After the Russia-Ukraine War, the stock market has seen subdued returns, affecting both retailers and swing traders. Retailers are looking for other investment opportunities to diversify their portfolios and reduce risks.
Retailers are becoming more cautious due to the inherent risks and volatility in the stock market, such as market corrections, rapid price changes, regulatory adjustments, unanticipated economic events, and geopolitical conflicts. A hike in Securities Transaction Tax (STT) has impacted profits for traders trading in the F&O segment.
In March 2023, the number of NSE active users fell to 3.26 crore, a decrease of 2.7% month-over-month and 9.4% year-over-year. The number of new demat accounts added also decreased by 8%.
Supernormal returns in the stock market can lead retailers and investors to explore fixed-income avenues like bonds, fixed deposits, peer-to-peer lending, T-bills, etc. In recent days, there is an increase in deposit rates which is attracting investors to park their funds in fixed-income securities. Since May 2022, there is a rise in repo rates from 4.4% to 6.5%, leading to a rise in deposit rates to as high as 7.3%-7.8%.
According to the RBI's March bulletin, banks raised ₹6.3 lakh crore through CD issuances in 2022–23 as of March 10 compared to ₹2 lakh crore at the same time last year. The substantial rise in CD issuance coincided with tighter liquidity circumstances and a surge in credit demand. There is a fierce rise in bond issues by banks like HDFC Bank and State Bank of India due to high credit demand and bolster liquidity into the system. The introduction of Green Deposits in the fixed-income instrument segment will also entice investors to invest in those securities for diversification.
Increasing bankruptcy of US-based banks and firms is posing a threat to the stock market returns. S&P Global Market Intelligence data shows that the number of U.S. corporate bankruptcies is expected to increase in 2023, with the first two months of the year recording the highest amount for any comparable period since 2011. Businesses submitted 57 bankruptcy petitions in February, the highest for a single month since March 2021. Following a slow year in 2022, 2023 will see high monthly bankruptcy counts due to a slump in the economy.
Peer-to-peer lending platforms allow retailers to lend money directly to individuals or small businesses, bypassing traditional financial intermediaries. It is attracting a lot of investors due to higher-than-normal interest rates. It offers returns proximity to 12%-18%. The 12% Club by BharatPe, a peer-to-peer lending platform recently garnered an AUM of ₹3,600 crores crores through their platform.
Thank you.
Comments
Post a Comment