9 trends of 2023 that will persist in 2024 | Screener: High and consistent dividend stocks

2023 was a complicated, surprising year - one that saw big shifts both for India, and globally. Some of these changes are likely to continue in 2024, in what promises to be a roller-coaster ride. We take a look at nine major trends that took off last year, and which are likely to define this year as well.

In this week's Analyticks:

The nine trends of 2023 that will persist in 2024
Screener: Top dividend stocks - and a high performing dividend basket

Let's take a look at the big nine:

1) India caught the world's attention in 2023, and will continue to be in the spotlight: Every country believes, secretly or not, that their nation should be at the center of things, dictating terms to the world. US Presidents frequently refer to the United States as the "greatest country on earth". On the other hand, Chinese Premier Xi Jinping says that it is China that "should be center stage in the world".

But in 2023, it was India that got more than its usual share of attention. Prime Minister Modi used the G20 to elevate India's economic profile. And as investing in China became both risky and unfashionable, India became an alternative. About 90% of the money that came into China in 2023 has already left. In contrast, foreign portfolio investments to India are at a nine-year high.

India's lucky streak is likely to continue in 2024. "A lot of the money supposed to go to China will now come to India," is how investor Mark Mobius puts it. Brokerage Jeffries also predicts higher foreign inflows into India in 2024.

2) Nifty Smallcap stocks keep climbing: Analysts complain that the Nifty Smallcap is overvalued and set for a comedown. And yet it keeps going up, and substantially outperformed the Nifty50 in 2023.

The Nifty Smallcap has already jumped 1.9% in January this year. While foreign investors are preferring larger stocks in the face of the overvaluation in smallcaps, domestic inflows are still going strong. Young retail investors are likely to keep taking bets on high-momentum smallcaps in 2024.

3) Indian regulators will regulate harder in 2024: A fast-growing economy comes with many temptations. The lending sector in particular is susceptible to taking big risks in boom times, and has been growing at breakneck speed in India.

But Indian regulators stepped in, like parents reaching home early to spoil the party, in 2023. Fast-growing lending startups and well-established players got a jolt when the RBI increased the risk weightage for unsecured loans, increasing lending costs. This is impacting companies such as PayTM and CRED - 24% of PayTM's loan value is from personal loans.

On the stock market side of things, SEBI has been busy cracking down on finfluencers, who have over the past few years, grown their followers on platforms like Youtube and Whatsapp through charisma, catchy taglines, and often suspect advice. SEBI went after the finfluencer Baap of Chart who was known for clickbait-y offers ("Bas 5 Minutes Mein Sureshot Profit"), and promises of guaranteed monthly returns. SEBI asked that the Rs 17.2 crores he got from users via 'misleading ads' be refunded. SEBI's latest consultation paper is an aggressive effort to crack down on such 'unregistered entities'. And there is no doubt that more regulation is coming.

4) Post-Jhunjunwala, Vijay Kedia has become the investor to watch: After Jhunjhunwala's passing away, the investing crowd had to find a new superstar. Increasingly, it looks like this is Kedia's title to lose. Kedia's investing style is very different from Jhunjhunwala's - he prefers midcap and smallcap companies to established players. His profile has risen in 2023 thanks to the stellar performance of his public portfolio. Bets like Neuland Labs, Elecon and Patel Engineering have been multibagger winners for Kedia.

5) AI arrived with a bang in 2023, and will surprise us in 2024: A recent test of AI images showed us how difficult it has become to tell real from fake:

The image survey by Bloomberg found that users were increasingly unable to tell the real photograph from the fake. In the above, the fake one made by AI, is B.

AI has shown an ability to do a variety of tasks, and it will reach us in unexpected ways in 2024. New AI products range from robot cleaners to AI-powered shoes that help you walk faster. AI will be there in 2024 in good ways (helpful robots) and bad (AI powered scams).

