Steel City Securities Ltd Management Discussions

ANNEXURE - 9

ECONOMY OVERVIEW:

The global economy remains remarkably resilient, with growth holding steady as inflation returns to target. The journey has been eventful, starting with supply-chain disruptions in the aftermath of the pandemic, a Russian-initiated war on Ukraine that triggered a global energy and food crisis, and a considerable surge in inflation, followed by a globally Synchronized monetary policy tightening. Despite many gloomy predictions, the world Avoided a recession, the banking system proved largely resilient, and major emerging market economies did not suffer sudden stops. (Source: IMF).

Despite an uptick in growth in major economies, the IMF remains cautious in its outlook on the global economy going forward. In its World Economic Outlook (WEO) April 2024 report, IMF has projected global growth to remain steady at 3.2 per cent in 2024 and 2025, marginally higher than 3.1 per cent in its January 2024 update. The slow pace of expansion is mainly attributed to high borrowing costs, withdrawal of fiscal support, and continued impact of conflict in Europe, weak productivity growth, and increasing geo-economics fragmentation.

Asia is expected to continue to account for the bulk of global growth in 2024-25. Inflation is expected to ease gradually as cost pressures moderate; headline inflation in G20 countries is expected to decline. The global economy has demonstrated resilience amid high inflation and monetary tightening, with growth around previous levels for the next two years (Source: World Bank).

Global equity markets ended 2023 on a high note, with major global equity benchmarks delivering double-digit returns. This outperformance was led by a decline in global inflation, slide in the dollar index, declining crude and higher expectations of rate cuts by the US Fed and other Central banks.

Indian Economy:

India showcased resilience amid global headwinds in 2023 and is likely to remain the worlds fastest-growing major economy on the back of growing demand, moderate inflation, stable interest rates and robust foreign exchange reserves. Over the course of the last decade (2014-2024), India has showcased a robust and resilient growth story driven by perseverance, ingenuity, and long-term vision in spite of unprecedented challenges such as COVID-19 pandemic and evolving geopolitical situations. In the last 10 years, India has moved from the 10th largest economy to the 5th largest economy of the world with an estimated GDP of $3.7 trillion in FY24.

INDIAN EQUITY MARKET

Indias stock market achieved a historic milestone, surpassing the $4 trillion market value for the first time, thereby solidifying its position as the worlds 5th-largest equity market. Marked by new highs and volatility, fiscal 2024 was a boon to equity investors who parked their investments in broader markets. Foreign investors demonstrated strong interest in Indias stocks, injecting over $15 billion into the market, while domestic funds contributed more than $20 billion. This surge in investment reflects confidence in Indias efforts to bolster its economic growth.

In the FY 2023-24 nearly 3.7 crore Demat accounts were added, marking the largest increase ever, averaging over 30 lakh accounts a month, driven by a rally in the market. The number of Demat accounts opened with two depositories - the Central Depository Services (CDSL) and the National Securities Depository (NSDL) -- jumped 11.9 percent year-on-year, to 15.14 crore from 11.45 crore.

This upward momentum in market was propelled by widespread buying across various sectors. This upward momentum in market was propelled by widespread buying across various sectors, despite challenges such as a depreciating rupee affecting market sentiment. The positive close for the fiscal year is attributed to robust demand in power, auto and metal stock, aligning with the bullish wave as seen in the international markets.

NSE Nifty 50 rose about 28.6% in FY24, while it hit an all-time high of 22,526 mark on March 11. The S&P BSE Sensex rising 24.9% in the financial year and hitting a fresh life high of 74,245.17 on March 7. The small and mid-cap space paid off for investors, as the indices outperformed the benchmarks during the year. On NSE, Nifty Small cap rose 63.44%, while Nifty Midcap advanced 55.76%. The BSE Small cap jumped 60.76% and BSE Midcap was up 62.97%.

Future Outlook

Indias real GDP is forecasted to grow by 8.2% in FY24 (according to the National Statistical Office (NSO), propelled by a strong upturn in industrial sectors, notably manufacturing. This growth is fuelled by declining input costs and increasing profitability. Additionally, the construction sector has experienced an uptick due to increased government capital expenditure (capex) and rising demand for office spaces and housing, particularly in urban areas.

There are several positive factors for the Indian economy. While healthy balance sheets of banks and corporates, supply chain normalization, business optimism and robust government capital expenditure are favourable for a renewal of the capex cycle, however the private capital investment cycle needs to take off. Thus, going forward, India is expected to see relatively stronger growth.

Few of the initiatives which will be stepping stones for the growth of our Company in coming years:

• Digital continues to be a game changer: Digitization has been a key driver for the financial services industry. Advances in technology, increasing smartphone penetration, and increasing digitization at systemic level are expected to lead more retail investors to adopt and consume financial services through Online. We have launched new version of Mobile App (Steel city SMART PLUS). We strongly believe significant growth of business transactions through our Mobile app will grow day by day.

• Completely digital on-boarding process (Quick KYC & Re KYC) whereby clients can open SCSL Demit & Trading accounts instantly will also help to onboard new clients quickly and hassle free.

• Plans to set up over 50,000+ E-governance centers by FY25

• We have plans to broaden and deepen geographical presence and expand distribution networks in the Northern and Western market of India

• Focus on augmenting product line under the e-governance segment with emphasis on NPS promotion. Leveraging its TIN centers for distribution of third party products ie. Loans, mutual funds, insurance schemes, credit cards and IPOs.