immense, spanning tourism, infrastructure development, retail, hospitality, and transportation.

Past data from events like the 2019 Kumbh Mela reveal the financial benefits associated with these gatherings. For instance, the 2019 Prayagraj Kumbh attracted over 24 crore visitors and contributed ₹1.2 lakh crore to the economy. Experts suggest that Maha Kumbh 2025 will surpass these figures due to enhanced infrastructure and promotional efforts.

The event is also a major source of employment. Thousands of jobs are created in sectors like:

• Hospitality and Catering: Hotels, guesthouses, and food vendors witness a massive influx of customers.
• Transportation: Drivers, logistics managers, and support staff see increased demand.
• Construction: Large-scale infrastructure projects require skilled and unskilled labor.
• Local Businesses: Artisans, shopkeepers, and small vendors benefit from the spending by millions of attendees.

Tourism and International Attention

The Maha Kumbh attracts tourists from around the world. In 2019, more than 10 lakh foreign tourists attended the Kumbh Mela, highlighting its global appeal. This influx boosts foreign exchange earnings and promotes India’s cultural heritage on a global stage.

The government invests heavily in developing tourism-related infrastructure to cater to the growing number of visitors. Improved roads, railways, airports, and accommodations ensure smoother experiences for pilgrims and tourists. These upgrades have lasting benefits, enhancing connectivity and accessibility long after the event. Source: Hindustan Times

Boost to Local Economies

Local economies around Prayagraj experience a surge in demand during the Maha Kumbh. Small businesses—from flower vendors to boat operators—report record earnings. Local artisans selling handicrafts and religious paraphernalia also find a lucrative market among visitors. This economic activity trickles down to even the smallest players, fostering inclusive growth.

Real Estate and Infrastructure Development

The Maha Kumbh catalyzes urban development. Significant funds are allocated for constructing new roads, bridges, sanitation facilities, and accommodations. The 2025 Maha Kumbh is expected to see unprecedented investments in infrastructure, ensuring a seamless experience for attendees. These developments often transform the host city, making it more attractive for future investments and events.

Government and Policy Support

The government’s role in organizing the Maha Kumbh is pivotal. For the 2025 event, the Uttar Pradesh government has planned extensive initiatives, including:

• Technology Integration: Digital tools for crowd management, virtual darshan facilities, and real-time visitor updates.
• Public Safety: Deployment of additional security personnel and emergency response teams.
• Environmental Measures: Efforts to minimize ecological impact through waste management and pollution control.

These measures not only enhance the event’s execution but also contribute to long-term economic stability and sustainability.
Source: The Hindu

A Broader Perspective on Economic Benefits

The Maha Kumbh’s economic impact extends beyond immediate revenues and job creation. Experts like Neelkanth Mishra, a prominent economist, emphasize the lasting effects on India’s economy. Infrastructure improvements increased global visibility, and the promotion of India as a cultural and spiritual destination has ripple effects across various sectors.

Moreover, the event’s ability to mobilize resources and people on a massive scale showcases India’s organizational capabilities. This, in turn, boosts investor confidence and attracts further investments.

Conclusion

The Maha Kumbh is more than a religious congregation; it is a testament to India’s cultural richness and economic potential. The event leaves an indelible mark on the economy by generating revenues, creating jobs, and driving infrastructure development. As preparations for the 2025 Maha Kumbh continue, it is a powerful example of how tradition and modernity coexist to create lasting economic and social impact.

Whether you view it as a spiritual journey or an economic engine, the Maha Kumbh’s significance is undeniable. It reminds us of the profound ways in which culture and economy are intertwined, shaping not just a city but an entire nation.

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Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

Have you noticed the latest buzz around India’s economic growth? You might be concerned about the future if you’re watching the numbers. The National Statistics Office (NSO) has released its first advance estimates, indicating that India’s GDP growth for the fiscal year 2024-25 (FY25) is set to slow down to 6.4%.

This figure marks the lowest growth rate in four years and falls short of the Reserve Bank of India’s (RBI) projection of 6.6%. Let’s break down what this means and why there’s still a silver lining in the second half of the fiscal year.

Key Takeaways from GDP Estimates

• Real GDP Growth: 6.4% for FY25, down from 8.2% in FY24.
• Nominal GDP Growth: Projected to grow by 9.7% in FY25, a slight increase from 9.6% in FY24.
• Gross Value Added (GVA): Real GVA growth is expected to remain at 6.4%, compared to 7.2% in FY24.
• Sectoral Growth:
  • Agriculture: 3.8% growth in FY25, up from 1.4% in FY24.
  • Construction: 8.6% growth in FY25, down from 9.1% in H1.
  • Services: Slight increase to 7.2% in FY25 from 7.1% in H1.
• Expenditure Growth:
  • PFCE: 7.3% growth in FY25, up from 6.7% in H1.
  • GFCE: 4.1% growth in FY25, up from 2% in H1.
  • Investment Demand: Remains steady at 6.4% in FY
• Source: MOSPI

Understanding the GDP Slowdown

The NSO’s estimate of 6.4% growth represents a significant deceleration from the 8.2% growth rate recorded in FY24. This slowdown is attributed to various factors, including subdued consumer demand and elevated inflation rates. In the first half of FY25 (H1), the economy grew at 6%, but the NSO anticipates an improved performance in the second half (H2), with GDP growth expected to rise to 6.7%.

Breakdown of the Estimates

The First Advance Estimates of GDP incorporate industrial production data from October and lead indicators up to December, projecting a stronger second half. The Gross Value Added (GVA) growth is also pegged at 6.4%, aligning with the GDP growth rate. This alignment suggests that indirect taxes and subsidies will likely balance each other out, maintaining overall economic stability.

Sectoral Insights: Agriculture and Manufacturing on the Rise

One of the key highlights of the NSO’s report is the anticipated improvement in the agriculture and manufacturing sectors during H2 FY25.

• Agriculture: Agriculture grew by 2.7% in the first half, but the NSO estimates a robust 3.8% growth for the entire fiscal year. This uptick is expected due to healthy reservoir levels and favorable soil moisture conditions supporting rabi cultivation.

• Manufacturing: The manufacturing sector saw a 4.5% growth in H1 and is projected to increase to 5.3% in FY25. This growth is primarily driven by a likely recovery in domestic demand, which is crucial for sustaining manufacturing activities.
  

While these sectors show promise, not all areas are set to perform equally. For instance, the labor-intensive construction sector is expected to slow down in H2, with growth dipping from 9.1% in H1 to 8.6% in FY25. On the other hand, the services sector is projected to see a marginal increase, growing from 7.1% in H1 to 7.2% in FY25.

Expenditure Trends: Private and Government Spending

On the expenditure side, private and government spending is expected to grow faster in the second half of FY25 than in the first half.

• Private Final Consumption Expenditure (PFCE): Estimated to grow by 7.3% in FY25, up from 6.7% in H1. This increase indicates stronger consumer spending, a positive sign for the economy.
  
• Government Final Consumption Expenditure (GFCE): Projected to rise by 4.1% in FY25, compared to 2% in H1. Increased government spending can help sustain economic activities and support various sectors.
  

However, investment demand, represented by gross fixed capital formation, is expected to grow at the same rate of 6.4% in FY25 as in H1. This stagnation suggests private investment is not picking up, which could concern long-term economic growth.

Inflation and Global Factors

Inflation remains a significant concern, with the December inflation rate expected to exceed 5%. Although vegetable prices moderated somewhat during the season, it wasn’t enough to counterbalance the substantial price increases observed in recent months.

Global uncertainties also affect the economic outlook. The incoming Trump presidency has added depreciation pressure on the rupee.

Additionally, the US Federal Reserve will likely maintain its current stance in the upcoming January meeting, which could lead to higher US yields and further pressure on the rupee. Given these global factors and elevated inflation, the RBI is expected to adopt a cautious approach, possibly waiting for more evidence that inflation is moderating before considering any rate cuts.
Source: Business Standard

Nominal GDP and Fiscal Deficit

The NSO has estimated nominal GDP growth to be 9.7% for FY25, slightly lower than the 10.5% assumed in the Budget. This marginal slowdown could make it challenging for the government to achieve its fiscal deficit target of 4.9%. However, sluggish capital expenditure might lead to substantial savings for the government, helping it stay on track with fiscal consolidation efforts.

Conclusion

India’s GDP growth for FY25 is projected to slow to 6.4%, the lowest rate in four years. While this may seem concerning, there are positive signs, particularly in the agriculture and manufacturing sectors, which are expected to perform well in the second half of the fiscal year. Improved consumer demand and increased government spending also support the economy. However, rising inflation and global uncertainties remain challenging, making understanding these factors important to grasping the economic outlook for the months ahead.

