The stock markets commenced 2023 in a downtrend. However, post-March, it embarked on an upward journey. Before stepping into 2024, let’s take a step back to introspect on how 2023 played out for investors and what transformations the year brought.
2023 proved to be a positive year for the stock markets. The Indian benchmark indices, namely Nifty 50 and Sensex, scaled all-time highs in December. In hindsight, the year was filled with action for stock market investors.
In this article, we have outlined the major events that unfolded each month in 2023.
January 2023 – The Adani-Hindenburg Saga
In late January, the U.S.-based short-selling firm Hindenburg Research released its 413-page report on the Adani Group of companies. The report initiated various claims regarding the group’s corporate governance. One claim suggested that the group used shell companies and related parties to siphon off money, artificially inflating their share prices.
What added intrigue was the timing of the report. Published just days before the Adani Enterprises Limited follow-on public offer (FPO) was set to open for subscription, the report led to a steep slump in the share prices of Adani Group companies. Consequently, the FPO was called off, and investors had their money returned.
February 2023 – The Union Budget
On 1st February 2023, Finance Minister Nirmala Sitharaman presented the Union Budget in Parliament. Notable announcements included tax exemptions for investors earning an annual income of up to Rs 7 lakhs. Capital expenditure allocation was also increased by 33% to Rs 10 lakh crore. Additionally, the budget focused on railways, green energy transition, and the education sector.
March 2023 – The Fall of Silicon Valley Bank
Due to the rise in the U.S. Fed funds rate, banks in the U.S. faced challenges. The Silicon Valley Bank failed, having invested in bonds. As interest rates rose, the value of these bonds fell, leading to a $21 billion loss. Depositors began withdrawing funds, eventually causing the bank to fail due to a lack of funds.
April 2023: Dabba Trading Episode
In April 2023, SEBI cautioned investors engaging in dabba trading, warning them against schemes promising assured returns. Dabba trading, an informal practice outside the stock market’s purview, prompted the NSE to emphasise that the entities involved were not authorised exchange members.
May 2023: SEBI’s Proposal for Mutual Funds
May 2023 saw the Securities and Exchange Board of India (SEBI) propose a uniform Total Expense Ratio (TER) for all mutual fund schemes to enhance transparency. However, this move could impact the profitability of Asset Management Companies (AMCs). Currently, investors face four additional expenses besides the expense ratio.
June 2023: RBI’s Financial Stability Report 2023
The RBI presented its Financial Stability Report in June 2023. Despite global economic uncertainties due to banking system turmoil, geopolitical tensions, and elevated inflation, the report highlighted India’s resilience. Strong domestic demand and robust fundamentals, including healthy bank balance sheets, increasing forex reserves, and narrowing Current Account Deficits (CAD), kept the Indian economy in good shape.
July 2023: India Bans Rice Exports
On July 20, 2023, the Indian government imposed a ban on the export of non-basmati rice, affecting 40% of global rice consumption. This decision, prompted by delayed monsoons, coincided with soaring tomato prices, reaching Rs 150-200/kg. Additionally, in its 50th meeting, the GST council shocked the online gaming industry by announcing a 28% GST on the full-face value of betting amounts.
August 2023: Brent Crude Rises and 6 New Countries Join BRICS
In August 2023, Brent crude oil prices surged to a 4-month high due to output cuts by Saudi Arabia and Russia. Saudi Aramco further increased the price of Arab Extra Light Crude Oil by 30 cents/barrel. Simultaneously, six new countries, including Argentina, Greece, Ethiopia, Iran, Saudi Arabia, and the UAE, joined the BRICS association, set to take effect from January 1, 2024.
September 2023: India-Canada Tensions Rise
Tensions escalated between India and Canada in September 2023. Canadian Prime Minister Justin Trudeau’s comments, suggesting Indian involvement in the assassination of a Canadian Sikh Separatist leader, led to the temporary suspension of visa services for Canadians by the Indian government, citing security threats.
October 2023: Israel-Hamas War
On October 7, 2023, the Palestinian group Hamas launched a well-planned but unprecedented attack on Israel from the Gaza Strip, causing temporary spikes in oil prices and geopolitical tensions. Although the war de-escalated, it has yet to conclude entirely.
November 2023: RBI Circular on Increased Risk Weighting
On November 16, 2023, the RBI announced a 25% increase in the risk weights for unsecured personal loans for commercial banks and NBFCs, setting the risk weight at 125%. This move aimed to slow down the rapid growth of these loans, given their higher risk of turning into non-performing assets (NPAs) due to their unsecured nature.
December 2023: The US Fed Signals Rate Cuts
Closing the year on a positive note, the US Fed, in its FOMC meeting on December 14, maintained the Fed Funds rate at 5.25-5.5%. Furthermore, the Fed anticipated a median rate of 4.6% by the end of 2024, indicating three possible rate cuts of 25 bps each, likely in the latter half of 2024.
The announcement brought joy to equity investors globally. Following this, the Indian benchmark indices reached all-time highs, with the Nifty surpassing 21,000 levels and the Sensex breaking the 70,000 mark.
That concludes our journey through the impactful events that shaped the stock markets in 2023. We trust you found this comprehensive overview informative. Remember to share these insights with your friends. Until next time, stay curious!
That’s it for today. We hope you’ve found this article informative. Remember to spread the word among your friends. Until we meet again, stay curious!
*The article is for information purposes only. This is not an investment advice.
*Disclaimer: Teji Mandi Disclaimer
