Panorama January 2025 edition is out now!

Panorama is a meticulously crafted report that offers a comprehensive view of the macro factors and market trends shaping India’s economic landscape.

Here are the key insights from the report:

1. The momentum factor has significantly outperformed other factors since 2011. The quality factor follows, but the gap between quality and momentum is considerable. Since January 2011, momentum has delivered a 21% annualised return, followed by a 14% return from quality. However, since April 2020, value has outperformed other factors.
2. Historically, value has witnessed significantly larger drawdowns. Excluding value, momentum has had the most significant drawdowns, though the gap with other factors isn’t substantial. Low volatility and quality factors generally tend to outperform during periods of market corrections.
3. Net financial savings of households (HH) remain subdued in FY24 due to increased financial liabilities. HH financial liabilities (% of GDP) continue to pick up in FY24, rising to 6.4% from 5.9% in FY23. This is the highest reading since at least the 1970s, barring 6.6% in FY07. Consequently, India’s HH debt to GDP continues to climb even as the aggregate for emerging markets moderates from the post-pandemic peak.
4. The share of consumption loans in bank credit rose from 14% in FY19 to 18% in FY24, while loans for asset creation increased from 29% to 33%. Both categories increased at the expense of loans for productive purposes. Sub-prime borrowers availed loans primarily for consumption, whereas super-prime borrowers used debt for asset creation, especially housing.
5. The microfinance sector is showing signs of stress with rising delinquencies. During H1FY25, the share of stressed assets with 31-180 days past due (dpd) rose from 2.15% in March 2024 to 4.30% in September 2024. Impairment remained high among borrowers with loans from multiple lenders and those with higher credit exposure.
6. The banking system’s GNPA ratio fell to 2.6% in Sep’24 from 2.8% in Mar’24. However, The RBI’s latest stress tests project a worsening asset quality. The GNPA ratio is expected to increase to 3% by March 2026 under the baseline scenario, 5% under the medium stress scenario, and 5.3% under the severe stress scenario

Click here to read the full report