Year Ender 2023: Key factors that moved the stock market this year

Other than it being the last trading day of 2023, December 29 also marks the start of the January F&O series. The year 2023 unfolded as an intriguing period, not only for the Indian equity market but also on the global markets' front. While 2023 started on a challenging note with restrained expectations and notable volatility in the initial months, the Indian market witnessed a remarkable recovery in the second half from its March 2023 bottom.

FOMO (fear of missing out) was common among investors as they lost track of winners while trying to time the market amid the ups and downs led by fears related to a rise in Covid-19 cases in China, lockdown in the Chinese economy, hawkish Central Bank, rising bond yields, and other macroeconomic challenges.

Before we step into the new year, where investors are expecting to see strong gains on the back of robust economic outlook and strong domestic flows, let's do a quick recap of the best and worst part of 2023 for Indian equity investors:

The Adani Group, found itself in muddy waters following allegations of fraud by US-based short-seller Hindenburg Research. Shares of its group companies went into free fall in January after the short seller's report alleged improper use of tax havens and concerns over its debt levels. The conglomerate has denied any wrongdoing.

However, Adani made the most of the crisis. To shore up investor confidence, it welcomed investors such as GQG and Abu Dhabi conglomerate International Holding into some of its companies, helping to dilute the family's tight shareholding.

After China, India became the second country in the world to start the ‘trade-plus-one’ (T+1) settlement cycle in top listed securities on January 27. The T+1 settlement cycle means that trade-related settlements must be done within a day, or 24 hours, of the completion of a transaction.

Adani Enterprises Ltd unexpectedly called off its ₹20,000-crore follow-on public offer (FPO), a day after the company closed the offer successfully. The decision followed a huge decline in its shares that resulted in the stock trading below the lower end of the FPO price band. The company said it will return the money collected from investors in the FPO.

The back-to-back collapses of Silicon Valley Bank (SVB) and Signature Bank early this year, followed by First Republic Bank in May, roiled global markets, leaving billions of dollars belonging to companies and investors stranded.

In its April 2023 policy, the Reserve Bank India had paused its rate hike cycle after raising the key lending rate for six consecutive times since May last year.

The country's largest private lender HDFC Bank has completed its merger with Housing Development Finance Corporation, India's biggest mortgage lender, in a deal that pits the new entity against the world’s largest banks. The merger took effect on July 1, 2023, following shareholder and regulatory approvals.

As part of its group restructuring, Reliance Industries had announced the demerger of its financial services business into Reliance Strategic Investments. The spun-off entity has been renamed Jio Financial Services, which has seen an implied price of ₹261.85 per share.

2023 has been the year of the IPO. The total number of IPOs this year crossed last year's tally, with 173 small and medium-sized enterprises (SMEs) and 56 mainboard listings to date. 2022 had a total of 40 companies hitting the primary markets and making their debut on the Street.

Also, with effect from December 1, capital markets regulator SEBI reduced the listing timeline for all IPOs to T+2 days, making the process among the fastest in the world.

Investors, both domestic and foreign, have actively demonstrated confidence in India's long-term growth narrative. So far this fiscal, DIIs and FIIs have invested $12 billion and $23 billion, respectively, in the Indian equity market till December 22, 2023. After being net sellers in FY22 and FY23, FIIs regained confidence in FY24 and the sentiment was further reinforced by the BJP's big-bang performance in the Assembly elections across three key states out of the four in the fray.

Benchmark index Nifty-50 scaled an all-time high level and closed at 21,457 on December 15, 2023, led by three back-to-back events that turned in favour of the equity market. These were the results of the Assembly elections in three big Hindi heartland states that raised the expectations of policy continuity in 2024, thereby boosting the market confidence; the status quo maintained by the RBI along with a positive revision in FY24 GDP from 6.5% to 7%; and dovish narrative by the US Fed in the FOMC meeting.

With this, the Indian market cap touched $4 trillion for the first time in December 2023. India is now the fifth-largest market in the world and stands tall among global economies. Only the US, China, Japan, and Hong Kong markets are currently ahead of India.