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Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

The convenience of accessing your Provident Fund (PF) is set to undergo a revolutionary transformation. Starting January 2025, the EPFO will roll out its IT 2.1 version, enabling claimants, beneficiaries, and insured individuals to withdraw claims directly through ATMs. This system minimizes human intervention, ensuring a faster and more seamless withdrawal experience. Source: Businesstoday

Let’s delve into what this change entails and how it could benefit millions of employees nationwide.

A Game-Changer for PF Withdrawals

The EPFO, with more than 70 million active contributors, is working on modernizing its services to enhance subscribers’ convenience and accessibility. Withdrawing your PF involves navigating online portals, submitting forms, and undergoing time-consuming approval processes. 

Although the recent digital transition has simplified the procedure to some degree, the new facility to withdraw PF through ATMs is set to offer unmatched ease. As per the Labour Secretary, this initiative will allow employees to access their funds with minimal effort, like withdrawing cash from a savings account.

Key Features of the New System

Introduction of PF Withdrawal Cards	PF withdrawal cards will be directly linked to subscribers’ accounts.
Direct ATM Access	The new system will introduce dedicated PF withdrawal cards, which function similarly to regular bank ATM cards.
Withdrawal Limit	Withdrawals will be capped at 50% of the total Provident Fund (PF) balance, ensuring that adequate funds remain for future emergencies.
Broader Government Initiatives	The government is taking various steps to enhance social security for workers, including gig and platform workers. Code on Social Security, 2020, extends benefits like medical coverage, disability support, and provident funds to gig workers.
Other Improvements	The government is exploring significant enhancements to the Employees’ Provident Fund (EPF) framework, including raising the salary limit for EPF eligibility to ₹21,000, removing the existing 12% cap on voluntary PF contributions, and streamlining claim settlement processes to ensure faster and more efficient handling.
Future of Social Security Benefits	Although no specific timeline has been provided, efforts to roll out enhanced social security benefits are in advanced stages.

How Will It Work?

The Labour Secretary outlined a user-friendly mechanism for ATM-based PF withdrawals:

1. Linking Your PF Account to Your Bank Account: Employees must ensure their PF account is linked to their registered bank account.
2. Generating a Unique ATM-PIN for PF Transactions: A one-time setup will enable users to develop a secure PIN specifically for PF withdrawals.
3. Withdrawing Cash: Once the PIN is set up, employees can use any ATM to withdraw their PF funds, subject to limits specified by the EPFO.
4. Instant Transactions: The withdrawals are expected to be instantaneous, making emergency access to funds much quicker than the current process.

Key Benefits of ATM-Based PF Withdrawals

• Simplified Access: Subscribers can now avoid visiting EPFO offices or dealing with lengthy procedures. With this new system, funds can be withdrawn effortlessly from any ATM.
• Accelerated Transactions: ATM-based withdrawals eliminate the delays typical of traditional PF claim processes, ensuring quicker access to funds when needed most, especially during emergencies.
• Round-the-Clock Availability: With ATMs accessible 24/7, subscribers can withdraw their PF savings anytime, including weekends and public holidays, offering unmatched convenience.
• Enhanced Efficiency: The integration of upgraded IT systems ensures smooth, error-free transactions, making the withdrawal process more reliable and user-friendly.
• Improved Financial Flexibility: The ability to withdraw funds instantly empowers subscribers with better financial security, particularly in urgent situations such as medical emergencies or unforeseen expenses.

Current PF Withdrawal Rules

While employed, employees can withdraw up to 90% of their PF balance from the EPFO portal for specific purposes. The withdrawal eligibility depends on the reason for withdrawal and the years of service. Below are some scenarios:

1. Housing:

Employees can withdraw up to 90% of the PF balance after completing at least five years of service for purchasing or constructing a house.

2. Medical Emergencies

Members can withdraw an amount equal to six months’ basic wages and dearness allowance or the employee share with interest, whichever is lower.

3. Education or Marriage

Employees can withdraw up to 50% of their share with interest after completing seven years of service.

4. Retirement

Employees above 54 can withdraw 90% of their balance within one year of their retirement date.

Source: Business Standard

EPFO Modernization Efforts

The Labour Secretary highlighted several improvements that will accompany this rollout:

1. Unified Digital Infrastructure: EPFO is upgrading its IT systems to ensure real-time data integration between PF accounts and banking networks.
2. Dedicated Customer Support: A helpline will be established to assist employees in linking their accounts and resolving any technical issues.
3. Withdrawal Limits: Initial daily withdrawal limits will likely be capped, ensuring responsible usage while safeguarding long-term savings.
4. Enhanced Awareness Campaigns: EPFO plans to conduct workshops and awareness drives to educate employees about this new facility.

Potential Challenges and Solutions

While the initiative is groundbreaking, it’s not without potential hurdles:

Initial Setup Issues

Some employees may have difficulty linking their accounts or generating the required PINs. EPFO will provide step-by-step guidance through its website, mobile app, and helpline to address this.

Infrastructure Readiness

Ensuring all ATMs are equipped to handle PF transactions is a massive task. EPFO is collaborating with banks and ATM service providers to upgrade infrastructure well before the rollout.

Awareness Gap

Not all employees may be aware of this new facility. EPFO plans extensive communication campaigns using print, digital, and social media channels to bridge the gap.

How Employers Can Support This Transition

Employers play a crucial role in facilitating a smooth transition. They can assist their employees by:

• Educating staff about the new withdrawal process during orientation sessions.
• Ensuring employee details, including Aadhaar and bank account information, are updated in EPFO records.
• Providing resources like workshops or one-on-one support to help employees link their accounts and generate their ATM PINs.

What This Means for the Workforce

The ability to withdraw PF from ATMs symbolizes a significant leap toward financial empowerment. Here’s how different segments of the workforce stand to benefit:

Blue-Collar Workers

Quick access to PF funds during emergencies can be a lifeline for daily wage earners or factory workers. The ATM-based withdrawal system ensures they no longer rely on intermediaries or travel to EPFO offices.

Tech-Savvy Professionals

This adds another layer of convenience for employees comfortable with digital processes. They can manage their PF accounts online while enjoying instant withdrawal through ATMs when needed.

Retirees

Senior citizens who rely on their PF savings post-retirement can now access funds more conveniently, avoiding long queues at banks or EPFO offices.

The Broader Impact on India’s Financial Ecosystem

This initiative is expected to have a ripple effect on India’s financial landscape:

1. Boost to ATM Usage: With millions of PF account holders using ATMs for withdrawals, the demand for ATM services will likely surge, encouraging banks to expand their networks.
2. Strengthened Digital Infrastructure: Integrating PF accounts with ATM networks will require robust IT systems, setting a benchmark for other financial services.
3. Enhanced Trust in EPFO: By simplifying fund access, EPFO will likely gain greater trust and participation from employees across sectors.

Conclusion

The announcement of ATM-based PF withdrawals marks a pivotal moment in the journey toward financial inclusion and digitization. With its launch in January 2025, employees across India can look forward to a simplified, secure, and speedy way to access their retirement savings. While challenges remain, the government’s proactive approach and EPFO’s robust infrastructure upgrades provide a promising foundation for this initiative’s success.

Whether you’re a young professional, a seasoned employee, or a retiree, this facility is set to redefine how you interact with your PF account. 

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

FAQs

India has once again shown its love for gold, leading the global race in central bank gold purchases. In a remarkable move, the country added an impressive 27 tonnes to its reserves in October 2024. This step underscores India’s smart economic strategy and reflects the worldwide trend of boosting gold reserves during uncertain times.

With this move, the total purchases for the year (January to October) reached 77 tonnes, according to data from the World Gold Council (WGC) based on IMF reports. The data reveals that India’s gold reserves have reached 882 tonnes, with 510 tonnes stored domestically following this latest purchase. Source: Mint

Emerging Markets Drive Global Gold Purchases

The World Gold Council (WGC) highlighted that emerging market central banks continued to dominate gold buying in 2024. Among the top contributors were Turkey and Poland, which added 72 tonnes and 69 tonnes, respectively, to their gold reserves from January to October.

Together, these three central banks—India, Turkey, and Poland—accounted for a remarkable 60% of total global net gold purchases this year, emphasizing the leading role of emerging markets in shaping global gold trends.

