The year 2022 is all set to culminate in a few days. There are no prizes for guessing that it was riddled with crests and troughs. There were glad tidings along with the traces of gloom.
As one can recall when the world’s economy had started to limp back to normality after two long years of pandemic, Russia started a full-blown war on Ukraine on February 24, dashing the hopes of economic recovery by optimists and pessimists alike. The war pushed the can of economic progress further down the road, leaving everyone — from analysts to lay investors — flabbergasted.
This ensued worries over surge in inflation, jump in oil prices, rise in interest rates, significant drop in IT stock prices, so on and so forth.
Here, we give the lowdown on some of the key themes of this year that were anticipated to take off well, but the fate had something else in store:
Fintech lending: For past couple of years, financial technology — popularly known as fintech — and particularly lending is projected as one of the key themes to watch out for. Earlier this year, buy now pay later (BNPL) schemes started to get quite popular with online platforms such as Amazon and Uber. But the banking regulator’s notification in June put an end to all this.
The RBI released a circular that time which practically banned non-banking companies from loading prepaid instruments such as cards using credit lines.
Then in September, RBI came up a set of guidelines for digital lending, thus preventing the apps from accessing mobile phone resources such as file and media of borrowers.
Cryptocurrencies: During the budget 2022-23, the finance minister Nirmala Sitharaman introduced tax of 30 percent on capital gains earned on crypto transactions and another one percent TDS (tax deducted at source) on crypto transactions. This gave a massive blow to investors’ interest, adversely impacting the volumes of crypto transactions across exchanges.
Bitcoin prices also plunged big time this year. It started on an upbeat note early this year when bitcoin was trading around $46,208 in global crypto exchanges but it now trades around $16,840 (on Dec 21), a drop of over 63 percent.
The overall market capitalisation of these cryptocurrencies has dropped significantly in the past one year. On January 1, 2022, the total market cap of cryptocurrencies was more than 2.24 trillion. It hovers around $810 billion in late December (Dec 21), less than one-third of its peak of $ 3 trillion in November 2021.
IT stocks: Nifty IT index delivered massive returns during the pandemic period. But this year was not as lucky for tech stocks. The Nifty IT index was trading at 38,715 on January 3, and it slipped to 26,880 on July 11. It further fell to 28,748 on December 21, a fall of 26 percent in this year alone.
Still the IT index is seen overpriced with P/E (price/earnings) ratio of 27.3 and P/B (price/ book value) ratio of 8.48 (on Nov 30).
Funds investing in overseas stocks: Through a number of investing routes, investors in India are incentivised to invest in equities across global markets. But the retail investors found it hard to spread their bets way too far .
At the start of the year, markets regulator asked mutual fund houses to stop taking fresh subscriptions in schemes investing in overseas stocks.
However, after nearly six months, SEBI in June permitted mutual funds to again invest in foreign stocks within the aggregate mandated limit of USD 7 billion for the industry.
This happened after a major correction in global markets that brought down the valuation of international stocks. The meltdown in global stocks brought down the cumulative value of investments made by all the mutual fund houses together.
In 2022, eight new fund of funds (FoFs) investing overseas were launched and collectively, they raised a total of ₹414 crore in their month of launch — not an impressive figure by any yardstick.
Paytm IPO: Although Paytm launched its IPO in the second week of November last year, steep fall in its price afterwards continued in 2022. And in the past one year, the much sought-after IPO lost over 75 percent of its value, which is seen as the world’s worst for large IPOs in a decade, according to the data compiled by Bloomberg.
ESG funds: Although more than 155 new mutual fund schemes were launched in 2022, but none of them was in the category of ESG. There are only a handful of active ESG funds (launched in previous years) and despite following the noble themes of environmental, social and governance – they have not managed to garner an overwhelming interest among investors.
Only three funds in this category have an AUM (assets under management) of over ₹1,000 crore including SBI Magnum Equity ESG Fund, Kotak ESG Opportunities Fund and Axis ESG Equity Fund.
The others are relatively smaller funds and posted negative or single digit returns in the past one year.
RBI’s digital rupee: RBI's digital rupee was launched with a lot of fanfare, but more than a month into the pilot project, stakeholders are not seeing much benefits into the scheme.
According to a Reuters report, the e-rupee was similar to the internet-based banking that users were already satisfied with. So, the use of blockchain technology and projecting it as an alternative to the popular cryptocurrencies is now being seen as a long leap.
However, there is no denying the fact that it is still too early to come to a conclusion on digital rupee as the jury is still out on this.