2022 will be remembered as a year that changed the dynamics for India in more ways than one. The India growth story seems to have only begun and to prove this, there’s the backing of a range of financial events this year. From the out-performance of Dalal Street to Digital Rupee pilot to LIC joining the bourses and Adani taking the 3rd richest person spot amid a global recession, a lot of action took place in the Indian financial scene.
As we close our 2022 diaries, here’s a look back at the top financial events that shaped India this year.
Dalal Street rules
Despite global economic slowdown, rising interest rates and a likely recession in 2023, the Indian stock markets managed to stay strong this year. Defying all odds, the Sensex touched historic highs of 63,583 in December 2022. This goes to show that the Indian markets are in a positive shape and are largely unaffected by global recessionary fears as of now.
LIC or Life Insurance Corporation of India went public by launching the country’s largest IPO with an issue size of approximately Rs. 21,000 crores. The issue attracted a record 6.1 million retail applications. However, the stock’s listing was far below investor expectations.
Being a cash-rich company, LIC’s long-term standing remains positive, and it continues to attract investor interest.
HDFC twins merge
The country’s biggest housing loan lender HDFC announced the merger between its wholly owned subsidiaries – HDFC Investments Limited and HDFC Holdings Limited. The merger between HDFC and HDFC Bank, which is expected to fructify by April 2023, will create India’s 3rd-largest entity measured by market capitalization.
After the merger, the size of the company’s combined balance sheet will be close to Rs. 17.87 lakh crores and a joint net worth of Rs. 3.3 lakh crores. This will make HDFC Bank almost double the size of ICICI Bank.
Digital Rupee pilot
In her Budget speech for 2022, FM Sitharaman announced the introduction of Digital Rupee in 2023. Much to the surprise of the nation, the introduction of CBDC has picked pace already with the pilot launch of its retail version on December 1, 2022. CBDC or central bank digital currency is the digital version of India’s fiat currency.
It is expected to ease routine financial transactions apart from being a safe and robust alternative to physical currency.
Adani grabs a spot on world’s rich list
Indian business tycoon and the head of Adani empire, Gautam Adani’s wealth grew leaps and bounds this year. Adani’s net worth stood at $137 billion, mainly driven by his business conglomerate’s rising value.
As per the Forbes Rich List of 2022, Adani is behind Tesla’s Elon Musk and LMVH’s Bernard Arnault.
Record UPI transactions
India’s flagship digital payments platform, Unified Payments Interface (UPI) managed to process a record 7.3 billion transactions by October this year. This was a record-high level since the launch of these services back in 2016. The value of these UPI transactions was estimated to be Rs. 12.11 trillion. This was a 57% jump year-on-year.
No other country in the world has such an advanced digital transactions solution on a single platform. Many countries are now looking to emulate India’s UPI success story.
Demat accounts shoot up
This year also saw a record number of 18 lakh new Demat accounts being added in the country.
This took the total number of Demat accounts in India to 10.6 crores by November 22. On a year-on-year basis, this was a 37% jump, signalling rising investor interest in the stock markets.
More Indians are slowly moving away from age-old investment formats like bank fixed deposits to explore avenues like stock markets, mutual funds, etc.
Record Rupee depreciation
The Indian Rupee depreciated a record 6.9% against the US Dollar in 2022. The rupee’s fall is mainly attributed to rising crude oil prices due to the Russia-Ukraine war, higher foreign capital outflows, and a strong dollar overseas. The US FED’s frequent interest rate hikes have also driven the Rupee’s depreciation.
Adani rules NDTV
To give stiff competition to rival group Reliance, the Adani group acquired NDTV this year through an open offer. Reliance’s media presence is through ownership in Network 18 media company. With the NDTV takeover, Adani will also be able to have a strong media presence.
India’s financial sectors are standing strong despite the global economic slowdown and recessionary fears coming closer. These major financial events of 2022 are proof of India’s economic reflex. They are also an indication of what investors can expect in 2023.
Stock market investments can carry high risk irrespective of the year of investment. It requires calculated risks, thought-through decisions, and appropriate knowledge of risk mitigation. You may therefore continue to explore the stock markets in 2023 if you have the right stock market knowledge and risk appetite.
In 2023, debt mutual funds may offer stable returns as compared to equity funds as interest rates continue to rise while stock markets remain volatile.
Historically, the US recession has impacted most major economies in the world. As per experts, there are high chances of a recession in the US in 2023. While this may impact the Indian stock markets, there is an overall positive expectation from the Indian economy.
Sensex can go up or down based on various factors and there is no single approach to predict its performance in 2023. Investors must use a mix of both fundamentals and technical analysis while predicting stock market performance.
Nifty has risen to all-time highs in 2022 despite lackluster performance of most major global markets. Since 2023 will probably see a global recession, it may also have some level of impact on Indian stock markets. Therefore, equity investors must maintain the right risk-return balance at all times.