Let’s explore why India’s gold purchases are making headlines, what they mean, and how they fit global trends. But first, let’s look at the list of top 10 countries with the largest gold reserves as of Q2 2024.

Countries with the most gold reserves:

Country	Gold Reserve (in Tonnes)
USA	8133.46
Germany	3351.53
Italy	2451.84
France	2436.97
Russian Federation	2335.85
China	2264.32
Japan	845.97
India	882.0
Netherlands	612.45
Turkey	584.93

Turkey & Poland’s  Record-Breaking Gold Buying Streak

The Central Bank of the Republic of Turkey added another 17 tonnes to its reserves in October. This marked the 17th consecutive month of net purchases, achieving the highest monthly total since December 2023. Turkey’s consistent gold buying has made October a standout month, surpassing the totals for the April-June and July-September quarters.

Poland also demonstrated a steady appetite for gold, with the National Bank of Poland recording net purchases of 8 tonnes in October. This marked the seventh consecutive month of net buying, further solidifying its position among major gold buyers in 2024. Source: Mint

Czech National Bank Expands Gold Reserves

The Czech National Bank (CNB) added 2 tonnes of gold in October, marking its 20th consecutive month of net buying. Over this period, CNB has accumulated 37 tonnes, bringing its overall gold reserves to 49 tonnes.

Kyrgyzstan’s Strong Gold Purchases

Kyrgyzstan also made a significant move, adding 2 tonnes of gold to its reserves in October. This purchase pushed its year-to-date (YTD) gold purchases to 6 tonnes, making October its highest reported monthly net buying since September 2023.

Ghana’s Gold Reserves Grow Steadily

In Africa, the Bank of Ghana purchased 1 tonne of gold in October, bringing its total gold reserves to 28 tonnes. The country’s reserves have been on a steady rise since May 2023, when they were just under 9 tonnes, showcasing a significant increase in gold holdings. Source: Mint

Why Is Gold So Important For Central Banks?

Gold has always been a haven for central banks. Here’s why:

1. Hedge Against Inflation: Gold maintains its value even when currencies depreciate, making it a reliable asset during inflationary periods.
2. Currency Stability: Holding gold helps stabilize reserves and minimizes reliance on foreign currencies.
3. Geopolitical Insurance: Gold is a buffer against potential economic sanctions or trade restrictions during international tensions.

With its growing economy and fluctuating rupee value for India, these benefits make gold a strategic asset.

What Does This Mean for India’s Economy?

India’s increased gold reserves have several implications:

• Stronger Economic Position: A larger gold reserve boosts India’s credibility in global financial markets.
• Enhanced Currency Stability: Gold reserves cushioned the rupee, ensuring stability against foreign exchange volatility.
• Long-Term Security: Gold provides a reliable fallback during economic crises, whether local or global.

India is preparing for short-term challenges and long-term economic growth by investing in gold.

A Glimpse at Global Gold Buying Trends

India is not alone in its gold-buying journey. Several central banks worldwide have been increasing their gold reserves, and countries like China, Turkey, and Russia have also ramped up their purchases recently.

This global trend is fueled by:

• Uncertain Global Economy: With geopolitical tensions and trade disruptions, gold offers security.
• Shift Away from Dollar Dependence: Many countries aim to reduce their reliance on the US dollar, and gold provides an alternative.
• Diversification of Reserves: Central banks balance their portfolios with a mix of currencies and commodities, including gold.

How Gold Reserves Impact the Common Man

While central bank reserves might seem like an abstract concept, they have tangible effects on everyday life:

1. Currency Stability: A stable rupee means less fluctuation in import and export prices, affecting electronics and fuel.
2. Lower Economic Vulnerability: With more substantial reserves, India can better withstand global economic shocks, ensuring job stability and consistent growth.
3. Better Investor Confidence: High gold reserves signal a strong economy, attracting foreign investment and boosting market sentiment.

These factors translate to a more predictable economic environment for an average citizen.

Challenges and Risks of Gold Accumulation

While adding to gold reserves has its benefits, it isn’t without challenges:

• High Import Costs: India is one of the largest gold importers, and increasing reserves can strain the current account deficit.
• Limited Returns: Unlike other investments, gold doesn’t generate regular income like bonds or equities.
• Market Volatility: Gold prices can fluctuate, impacting the value of reserves.

The RBI must carefully balance its gold purchases with other economic strategies to avoid pitfalls.

What Lies Ahead for India’s Gold Strategy?

India’s move to top global gold purchases is a calculated step in bolstering its economic resilience. However, the future of this strategy depends on several factors:

• Global Economic Trends: If geopolitical tensions continue, gold will remain a critical asset.
• Domestic Economic Policies: The RBI’s approach to managing inflation, currency stability, and trade balances will shape its gold strategy.
• Technological Advancements: Gold trading and storage innovations could make reserves more cost-efficient and accessible.

India’s continued focus on gold indicates a long-term commitment to securing its economic future.

Conclusion

India’s addition of 27 tonnes to its gold reserves is a milestone that reflects both strategic foresight and economic prudence. By leading global gold purchases, India has strengthened its financial position and set an example for other nations.

For citizens, this move signals a more stable and secure economic environment, ensuring growth and resilience in the face of global uncertainties.

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Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

FAQ

Have you wondered why your EMIs or savings interest rates have remained unchanged for months despite the fluctuating economy? Or what a seemingly technical adjustment like cutting the Cash Reserve Ratio (CRR) means for you? On Friday, December 6, 2024, the Reserve Bank of India (RBI), led by Governor Shaktikanta Das, announced a decision that could subtly reshape the economic landscape. Here’s a breakdown of what happened, why it matters, and how it could influence your financial decisions.

Key Highlights from the RBI Monetary Policy Committee Meeting

1. Repo Rate Unchanged at 6.5%
   • The RBI kept the repo rate steady at 6.5% for the 11th consecutive time, signaling a continued focus on inflation control.
2. CRR Cut by 50 Basis Points to 4%
   • A reduction in the Cash Reserve Ratio (CRR) from 4.5% to 4% will inject approximately ₹1.1 trillion ($12.98 billion) into the banking system to boost liquidity.
3. Economic Indicators to Watch
   • Inflation: In October 2024, inflation surged to 6.2%, exceeding the RBI’s upper tolerance limit.
   • GDP Growth: India’s GDP growth rate slowed to 5.4% in Q2 FY2024, raising concerns about the impact of stringent monetary policies.
   • Future Inflation Forecasts: RBI projects inflation at 4.8% for FY2024-25, with Q3 at 5.7% and Q4 at 4.5%.

Source: EconomicTimes

Understanding the Repo Rate and Why It Was Held Steady

The repo rate is the interest rate at which commercial banks borrow funds from the RBI. It’s a crucial tool for managing borrowing costs and inflation.

• Impact on Inflation: By keeping the repo rate at 6.5%, the RBI aims to balance controlling inflation and not stifling economic growth. As seen in October, high inflation limits the central bank’s ability to lower rates without risking further price increases.
• Economic Growth Concerns: The slowdown in GDP growth has sparked debates over whether the current rate is restrictive. However, a cautious approach prevails to maintain inflation within the 2-6% target range.

What Is the Cash Reserve Ratio (CRR), and Why Does It Matter?

The CRR represents the percentage of a bank’s deposits that must be maintained as cash reserves with the RBI. By lowering the CRR from 4.5% to 4%, the RBI has effectively released more liquidity into the banking system.

• Liquidity Boost: This reduction will inject ₹1.1 trillion into the economy, enabling banks to lend more and potentially lower interest rates for borrowers.
• First Cut Since 2020: This is the first adjustment since the pandemic-induced cut in March 2020, signaling the RBI’s effort to support credit flow amid slowing growth.

Impact on Loans and Homebuyers

For those with existing loans or planning to take one, here’s what the RBI’s decision means:

1. No Immediate Changes to EMIs:
   
   • With the repo rate unchanged, lending rates, including those for home loans, will likely remain stable in the short term.
   • Borrowers with floating-rate loans may not see changes in their EMIs unless banks independently lower their lending rates, encouraged by the additional liquidity from the CRR cut.
2. Future Affordability:
   • Stability in repo rates provides predictability in loan costs. This is particularly beneficial for prospective homebuyers, as affordable EMIs could sustain demand in the real estate market.
   • The additional liquidity might reduce interest rates if banks compete to lend more aggressively.

Source: BusinessToday

The Broader Economic Context

The RBI’s cautious stance reflects a delicate balancing act.

