ps it infrastructure services ltd share price Management discussions

ECONOMIC OUTLOOK

Policymakers the world over are currently facing a predicament. The last two years have seen the global economy struggling to deal with overlapping crises, the latest being the liquidity troubles after a series of global bank crises. While the impact appears to have been contained, these uncertainties continue to undermine the confidence among consumers and businesses to spend, therefore impacting economic growth.

The World Bank now fears that the ongoing slump in global economic growth will likely result in a "lost decade." Despite this gloom, many market analysts believe that this could well be Indias decade. And there are enough reasons and data to back this claim. Recent data revisions by India suggest the economy has fared better than previously believed despite continuing global uncertainties. The International Monetary Fund (IMF) expects India to grow by 5.9% in FY 2023-24 and by an average rate of 6.1% over the next five years.

However, capital investment, especially in the private sector, has lagged so far. India is an attractive investment destination is a point well emphasized. The question is, why has private investment not yet picked up sustainably, and what can policymakers do to take advantage of this window of opportunity?

Our overall outlook for the Indian economy remains positive: We expect investments to see a turnaround and thrust the economy into sustainable growth. India will likely grow at a moderate pace of 6.0%-6.5% in FY 2023-24, as the global economy continues to struggle. Growth in the next year will likely pick up as investments kick start the virtuous circle of job creation, income, productivity, demand, and exports supported by favorable demographics in the medium term.

It looks like the world has come out of the shadow of the pandemic and has, in fact, learned to live with it. However, geopolitical crises, supply chain reorientations, global inflation, and tight monetary policy conditions will weigh on the outlook. We have delved into these challenges in detail in our previous outlooks.

INDUSTRY OVERVIEW

The Indian stock market has been a centre of attention for investors and analysts alike in recent years, with its ups and downs creating a sense of uncertainty for those investing in the market. However, as we move into 2023, the outlook for the Indian stock market prediction seems positive, with a projected growth rate of 7.5% to 8%.

The Indian stock market has been through a roller coaster ride in the past few years. From a record-breaking bull run to the COVID-19-induced crash, investors have experienced both the highs and lows of the market. As we move into 2023, the market outlook seems promising, and investors are eager to know about the stock market predictions for the year ahead.

Most experts predict a bullish market outlook for the Indian stock market in 2023. Positive economic growth and government policies are expected to drive up stock prices. Additionally, the low-interest rates and ample liquidity are expected to attract investors toward equities. The return on foreign investments is also expected to further fuel the markets growth.

OPPORTUNITIES & THREATS

The Indian equity market has been posting positive returns for the last seven years. Though last year Sensex and Nifty posted only a modest gain of 4.9% and 4.3%, respectively, Indian markets appeared strong even as S&P 500, Russian MOEX, FTSE Italia, DAX (Germany), CSI 300 (China), Hangseng and Nikkei 225 posted negative returns of 18%, minus 51%, minus 48%, minus 26%, minus 21% and minus 11% respectively.

Fortune India spoke with a few fund managers to understand what could spoil the equity applecart and what the big threats for the Indian stock market are in 2023.

In 2022, foreign investors sold Indian shares worth ^1.21 lakh crore ($17 billion), while domestic investors bought ^2.56 lakh crore ($36 billion) of equities reflecting the buoyant mood of Indian investors toward the stock market.

Domestic flows, which were supportive in the last two years, in the wake of higher deposit rates could also pose a risk to equities in 2023. "Higher fixed deposit rate is always welcome by Indian savers so retail inflows into equities may get slowed down if rates move up.

Stock pickers and active funds may take precedence over Index Funds that were in vogue for past years.

RISKS AND CONCERNS

PS IT Infrastructure & Services Ltd. (PIISL) has exposures in various line of business. PIISL are exposed to specific risks that are particular to their respective businesses and the environments within which they operate, including market risk, competition risk, credit risk, liquidity and interest rate risk, human resource risk, operational risk, information security risks, regulatory risk and macro-economic risks. The level and degree of each risk varies depending upon the nature of activity undertaken by them.

MARKET RISK

The Company has quoted investments which are exposed to fluctuations in stock prices. PIISL continuously monitors market exposure in equity and, in appropriate cases, also uses various derivative instruments as a hedging mechanism to limit volatility.

LIQUIDITY AND INTEREST RATE RISK

The Company is exposed to liquidity risk principally, because of lending and investment for periods which may differ from those of its funding sources. Management team actively manages asset liability positions in accordance with the overall guidelines laid down by various regulators. The Company may be impacted by volatility in interest rates in India which could cause its margins to decline and profitability to shrink. The success of the Companys business depends significantly on interest income from its operations. It is exposed to interest rate risk, both as a result of lending at fixed interest rates and for reset periods which may differ from those of its funding sources. Interest rates are highly sensitive to many factors beyond the Companys control, including the monetary policies of the RBI, deregulation of the financial sector in India, domestic and international economic and political conditions and, inflation. As a result, interest rates in India have historically experienced a relatively high degree of volatility.

The Company seeks to match its interest rate positions of assets and liabilities to minimize interest rate risk. However, there can be no assurance that significant interest rate movements will not have an adverse effect on its financial position.

HUMAN RESOURCE DEVELOPMENT

The Company recognizes that its success is deeply embedded in the success of its human capital. During 2022-23, the Company continued to strengthen its HR processes in line with its objective of creating an inspired workforce. The employee engagement initiatives included placing greater emphasis on learning and development, launching leadership development programme, introducing internal communication, providing opportunities to staff to seek inspirational roles through internal job postings, streamlining the Performance Management System, making the compensation structure more competitive and streamlining the performance-link rewards and incentives.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

The provision of the Companies Act, 2013 relating to CSR Initiatives are not applicable to the Company.

COMPLIANCE

The Compliance function of the Company is responsible for independently ensuring that operating and business units comply with regulatory and internal guidelines. The Compliance Department of the Company continues to play a pivotal role in ensuring implementation of compliance functions in accordance with the directives issued by regulators, the Companys Board of Directors and the Companys Compliance Policy. The Audit Committee of the Board reviews the performance of the Compliance Department and the status of compliance with regulatory/internal guidelines on a periodic basis.

The Company has complied with all requirements of regulatory authorities except as per remark and observations stated in the Form MR-3 issued and submitted by Secretarial Auditors and is forming of the Annual Report.