2023 Recap: A look at 11 key developments in Indian financial markets

From the implementation of the T+1 settlement to the first initial public offering (IPO) from the Tata Group stable after almost two decades, here is a quick recap of the wholesome year.

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The calendar year 2023 turned out to be an eventful period for the Indian financial market. Domestic equity indices saw an impressive rally in 2023, with the Nifty50 rising over 19 per cent year-to-date (YTD) and the Sensex soaring over 18 per cent YTD. From the implementation of the T+1 settlement to the first initial public offering (IPO) from the Tata Group stable after almost two decades, here is a quick recap of the wholesome year.

1. T+1 settlement

Indian stock markets shifted to a shorter settlement cycle, or T+1 regime, for the final list of large stocks on January 27, 2023. T+1 (trade plus one) means that market trade-related settlements will need to be cleared within one day of the actual transactions taking place. Earlier, trades on the Indian stock exchanges were settled in two working days after the transaction was done (T+2).

2. IPO listing timeline reduced to T+3

In June, the market watchdog, the Securities and Exchange Board of India (SEBI), reduced the listing timeline of IPOs from T+6 to T+3. The new rule was implemented in two phases: optional from September 1, 2023, and mandatory from December 1, 2023.

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3. Bank Nifty Monthly Expiry

The National Stock Exchange (NSE) announced on July 12, 2023, a revision in the expiry days for futures and options (F&O) contracts of Bank Nifty and Nifty Midcap Select. From September 4, 2023, Bank Nifty's weekly F&O contract expiry was fixed on Wednesdays instead of Thursdays.

4. Sensex and Bankex contract revival

The Bombay Stock Exchange (BSE) relaunched Sensex and Bankex derivative contracts in May. The relaunch of derivative contracts was accompanied by a reduced number of futures and options.

5. Major mergers & acquisitions

Mortgage major HDFC Ltd and India’s largest private bank, HDFC Bank, merged on July 1 to create a combined entity with a market capitalisation of Rs 14.37 lakh crore.

PVR Ltd. and INOX Leisure Ltd. merged on February 6.

6. India saw the highest number of IPOs

As per Zee Business Research, the total number of IPOs grew in India by 56 per cent year-on-year (YoY), which was the highest in the world. The second-highest number of IPOs was seen in Italy.

7. Tax benefits removed from debt mutual funds

On March 24, 2023, the central government eliminated the long-term capital gain tax benefit enjoyed by debt mutual fund investors. The modifications provided that debt funds that invest less than 35 per cent in equity shares will be taxed at the income tax bracket level and will be considered short-term capital gains.

8. First IPO from Tata Group after 19 years

Tata Group launched the Tata Technologies IPO 19 years after Tata Consultancy Services' (TCS) IPO in 2004. Tata Technologies is a subsidiary of Tata Motors, one of the known automotive players in India.

9. RBI's interest rate trend

The Reserve Bank of India (RBI) increased the repo rate in February by 25 basis points to 6.5 per cent but then maintained a status quo until the last policy meeting that was held in December 2023.

10. India's weightage rose in the MSCI Global Index

Index provider MSCI raised India's weightage in its Global Standard (Emerging Markets) index to 16.3 per cent from 15.9 per cent. This marked "a significant increase over the past three years, almost doubling its weight," according to a note by Nuvama Alternative & Quantitative Research.

11. JP Morgan announced the inclusion of Indian bonds in its bond index

JP Morgan's EM Bond Index will add Indian securities to its Government Bond Index-Emerging Markets, with effect from June 28, 2024.

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