• Inflationary Pressures: With inflation exceeding the upper limit of 6%, the central bank remains wary of aggressive rate cuts that could further drive up prices.
• Growth Concerns: GDP growth of 5.4% in Q2 FY2024 is well below potential, raising alarms about the impact of tight monetary policies on economic activity.
• Government Advocacy: Finance Minister Nirmala Sitharaman and Commerce Minister Piyush Goyal have emphasized the need for lower borrowing costs to spur economic growth.

Market and Investment Implications

The RBI’s decision has rippled across various sectors:

1. Banking Sector:
   • Banks benefit directly from the CRR cut, gaining more funds for lending.
   • This could improve credit growth, potentially driving domestic demand over time.
2. Real Estate:
   • Stable interest rates support affordability, particularly in the price-sensitive affordable housing segment.
   • Developers also gain from lower financial costs, facilitating smoother project execution.

How Markets Reacted to RBI’s Policy Announcement

The Reserve Bank of India’s (RBI) decision to keep the repo rate unchanged at 6.5% on December 6 sparked mixed reactions across the stock market. Rate-sensitive sectors, closely tied to interest rate changes, witnessed notable fluctuations. Here’s how the markets unfolded post-announcement, reflecting a blend of volatility and resilience. Source: Mint

Sensex and Nifty’s Intraday Swings

The initial response to the RBI’s announcement was muted, with benchmark indices slipping into the red.

• Sensex:
  • Fell 260 points to hit its day’s low of 81,506.19 immediately after the policy announcement.
  • Later, it reversed course, climbing 420 points from its day’s low to touch an intraday high of 81,925.91.
• Nifty:
  • Dropped 88 points to its day’s low of 24,620.5 following the announcement.
  • Rebounded by over 130 points, reaching its intraday high of 24,751.05.

This recovery was driven by strong buying interest in select sectors, signaling investor confidence in the RBI’s efforts to maintain financial stability while addressing inflation and liquidity concerns.

Broader Market Performance

While the benchmarks displayed mixed movements, the broader markets outperformed:

• Midcap and Smallcap Stocks:
  • Both indices gained 0.4%, reflecting sustained interest from investors seeking opportunities outside large-cap stocks.

Sectoral Highlights: Rate-Sensitive Sectors Show Mixed Trends

The performance across rate-sensitive sectors was varied, with some indices shining while others lagged.

• Banks and Financial Services:
  • Nifty PSU Bank surged 1.3%, emerging as a standout performer among rate-sensitive indices.
  • Nifty Auto advanced by 0.74%, while Nifty Bank, Nifty Private Bank, and Nifty Financial Services gained over 0.4%.
• Real Estate:
  • Nifty Realty was the only rate-sensitive index to close in the red, dipping 0.14%, reflecting subdued sentiment in the real estate sector.

Top Performers in Banking and Financial Services

Within the Nifty Bank and Nifty Financial Services indices, several stocks recorded gains:

• REC:
  • Led the rally in the financial services space with a 3% increase, highlighting robust investor interest.
• MCX and PFC:
  • Both rose over 1.5%, contributing to the sector’s overall positive performance.
• LIC Housing Finance, Muthoot Finance, ICICI General Insurance, and ICICI Prudential:
  • Posted gains of over 0.5% each, reflecting optimism in the financial services sector.

Looking Ahead: Will Rate Cuts Happen Soon?

While the RBI has held off on reducing the repo rate, a rate-cutting cycle has already begun in the United States. Many experts anticipate India might follow suit in the latter half of 2024 if inflation moderates. For now, the CRR cut provides the liquidity boost markets were looking for, even without a direct rate cut.

Conclusion

The RBI’s decision to maintain the repo rate and cut the CRR highlights the complexities of navigating high inflation, slowing growth, and financial stability. While the immediate impact on your loans and investments may be subtle, these moves aim to lay the groundwork for long-term economic resilience. The next few months will be crucial for borrowers, investors, and businesses to determine how these policies shape the financial landscape.

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Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

Online platforms have transformed consumer behavior, especially in urban areas. Instead of buying small quantities frequently (“top-up”), many now prefer stocking up. This shift, fueled by convenience, variety, and competitive pricing, has reshaped how products and services are purchased, particularly in metro cities.

Driven by this shift, India’s online grocery market is expected to rise from $3.95 billion in FY21 to $26.93 billion by 2027, growing at a strong CAGR of 33%. The e-commerce industry is set to reach $325 billion by 2030, driven by the growing adoption of online services like e-commerce and edtech.  Source: IBEF

India’s overall digital economy is on track to hit $1 trillion by 2030, up from $537.5 billion in 2020.

India has approximately 936.16 million internet subscribers, with around 350 million active online users regularly making transactions.

Growth of FMCG on Quick-Commerce Platforms

• E-commerce and quick commerce sales have surged 30% over five consecutive quarters year-on-year, driven by consumer demand for convenience and variety. Ready-to-eat foods led e-commerce growth with a 52% increase in sales (MAT September 2024 vs. 2023), followed by salty snacks and edible oils at 41% each, and biscuits and packaged atta at 40% and 39%, respectively.
• Large FMCG companies like Nestle, ITC, and Hindustan Unilever report high double-digit growth in major cities, especially through platforms like Blinkit, Swiggy Instamart, Zepto, and BBNow.

Impact on Traditional Trade

• Neighborhood Kirana stores still account for 85% of FMCG sales nationwide, but quick-commerce is growing fast in cities. This shift has made companies like Dabur and Nestle adapt their stock in traditional stores.

Changing Buying Patterns

• Shift to Online Groceries

More urban households have turned to online grocery platforms for weekly or monthly shopping. Companies like BigBasket, Grofers, and Amazon Fresh have revolutionized this space.

Recently, consumers have started buying in bulk, including 5kg or 10kg packs of staples like rice, oils, and atta, on quick-commerce platforms such as BB Now, Zepto, Blinkit, and Amazon, a shift from previous trends.

• Preference for Direct-to-Consumer (D2C) Brands

Consumers opt for niche D2C brands such as Plum, The Minimalist, Sleepy Owl, and The Souled Store, which offer high-quality products, often bypassing traditional retail channels.

• Rise of Subscription Models

From meal kits to beauty boxes, subscription models cater to convenience-driven buyers who value curated and recurring services.

• Surge in Second-Hand Marketplaces

Platforms like OLX and Quikr are making sustainable choices like buying and selling pre-owned goods more accessible.

Key Drivers Behind the Change

Convenience 

Urban consumers prioritize convenience in their shopping, and it’s clear why. With hectic lifestyles, they don’t have the time to visit stores. Online platforms have come to the rescue, providing doorstep delivery, flexible return policies, and cashless payments, making shopping more effortless. 

Wider Variety and Choices

E-commerce sites and apps offer access to various products that might not be available locally. As an urban shopper, you can easily compare prices, brands, and features in one place, making your shopping experience more convenient and tailored to your needs.

Competitive Pricing and Discounts

Online platforms are perfect if you keep an eye on your budget and love finding offers, discounts, and cashback deals. They help you get better pricing and more value for your money—making it a smart way to shop!

 Integration of Technology

AI recommendations, voice search, and AR features make online shopping more personal and fun. They help you find what you’re looking for faster, making the shopping experience more interactive.

What Are The Benefits of This Shift?

Consumers

• Convenience: You no longer have to leave your home to shop for your needs. With services like home delivery and pick-up, everything you want comes straight to your doorstep, saving you time and effort.
• Cost Savings: Brands know you’re always looking for discounts and special deals. It catches your attention when they offer great pricing or limited-time offers, making you feel like you’re truly getting a bargain.
• Customization: With personalized recommendations, shopping is tailored for you. Thanks to data analytics, brands can send you offers and suggestions based on your preferences or past purchases, making the experience more helpful and engaging, not intrusive.

Businesses

Businesses can now reach more significant markets without investing heavily in physical stores. E-commerce has helped smaller businesses grow and compete with the big players without breaking the bank. Even the most prominent brands have been using e-commerce to expand their reach and keep customers returning by making shopping more accessible and convenient for everyone.

Gig Workers

With the rise of online shopping, more opportunities have opened for delivery agents, warehouse staff, and tech support teams. It’s great to see how this shift has created jobs and supported so many people behind the scenes of our online purchases.

Technology Providers

Payment gateways, logistics teams, and AI solution providers are thriving as online shopping grows. It’s exciting to see how their services are in such high demand, helping make your online shopping smoother and more efficient every step of the way.

Who Is Already Benefiting?

