INVC NEWS
Mumbai : The Securities and Exchange Board of India (SEBI) has extended the implementation date for new guidelines concerning direct payments of securities into investors’ demat accounts. These changes were initially slated to take effect from October 14 but have now been postponed until November 11. In the meantime, equity mutual fund investments have witnessed a notable drop of 10% in September, further reflecting the financial shifts in the Indian investment landscape.
SEBI’s New Guidelines for Demat Accounts
The new SEBI guidelines, designed to enhance transparency and security in the market, require securities to be directly paid into investors’ demat accounts. This change aims to streamline the investment process and safeguard investors’ funds, ensuring that their holdings are more secure and less prone to fraud or mismanagement.
However, due to logistical concerns and the need for further preparation, SEBI has extended the deadline to November 11. This postponement provides stakeholders in the financial market—including brokers, depositories, and investors—additional time to adjust to the new system. The extension is seen as a response to numerous requests from the industry to ensure smooth implementation.
What Does This Mean for Investors?
For investors, this delay in implementing SEBI’s guidelines offers a grace period to get familiar with the upcoming changes. The new rule mandates a direct deposit of securities into investors’ demat accounts, meaning that the role of intermediaries will be reduced. Investors are urged to ensure that their accounts are up-to-date and prepared for these changes.
The move will also potentially reduce the risks associated with delayed transfers and fraudulent activities, as the direct payment method minimizes the steps involved in the transaction. By November, investors should ensure they are aligned with the new processes to avoid disruptions in their trading activities.
Decline in Equity Mutual Fund Investments
Alongside SEBI’s extended timeline for demat accounts, the Indian financial market has also seen a decline in equity mutual fund investments. September 2024 saw a 10% decrease in investments, with inflows dropping to ₹34,419 crore, compared to the previous month. This drop comes after a consistent rise in investments over the past 43 months, highlighting a shift in investor sentiment.
Reasons for the Decline in Mutual Fund Inflows
Several factors contributed to the decline in equity mutual fund investments in September. Market volatility, investor uncertainty, and the upcoming festival season may have caused a cautious approach among investors. Additionally, economic factors such as inflationary pressures, fluctuating global markets, and geopolitical tensions have led to increased investor caution.
Despite this decline, it’s important to note that the Association of Mutual Funds in India (AMFI) reports that this is the 43rd consecutive month of net inflows into equity funds. This shows that while there may be temporary fluctuations, the overall confidence in mutual funds remains intact.
Financial Aid to States Ahead of Festival Season
In a bid to bolster state economies ahead of the festive season, the Central Government of India has disbursed a significant financial package of ₹1,78,173 crore to various state governments. This includes an advance installment, in addition to the regular payment scheduled for October 2024.
The financial aid is expected to accelerate capital expenditure in states, promoting development and welfare-related projects. This move also ensures that states have sufficient resources to manage expenditures during the economically demanding festival period.
UP Receives the Largest Share
Among the states, Uttar Pradesh received the largest allocation of ₹31,962 crore, followed by Bihar with ₹17,921 crore, Madhya Pradesh with ₹13,987 crore, and West Bengal receiving ₹13,404 crore. This financial assistance is vital for maintaining a steady flow of resources to state governments, particularly as India continues to face challenges related to global economic dynamics.
In the northeastern states, Meghalaya received ₹1,367 crore, Tripura secured ₹1,261 crore, and Manipur was granted ₹1,276 crore. The financial aid will be instrumental in driving state-level economic recovery, development initiatives, and welfare spending.
Tata Group Shares Surge by 10%, Chemicals Lead the Rally
On Thursday, shares of companies under the Tata Group surged by up to 10% during the trading session. Tata Chemicals and Tata Teleservices were among the top performers, recording the most significant gains. However, towards the end of the session, some of these gains were pared back.
At the close of business on the Bombay Stock Exchange (BSE), shares of Tata Investments rose by 5.71%, reaching ₹6,924.40. Meanwhile, Tata Chemicals saw an increase of 4.07%, followed by Tata Technologies with a 1.49% rise, and Tata Steel, which gained 0.41%. In contrast, Tata Consultancy Services (TCS) experienced a slight decline of 0.56%, closing at ₹4,228.40.
This surge in Tata Group shares reflects growing investor confidence in its chemical and technology sectors, despite market-wide fluctuations. The group’s diversified portfolio continues to attract investors, reinforcing its strong position in India’s corporate landscape.
UPI Dominance Continues with 52% Increase in Transactions
Unified Payments Interface (UPI) remains dominant in the Indian digital payments market, registering a 52% growth in transactions during the first half of 2024. According to a report by Worldline, UPI transactions reached 78.97 billion between January and June, compared to 51.9 billion during the same period in 2023.
UPI Transaction Volume and Value Surge
In monetary terms, UPI transactions amounted to ₹116.63 lakh crore in the first half of 2024, representing a 40% increase from ₹83.16 lakh crore in the previous year. This growth underscores the increasing reliance on UPI for digital payments across India.
However, there has been a decline in the average transaction size for UPI payments, which fell by 8% from ₹1,603 in 2023 to ₹1,478 in 2024. This decrease in ticket size may indicate a rise in smaller, more frequent transactions as UPI usage continues to penetrate deeper into various sectors.
PhonePe Leads the UPI Market
Among UPI platforms, PhonePe maintains its position as the leading service provider in terms of both transaction volume and value. Google Pay follows in second place, with Paytm ranking third.
The report also highlighted the top beneficiary banks for UPI transactions. The five leading banks receiving the highest transaction volumes via UPI are Yes Bank, State Bank of India (SBI), Axis Bank, HDFC Bank, and ICICI Bank.
As India navigates a dynamic financial landscape, the extension of SEBI’s demat account regulations, the decline in mutual fund investments, and the rise in UPI transactions are key indicators of ongoing shifts in investor behavior and market performance.