6) Real-estate and manufacturing-linked sectors are making a comeback: After a long, quiet period in 2021 and 2022, the realty sector came roaring back in 2023. Manufacturing linked sectors like construction, metals and mining and general industrials are also booming, thanks to the government's aggressive capex. 2024 is likely to continue as a boom year for these segments, although construction may soften post-elections.

On the downside, the rural sector is one to watch. The El Nino made the weather hotter and more unpredictable in 2023, and this is set to persist till May 2024. El Nino has already caused bad coffee harvests in Vietnam and a weak soybean crop in Brazil. In India, El Nino especially affects North India, weakening the monsoon in this region and causing droughts.

7) OPEC's dominance in the oil market is under threat (which is good news for India): OPEC’s one-time nemesis — US shale exports — is making a comeback, threatening the cartel’s control over the oil price.

Shale oil drillers in Texas and North Dakota have pumped much more oil than anyone expected in 2023, hurting OPEC+'s efforts to keep prices high by controlling supply. Oil prices have continued to fall as US shale production is expected to go even higher in 2024. Citigroup predicts that the oil market will remain in surplus in 2024, making it difficult for oil producers to maintain prices at current levels.

Falling oil prices are great for importers like India, since it will mean a lower import bill, and less inflationary pressure. Cheaper oil imports may also be a boost to our petrochemical exports.

8) War is back in the headlines (which is bad news for everyone): “It’ll all be over by Christmas” was the prediction that analysts made when the First World War exploded in August 1914. The war eventually lasted four years and killed 20 million people.

War is unpredictable, and bad for everyone (including those fighting). The Armed Conflict Survey says that the world saw 183 conflicts in 2023, the highest in 30 years. We started January 2o24 with more fighting in Israel, and rising attacks on ships in the Red Sea.

9) Pandemic-era startups are now fully out of fashion: Remember when Zoom predicted that the office meeting would move permanently online? Or when Byju's saw education going digital? Zoom Video Communications, whose share price had jumped 400% in 2020, was removed from the Nasdaq100 index in December 2023 after disappointing performance and falling market cap.

Byju has cut so many costs that employees are complaining that the company's toilets "look worse than government bus stops". Investment giant Prosus has written down the valuation of Byju’s to below $3 billion, a steep drop from the $22 billion valuation the Indian startup hit in 2022.

Instead, good-old fashioned public sector companies are making a comeback, Stocks like REC Limited, Indian Railway Finance, Power Finance Corporation, and Rail Vikas Nigam have been among the top gainers in the Nifty500, helped by the government's aggressive spending in infrastructure and construction.

Screener: Starfolio - High and consistent dividend yield stocks

Coal India leads in 1-yr dividend yield %

This screener shows stocks with high and consistent dividend yields over one, two and five years. It features the top 10 stocks with the highest dividend yield in the last year. These companies have also outperformed the Nifty 50 in the past year.

The screener is optimised to show 10 stocks with high 1-year dividend%. Out of the 10 stocks currently available in the screener, nine are from the public sector. Major stocks that appear in the screener are Coal India, Indian Oil Corp, Bharat Petroleum Corp, Oil India, Oil & Natural Gas Corp and Power Grid Corp of India.

FY24 has seen an increase in government budgets, contributing to growth in stock prices for these public sector companies. These public companies have to give out a certain percentage of dividends every year, which helps them dominate the screener. According to government guidelines, all public sector companies must give out at least 30% of their net profit or 5% of net worth (whichever is higher) for annual dividends.

This screener also appears in Starfolio’s featured baskets. This basket is great for long-term investors looking for high dividend-paying companies to generate passive income. This particular basket was created on March 10, 2023, with an annual rebalancing frequency. It was first rebalanced on May 2, 2023, with the next scheduled for May 1, 2024. Each stock in the basket holds an equal weight of 10%, with seven being large-cap and three mid-cap.

Since its creation, the basket has given pretty impressive returns of 118.2% in its portfolio price (not including dividends) over the past 10 months. The basket outperformed the Nifty 50 index by 93.5% in the same period. The basket also has an average net profit of 671.6% for its companies, and an average revenue growth of 20.2%.

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