• E-Commerce Giants and Digital Payment Providers
  Platforms like Amazon, Flipkart, and Meesho are transforming how we shop, offering everything from fashion and electronics to daily essentials. At the same time, apps like Paytm, PhonePe, and Google Pay are booming as more people and businesses embrace online transactions, making payments quick and hassle-free.
• Content Creators and Logistics Teams
  Social media influencers also ride this wave, collaborating with brands and thriving in online and social commerce. Meanwhile, logistics companies managing last-mile deliveries are busier than ever, reshaping urban delivery systems to keep up with the growing demand.

The Impact of E-Commerce on Traditional Retail

As online shopping grows in urban markets, it impacts traditional retail channels. While neighborhood Kirana stores still play a significant role in FMCG sales nationwide, their influence in urban markets has steadily declined. E-commerce platforms are rapidly replacing physical stores, particularly in large cities, where quick commerce has become the preferred shopping method.

FMCG companies, including major players like Nestle, ITC, and Hindustan Unilever, have noted this shift in their recent earnings reports. To meet the growing demand, these companies are now focusing more on e-commerce and quick-commerce platforms. 

The Future of Urban Buying Patterns

As digital penetration continues to rise, more consumers, especially in urban areas, will embrace online shopping for everything from groceries to electronics. The growth of e-commerce platforms and the rise of quick-commerce services will continue to reshape the retail landscape. However, companies must keep sustainability in focus and adapt to technological advancements. 

Conclusion

Online platforms are reshaping urban shopping trends by offering unmatched convenience, a vast range of products, and competitive pricing. With e-commerce expected to reach $325 billion by 2030, urban consumers are increasingly embracing the digital shift, marking the beginning of a new era in retail. 

As the demand for online and quick-commerce platforms grows, businesses must continue to adapt and innovate to meet the needs of this rapidly changing market.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

FAQs

The Indian stock market has been experiencing an exciting trend—a surge in global funds purchasing domestic shares. India has become a leading hub for dealmaking, with companies securing a record $28.4 billion through IPOs and primary share offerings this year, as reported by Prime Database.

This phenomenon highlights India’s growing appeal as a favorable investment destination. Let’s investigate why this happens, its implications, and key contributing factors.

Key Insights into India’s Record Primary Market Activity

India: A Global Dealmaking Hotspot

Record Capital Raised: According to the Prime Database, companies in India raised a historic $28.4 billion through IPOs and primary share offerings in 2024.

Significant Growth: This is more than double the capital raised in 2023, showcasing India’s growing prominence in global dealmaking.

Strong IPO Performance

Impressive Post-Listing Gains: IPOs in 2024 delivered an average gain of 24% on their first trading day.

Continued Enthusiasm: Investor interest remains robust, even as broader market indices face corrections.

Valuation Challenges

Expensive Market Levels: Despite the correction, the Nifty continues to trade at nearly 20 times its 12-month forward earnings, ranking among the most expensive globally.

Primary Market Purchases Hit a New High

Record-Breaking Year: Primary market purchases, including IPOs and preferential share sales, reached $11.5 billion in 2024.

Surpassing Past Records: According to Central Depository Services Ltd, this figure exceeds the previous high set in 2021.

Global Fund Activity: Contrasting Trends

Secondary Market Selling: Global funds sold over $13 billion in shares on the exchanges, contributing to a market correction.

Impact on Indices: The NSE Nifty 50 index has entered correction territory, falling over 10% since its September peak. Source: Money control

Foreign Investor Strategy

Focus on New Issues: Foreign investors target IPOs and other new issuances for faster return potential.

Selling in Secondary Markets: According to industry experts,  expensive valuations in the secondary market are prompting profit-booking. 

Why Global Funds Are Targeting Indian Markets

1. Economic Resilience

India’s economy has shown remarkable resilience, bouncing back strongly post-pandemic. Key economic indicators like GDP growth, rising exports, and a robust manufacturing sector have positioned India as an attractive market for global funds.

2. Reforms and Policies

Pro-investor government policies, including taxation reforms, manufacturing incentives, and ease of doing business, have further boosted foreign interest in Indian shares. The country’s push toward digitalization and sustainability also aligns with global investment trends.

3. Attractive Valuations

Amid volatility in other global markets, Indian companies are offering competitive valuations. Certain sectors, such as technology, green energy, and finance, present lucrative opportunities for foreign institutional investors (FIIs).

Key Sectors Driving Global Investments

1. Technology

India’s global leader in the IT sector continues to attract substantial investments. Companies focused on cloud computing, artificial intelligence, and fintech have become magnets for global funds.

2. Renewable Energy

India’s ambitious renewable energy goals have caught the attention of global investors. Solar, wind, and green hydrogen projects are receiving record funding, driven by the worldwide push toward net-zero emissions.

3. Consumer Goods

India’s growing middle class and increasing spending power encourage investments in FMCG and consumer-focused sectors.

Data Highlights: The Surge in Purchases

In recent months, there have been record inflows of foreign funds into domestic equity markets. Key data points include:

• Volume of Investments: A marked increase in block trades by foreign institutional investors.
• Top Stocks: Blue-chip stocks in the banking, technology, and energy sectors have emerged as favorites.
• Market Impact: Benchmarks such as the Sensex and Nifty 50 have touched new highs, driven by robust foreign inflows.

Global and Domestic Factors Supporting the Trend

1. Global Economic Conditions

• Interest Rates: Despite rising interest rates in developed economies, Indian equities remain competitive due to their high growth potential.
• Diversification: Global funds are reallocating portfolios to hedge against risks in other markets, especially the US and Europe.

2. Domestic Stability

• Political Stability: A stable government and upcoming elections often increase investor confidence.
• Market Maturity: India’s equity market is more transparent and accessible than ever, supported by regulatory oversight and technology-driven platforms.

Implications of Record Purchases

1. For the Stock Market

• Increased Liquidity: Greater foreign participation boosts liquidity, making the market more efficient.
• Market Rally: Higher foreign inflows often lead to market rallies, benefiting domestic investors too.

2. For Companies

• Capital Availability: Companies can raise more funds through IPOs and secondary offerings, enabling growth and expansion.
• Global Exposure: Increased FII participation often leads to improved corporate governance and global visibility.

3. For the Economy

• Growth Opportunities: Investments in critical sectors create jobs and drive economic growth.
• Currency Stability: Foreign inflows support the rupee, reducing volatility in the foreign exchange market.

Challenges and Risks

While the record purchases are a positive sign, there are risks and challenges to consider:

• Dependence on Foreign Inflows

Over-reliance on FIIs can lead to market instability if global factors cause a sudden outflow.

• Valuation Concerns

With rising investments, some stocks may become overvalued, increasing the risk of corrections.

• Geopolitical Uncertainties

Global tensions and trade wars could impact foreign fund flows, creating uncertainties in the Indian markets.

What Lies Ahead?

• Sustained Growth

Experts predict India will continue attracting global funds thanks to its economic growth and favorable demographics.

• Focus on Emerging Sectors

Sectors like electric vehicles, biotechnology, and digital infrastructure will likely see increased investment.

• Regulatory Support

Continuous efforts by regulators like SEBI to enhance market transparency will further encourage foreign investments.

Conclusion

The surge in domestic share purchases by global funds results from India’s growing prominence in the international economic landscape. While this trend benefits the market and the economy, maintaining a balance through solid policies and market reforms will be essential. 

Know more about:
IPOs | Current IPOs | Upcoming IPOs | Listed IPOs | Closed IPOs | IPO Performers

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

FAQ

India’s sports market is set for unprecedented growth, with the industry expected to reach $130 billion by 2030. This projection, revealed in the Deloitte-Google Think Sports report, underscores India’s evolving sports ecosystem, powered by rising sports viewership, digital innovations, and increased investments across multiple sports segments. 

The report emphasizes the potential for the sports sector to create 10.5 million jobs while contributing $21 billion in indirect tax revenue, showcasing its significant role in driving economic growth and employment opportunities. Source: Times of India

This article analyzes the report’s findings, breaking down the factors driving this growth and what this means for India’s sports industry.

A Rapidly Growing Sports Economy

The Deloitte-Google report highlights that India’s sports industry has experienced significant growth over the past decade. Major sporting leagues, endorsements, and viewership have grown substantially, with cricket, India’s most popular sport, leading the charge. 

However, non-cricket sports like football, kabaddi, and badminton are also gaining traction. Increased participation in diverse sports and a growing digital landscape further amplify the market.

Since 2017-18, India’s sporting goods exports have increased at an annual growth rate of 11%. Major exports include athletic and gymnastics equipment, cricket and football gear, nets, exercise equipment, boxing items, toys, games, protective gear, sportswear, carrom boards, and hammocks.

India’s sports fanbase has expanded to 655 million people, with Gen Z accounting for 43%, fueling a growing demand for interactive and personalized experiences. The Deloitte-Google Think Sports report highlights how sports emerge as a significant driver of economic growth and a force for social change. This includes empowering youth and creating employment opportunities, demonstrating the industry’s broader impact beyond entertainment. Source: Business Today

Key Highlights of the Report

Expanding Interest Beyond Cricket

• Cricket Dominates, but Other Sports Are Gaining Ground: While cricket is India’s most-followed sport, the report shows a rising interest in sports like kabaddi and football, which have 120 million and 85 million fans, respectively.
• Multi-Sport Fandom on the Rise: Around 90% of Indian sports fans follow multiple sports, creating broader investment opportunities across sports sectors.

Shift to Digital Sports Consumption

• Gen Z’s Digital Engagement: 93% of Gen Z fans access sports content online, with a growing preference for on-demand, non-live content over live events. They spend 20% more time on it.
• Broadened Fan Demographic: Fans are increasingly diverse, with 36% being women and 59% residing in rural areas.
• Growth in Sports Apparel: Interest in fitness has fueled demand for sports apparel, which is projected to double to $58 billion by 2030. Source: Business Today

Technology-Driven Transformation in Sports

• Advancements in Sports Tech: The sports technology market is anticipated to hit $1 billion, propelled by innovations enhancing fan engagement and operational efficiency.
• AI in Talent Development: AI tools are already revolutionizing scouting and training; meanwhile, e-learning platforms broaden access to sports resources nationwide.
• Opportunities in AI-Driven Personalization: AI offers a pathway to immersive, personalized experiences and greater digital accessibility for fans.

Sports as a Catalyst for Nation-Building

• Socioeconomic Impact: Experts believe that sports in India have the potential to unify communities and build a resilient, inclusive society, aided by AI, cloud technology, and grassroots initiatives.
• Public-Private Partnerships for Progress: They emphasize that to harness this potential, challenges in access, infrastructure, and equity must be addressed, recommending public-private partnerships to advance India’s sports ecosystem.

A Pivotal Moment for Sports in India

• Path to Unlocking Sports Value: Industry experts underscore India’s sports market is transformative, marked by multi-sport fandom and Gen Z’s engagement.
• Innovation and Engagement Opportunities: These trends offer companies unique chances to connect with India’s large, passionate fanbase, setting the stage for further innovation and engagement.

Drivers of Growth: Key Factors Influencing the Market

1. Rise of Digital Platforms and OTT Media Digital streaming services have transformed sports consumption in India, allowing fans to access live matches and behind-the-scenes content on the go. OTT platforms like Disney+ Hotstar and JioCinema provide a personalized and immersive sports experience, reaching new audiences and further monetizing sports content through ads and subscriptions.

Sports Media Spends

2. Increased Sponsorship and Brand Investments With major corporations and brands investing heavily in sponsorships, the visibility of sports in India has expanded significantly. Sponsorships from national and international brands drive the growth of sports beyond cricket, helping leagues like the Indian Super League (ISL) in football and the Pro Kabaddi League reach wider audiences.
3. Sports Infrastructure Development India has ramped up its investment in sports infrastructure, building modern stadiums and facilities to host national and international events. The government’s “Khelo India” initiative is furthering these efforts, aiming to promote sports at the grassroots level and develop a robust sports ecosystem across the country.
4. Youth Engagement and Grassroots Initiatives India’s youth, which makes up a significant portion of its population, are increasingly engaging in sports, not only as viewers but also as participants. Government programs like Khelo India and private youth sports academies foster talent and promote sports culture. With more youngsters entering the sports scene, the future of India’s athletic talent pool looks promising.
5. Technological advancements in sports management technology are becoming integral to India’s sports industry. Technology enables teams to improve efficiency, from data analytics to player performance tracking, while fans enjoy enhanced experiences. Innovations like AR/VR experiences in live sports and AI-driven analysis are drawing more engagement and investment in sports technology.

Emerging Opportunities in the Indian Sports Economy

• Media Rights and Broadcasting Opportunities The demand for sports content creates lucrative opportunities for broadcasters. Media rights for major leagues, especially cricket tournaments like the Indian Premier League (IPL), attract multi-billion-dollar deals, contributing significantly to the sports economy. As viewership grows, media rights will remain a major revenue source.
• Though relatively new in India, merchandising and licensing are poised for growth as fans show increased interest in sports merchandise like jerseys and gear. This trend is not limited to cricket but extends to other sports, with Indian football and kabaddi leagues starting to explore merchandise as a revenue stream.
• Rise of the Fitness and Wellness Industry The shift toward health and wellness, particularly post-pandemic, has fostered a greater interest in physical fitness and sports. Gyms, fitness programs, and sports academies are tapping into this trend, leading to a complementary rise in related sports industries. This focus on wellness also encourages more individuals to participate in sports as part of a healthier lifestyle.

The Role of E-sports and Fantasy Sports

The surge in e-sports and fantasy sports platforms, such as Dream11 and MPL, has created a new frontier within the sports market. These platforms are highly popular among younger audiences, and with investments pouring in, they are poised to become a substantial part of the overall sports economy. E-sports tournaments and events are becoming regular fixtures, supported by significant sponsorships and partnerships.

• Fantasy Sports: Platforms enable fans to create fantasy teams based on real matches, boosting fan engagement and attracting millions of users.
• E-sports Growth: Competitive gaming events draw sponsorships and create new opportunities for brand endorsements.

Challenges Facing the Indian Sports Economy

While growth is promising, the sports market in India faces certain challenges:

1. Infrastructure Gaps – Despite advancements, the quality of sports infrastructure outside urban areas remains inadequate. Investments are needed to bring facilities to smaller towns and rural areas.
2. Limited Sports Culture Beyond Cricket – While cricket dominates the sports landscape, there is still limited viewership and engagement for other sports, though this is changing slowly.
3. Talent Development and Retention—Talent development across sports disciplines needs to be prioritized for sustained growth. Retaining trained athletes who can excel nationally and internationally remains a challenge.

What’s Next for India’s Sports Industry?

The Deloitte-Google report concludes that, with sustained investment, India could become one of the world’s top sports markets by 2030. International events like the Olympics and Commonwealth Games inspire more Indians to pursue sports professionally. 

India’s sports market is on the cusp of transformative growth, with an expanding digital ecosystem, increasing sponsorship investments, and a rising sports-conscious population. If current trends continue, India’s sports industry will contribute substantially to the economy and cultivate a robust sports culture across the nation.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

FAQs

With Donald Trump’s victory securing him a second term in the White House, many wonder how his leadership will shape global financial landscapes—especially for Indian investors.

For those following US-India trade ties, Trump’s win has implications for trade policies, market fluctuations, and investment flows. But what does this mean specifically for Indian markets and investors?

Immediate Market Response To Donald Trump Win

A Donald Trump win triggered a swift response in the Indian markets. On November 6, Indian stock indices rallied, with the Nifty climbing above 24,500 and the Sensex jumping by 900 points, closing at 80,378.13. Gains were broadly distributed, particularly in sectors like IT, realty, oil & gas, and power, which surged by over 2%.

The mid-and small-cap indices also experienced a 2% boost, outperforming the benchmark. These gains suggest optimism among Indian investors, largely due to Trump’s business-friendly policies, which may align well with India’s growth sectors.

Bitcoin Surge and Impact on Indian Crypto Markets

As election results came in, Bitcoin crossed the $75,000 mark for the first time, indicating a solid rally fueled by “Donald Trump Trades.” Indian crypto exchanges such as CoinSwitch and CoinDCX reported increased trading volumes, with heightened interest linked to Trump’s endorsement of digital assets.

This shift points to rising optimism around cryptocurrency in India. It suggests that Trump’s pro-crypto stance could positively impact Indian crypto markets and investments in exchange-traded funds (ETFs) that offer exposure to digital assets. Source: Moneycontrol

Foreign Portfolio Inflows: A Renewed Focus on India

Donald Trump’s victory may also influence foreign portfolio investments (FPIs) in Indian markets. In October, FPIs shifted from net buyers to net sellers, with a sell-off of Rs 94,017 crore. However, Trump’s return could prompt renewed foreign investments in India, especially given the alignment of US-India trade interests.

With India viewed as a strategic alternative to China, a realignment of supply chains might encourage FPI inflows in technology, defense, and clean energy sectors. Both countries’ efforts to bolster mutual economic ties could drive steady capital inflows into the Indian markets, possibly reversing the recent trend of FPI outflows. Source: BusinessToday

Mutual Fund Performance and US-India Diversification

Investors in US-focused Indian mutual funds saw substantial returns in 2024, with some funds delivering gains of up to 38%. Notably, funds like the Mirae Asset NYSE FANG+ETF Fund of Funds, Mirae Asset S&P 500 Top 50 ETF, and Bandhan US Equity FoF recorded returns of 38%, 35%, and 31%, respectively. In comparison, domestic funds in India’s large, mid-, and small-cap categories posted 16%, 26%, and 25% returns, respectively. 

As US-focused funds continued to outperform, Indian investors benefited from geographical diversification. Given Trump’s economic priorities, US markets could see continued stability, which would favor US-focused investments within Indian mutual funds and maintain robust returns for investors.
Source: MoneyControl

Trade Relations and Manufacturing Opportunities for India

Trump’s policies, often characterized by his “America First” approach, could benefit Indian manufacturers and exporters. His plans to tighten trade restrictions on China might lead more US companies to shift manufacturing operations from China to India.

This shift could open export opportunities for Indian businesses in the machinery, textiles, and chemicals sectors as companies look to diversify their supply chains. Stronger dollar values could further boost Indian exports, particularly in telecommunications, pharmaceuticals, and automotive components. Source: MoneyControl

Strengthening India-US Trade Relations

Under Trump’s administration, India and the US have built a solid partnership grounded in mutual economic goals, technological collaboration, and trade growth. Trump’s pro-business stance could deepen this alliance with the US, already a leading investor in India across sectors like technology, infrastructure, and renewable energy.

As the demand for skilled Indian workers rises in industries pivotal to both countries, India’s role in the global digital economy could strengthen, promoting cross-border growth in tech, renewable energy, and sustainable development. Source: Livemint

Geopolitical Considerations and Global Tensions

Trump’s foreign policy, particularly regarding Ukraine and the Middle East, may have ripple effects on global markets, including India. Analysts predict that Trump could push for a ceasefire in the Ukraine conflict, potentially easing geopolitical tensions.

In the Middle East, he has been vocal in his support for Israel and Saudi Arabia, and his policy on Iran may become even more assertive. Regarding China, while continuity is expected, Trump’s trade stance remains steadfast, potentially creating indirect opportunities for Indian industries as US-China trade relations stay strained.

Currency Implications and Rupee Volatility

The Indian rupee may experience downward pressure as the US dollar strengthens under Trump’s leadership. On Wednesday, the rupee closed at a record low of 84.28 per dollar. A stronger dollar could make Indian exports more competitive and increase import costs.

To manage the rupee’s volatility, the Reserve Bank of India (RBI) has maintained a significant foreign exchange reserve of $684.8 billion as of October 25. The RBI stands ready to use these reserves to stabilize the rupee in case of any adverse impacts from global market volatility, ensuring excellent stability in the domestic currency markets. Source: Livemint

A Potential Shift in the Dollar’s Strength

Trump has often favored a weaker dollar to boost American manufacturing competitiveness. For India, a weaker dollar could reduce export profits and potentially make the country less attractive for foreign investments.

While weakening the dollar could boost US manufacturing, it poses challenges, as a weaker dollar might drive inflation. Implementing this would be complex, involving a delicate balance between inflation control and supporting American industry. Such policies may have cascading effects on Indian trade, investment, and currency stability.

Conclusion

Donald Trump’s second term in office presents Indian investors with opportunities and challenges. With potential shifts in trade policies, the strengthening of India-US relations, and volatility in currency and crypto markets, Indian investors are likely to feel the ripple effects across multiple sectors.

As markets respond to these global changes, Indian investors can expect opportunities in diversified mutual funds, sectors aligned with manufacturing and export, and sectors poised for growth as trade between the two countries deepens.

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Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

New company formation is often seen as a crucial indicator of economic health, signaling growth, innovation, and a vibrant business landscape. However, recent reports reveal a noticeable decline in registered new companies, pointing to challenges in the current business climate. 

This slowdown, dubbed “business blues,” has sparked discussions on the factors contributing to the drop, potential long-term impacts, and strategies to rejuvenate entrepreneurial enthusiasm.

Decline in New Company Registrations

Over the past three months, new company registrations have steadily declined, with the most significant drop seen among high-investment ventures across various states. This downturn, often viewed as an indicator of entrepreneurial activity, raises concerns about a possible slowdown in business formation.

Despite the recent decline, new company registrations from January to September 2024 remain 12% higher than in the same period in 2023. However, this growth mainly reflects strong activity in the early months of 2024, as recent months indicate a clear downturn in new registrations.

September marked the third consecutive month of fewer registrations than the same period in 2023, and preliminary data for October suggests this trend may extend further. Source: Mint

Year-on-year change in registrations of new companies (%)

	2020	2021	2022	2023	2024
Jan	2	-14	12	0	18
Feb	-11	35	4	-81	511
Mar	-45	199	-13	-13	27
Apr	-69	291	27	5	-4
June	14	16	24	-13	12
July	54	-6	-1	9	-11
Aug	64	-19	9	6	-4
Sep	81	-0	-18	4	-21
Oct	68	-4	-33	46
Nov	27	6	-10	4
Dec	19	-7	21	-8

Capital Commitments: A Cautionary Signal for Entrepreneurship

Data on capital commitments provides additional insight into the current state of entrepreneurial activity. Paid-up capital, the initial investment shareholders contribute when starting a company, reflects both financial commitment and business ambition. Previously, government regulations required a minimum paid-up capital of ₹1 lakh, though this rule was removed in 2015.

Source: Mint

Majority of New Companies Formed with Low Initial Investment

Most new companies are registered with a paid-up capital of up to ₹1 lakh. This trend has grown over the last six years, with the share of companies in this category increasing from around 72% in 2019 to approximately 83% in 2024.

Source: Mint

Decline in High Capital Ventures

While the number of registered companies has risen, the share of new companies with higher paid-up capital—a sign of larger business ambitions—has either stalled or dropped between 2022 and 2024. This decrease in higher capital ventures highlights a potential slowdown in large-scale entrepreneurial commitments.

Registrations in higher capital bands dropped

	Jan-Sep 2022	Jan-Sep 2023	Jan-Sep 2024
Less Than Rs.1 Lakh	101,805	97,724	113,084
Between Rs. 1 to 5 Lakh	14,018	10,797	11,035
Between Rs. 5 to 10 Lakh	8,826	7,350	7,546
Between Rs. 10 Lakh to 1 Crore	6,289	4,608	4,032
More Than 1 Crore	2,539	1,243	679

Shift from Post-Pandemic Growth Trends

This decline contrasts sharply with post-COVID-19, during which new business registrations rose consistently. This increase was driven by a surge in entrepreneurial activity and the expanded compliance requirements from a broader scope of the Goods and Services Tax (GST).

Negative Trends in Company Registrations

Significant Drop in Q2 of FY 2024-25

The most substantial decline in new company registrations occurred in the second quarter (July-September) of FY 2024-25. Analysis at the state level shows that this decline spans multiple states, with double-digit drops in many cases. In terms of company registrations, each of the top 10 states experienced a decrease in new registrations during this period.

• Top States with Maximum Drop

Among the top three states for company registrations, significant declines were recorded:

• Maharashtra: down by 13.2%
• Uttar Pradesh: down by 16.5%
• Delhi: down by 14.9%

• Exceptions in Andhra Pradesh and Manipur

Only two states, Andhra Pradesh and Manipur, saw an increase in registrations compared to the same period in 2023.

• Andhra Pradesh: Experienced an uptick in registrations following the installation of a new political administration in June 2023.
• Manipur: Registered a rise in activity despite the social unrest that began in May 2023, impacting the economic environment.

Rise in Limited Liability Partnerships (LLPs)

Another shift in business registrations is the increase in Limited Liability Partnerships (LLPs), an alternative to private limited companies that face fewer regulatory requirements. LLPs are often ideal for small businesses that do not plan to seek external funding.

Between January and September 2024, LLP registrations rose by 39% compared to the same period in 2023. Consequently, LLPs now comprise a larger portion of total registrations, increasing from 20-25% in past years to 25-30% in 2024.

Source: Mint

Impact on the Economy

A decline in new company formations has widespread economic growth, employment, and innovation implications. Here are some potential impacts of this trend:

1. Reduced Job Creation

• Fewer Employment Opportunities: New companies are a major source of job creation. When fewer businesses start, employment opportunities dwindle, affecting local economies and increasing unemployment rates.
• Stagnation in Workforce Development: New businesses often bring fresh talent into the workforce and foster skills development. Without new company formations, the labor market risks stagnation.

2. Slower Economic Growth

• Lower GDP Contributions: New companies contribute significantly to GDP through investments, taxes, and consumer spending. A slowdown in new business formation reduces these contributions, potentially impacting overall economic growth.
• Innovation Bottleneck: Startups and small businesses are traditionally at the forefront of innovation. A decline in new companies could limit technological advancements and slow the introduction of innovative products and services.

3. Limited Competition

• Market Dominance of Established Firms: A reduced influx of new companies can lead to monopolistic trends, where a few established players dominate the market, potentially driving up prices and limiting consumers’ choices.
• Reduced Pressure for Innovation: Existing companies may face less competitive pressure to innovate or improve their services, which could stagnate industry standards and slow down advancements.

Potential Solutions to Encourage New Business Formation

To counteract this trend, creating an environment that supports and encourages entrepreneurship is essential. Here are some steps that can be taken to revive the enthusiasm for new business formation:

1. Reducing Regulatory Burdens

• Simplifying Compliance Requirements: Streamlining compliance processes can make it easier for new companies to start. This could include reduced paperwork, online registration, and one-stop portals for approvals.
• Tax Incentives for Startups: Offering tax breaks or subsidies for new businesses could reduce their financial burden in the early stages, making it easier for entrepreneurs to navigate the initial years of operation.

2. Expanding Access to Funding

• Creating Supportive Loan Programs: Governments and financial institutions can establish low-interest loan programs tailored for startups and small businesses. For example, microloans, angel investments, and small business grants could help bridge the funding gap.
• Encouraging Venture Capital Investment: Initiatives to incentivize venture capital firms, such as tax deductions on startup investments, can increase access to funding for new businesses.

3. Fostering a Supportive Ecosystem

• Mentorship and Business Support Programs: It can be invaluable to set up programs where experienced entrepreneurs mentor new business owners. These programs can guide critical aspects like managing finances, marketing, and navigating regulatory landscapes.
• Incubators and Co-working Spaces: Providing shared spaces for startups, including incubators and co-working spaces, can reduce overhead costs and foster collaboration among entrepreneurs, increasing their chances of success.

4. Encouraging Consumer Demand

• Supporting Local Businesses: Encouraging communities to support local businesses can help boost demand for new enterprises. Governments can run campaigns to promote local consumption, benefiting small businesses.
• Targeted Marketing Support: Providing resources or subsidies for marketing efforts can help startups reach their target audiences more effectively, promoting growth even in a cautious consumer environment.

The Road Ahead

While the decline in new company formation is concerning, it’s also a call to action. Policymakers, financial institutions, and the broader business ecosystem must work together to create a conducive environment that encourages entrepreneurial endeavors. By addressing the 

economic and regulatory challenges, it is possible to reverse this trend and restore the vibrancy of the business landscape.

The current downturn in new company formations is a complex issue rooted in economic uncertainties, regulatory hurdles, and cautious consumer behavior. Yet, with targeted interventions and support mechanisms, there is potential to reignite the entrepreneurial spirit and foster growth.

Reversing the business blues requires a collective effort to lower barriers, facilitate funding, and boost demand. In doing so, economies can unlock the benefits of a thriving startup ecosystem and ensure continued progress in innovation, job creation, and economic resilience.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

FAQ

Silver prices have recently soared in domestic and international markets, fueled by strong festive season demand and notable global factors.

Domestically, silver breached the ₹1 lakh per kilogram mark, while internationally, prices reached a 12-year high of over $34 per troy ounce. Analysts expect this upward trend to persist as silver prices often correlate with gold, which has also been on an upward trajectory. Forecasts suggest that silver could reach its all-time high of $50, last seen in April 2011, with an end-of-year target of around $40 per ounce. Source: Mint

Silver Price Historical Trend in India

Silver Outpaces Gold in 2024

Silver’s performance this year has outpaced gold, reducing the traditional gold-to-silver price ratio. Silver has surged around 42% year-to-date, compared to gold’s 32% rise. In comparison, stock market returns have been relatively modest, especially with recent market corrections.

With silver gaining approximately $10 per ounce since January, its appeal as an investment has risen, particularly given the safe-haven status that silver shares with gold. Source: Mint

Change in Gold and Silver Rates in the Last 10 Years

Year	Gold-Rs/10 Gram	Silver Rates in Rs/Kg
29-10-24	80450	99000
31-03-23	51484	66990
31-03-22	65330	76000
31-03-21	48720	65400
31-03-20	48651	40500
31-03-19	35220	40600
31-03-18	31438	41400
31-03-17	29667	37825
31-03-16	28340	36990
31-03-15	26245	37825

4 Key Factors Fueling Silver’s Price Rise

Several global factors are driving Silver’s recent rally. Here are some of the primary influences on silver prices:

U.S. Federal Reserve’s Interest Rate Cuts

Interest rates set by the U.S. Federal Reserve directly affect bullion prices because of their inverse relationship. When rates are lower, metals like gold and silver become more attractive as they help protect against inflation and economic uncertainty.

The Federal Open Market Committee (FOMC) recently lowered interest rates by 50 basis points in September—the first cut in four years—and hinted at possible further reductions through 2025. Lower rates generally lead to more investment in precious metals, increasing the demand for silver as an alternative asset.

China’s Economic Stimulus

China’s economic policies also profoundly influence global commodity markets, including silver. China recently announced a series of stimulus measures to spur growth as the world’s second-largest economy.

Analysts expect additional stimulus actions, given that current measures may not be sufficient to reach the projected 4.8% growth rate this year. Since China is a primary silver importer, any economic turnaround will likely boost silver demand, especially for industrial purposes. This trend mirrors the rise in silver prices in 2011, supported by China’s growth.

Supply Shortfalls: A Key Market Driver

Despite abundant global reserves, silver supply has not kept up with demand over the last three years. According to the Silver Institute’s 2024 World Silver Survey, the global market recorded a supply deficit of 184.3 million ounces in 2023, expected to widen to 215 million ounces this year. The primary reasons for this shortfall include:

• Industrial Demand: There is a high demand for industrial silver applications.
• Reduced Mine Output: Labor strikes, lower ore grades, and mine closures in major silver-producing countries like Mexico, Argentina, Australia, and Russia have impacted production.

With supply failing to meet demand, the pressure on silver prices remains high, especially as industrial and investment demands surge.

Rising Industrial Demand: Driving Silver’s Value

Silver’s applications in industry are a significant factor in the rising metal price. Here are some key areas where silver demand has been growing:

• Photovoltaic Sector: Silver is crucial for solar energy technology, especially photovoltaic cells. In 2024, demand from the photovoltaic sector alone is projected at 232 million ounces, representing a significant portion of industrial demand and outpacing demand for silver jewelry.
• Electronics and Electrical Manufacturing: Silver is widely used in electronic devices due to its excellent conductivity. Nearly every electronic device, from mobile phones to computers, contains silver. For 2024, annual demand in this sector is estimated at 485.6 million ounces. Additionally, silver is used in specific military applications, including missile manufacturing, which adds to the market amid ongoing global conflicts.

Industrial demand for silver rose by 11% in 2023 and is projected to increase by another 9% in 2024, reflecting a consistent trend despite economic hurdles. Although there are substantial global silver reserves, a supply shortfall has continued due to decreased mine production and heightened industrial demand.  Source: Mint

India’s Role in Silver Demand

Though a relatively small producer of silver, India is one of its largest consumers, importing substantial quantities of the metal for various uses. India’s demand is primarily driven by:

• Jewelry and Silverware Fabrication: In 2023, India’s demand for silver in jewelry fabrication was about 83.7 million ounces, nearly 41% of global demand in this sector. While this is a decline from 2022 levels due to a depreciating rupee and higher import duties, the country’s demand remains considerable.
• Physical Investment: India’s physical investment demand for silver, while smaller than that of the U.S., is substantial. In 2023, it was recorded at 49.3 million ounces, about 20% of the global total, despite falling from the previous year’s levels.

India’s silver demand influences the global supply shortage and can impact price levels, particularly if demand trends shift upward. Source: Mint

Conclusion

In summary, silver’s price outlook remains bullish. It has the potential to hit new highs, supported by robust industrial demand, safe-haven appeal, and constrained supply. With key global economic and geopolitical factors playing out, silver’s performance in 2024 is set to continue catching investors’ attention.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

FAQs