Market Outlook - November 2024

Market Update

Indian equity markets had a challenging month, with Nifty declining 6.2% for the month of October. This was its biggest monthly drop since March 2020. Small and midcap indices dropped 3% and 6.7%, respectively. The worst-performing industries were oil and gas (-14%), consumer durables (-10%), and auto (-12%). Investor sentiment was impacted by (1) the Chinese market’s strong early-month surge, (2) ongoing FPI outflows, (3) poor 2Q performance, (4) geopolitical concerns, and (5) uncertainty around the forthcoming US presidential election. Indian market performed the worst globally for the month, with France (-4%) Hong Kong (-3.9%), and Mexico (-3.5%) being the other notable losers. Dow Jones and US SPX both fell by a modest 1%. Other significant events include: (1) BJP winning the Haryana assembly elections; (2) SEBI introducing plans to limit retail participation in speculative index derivatives; (3) Government raising the minimum support price for rabi crops; (4) RBI prohibiting four NBFCs from approving and disbursing loans; and (5) IMF maintaining India’s GDP forecast at 7% for FY2025.

The data of 2QFY25 point to a widespread decline in the Indian economy. However, it is expected that H2FY25 will be a much better period as demand has shifted to the second half due to delayed monsoons and delayed onset of festive and marriage seasons. 34 Nifty-50 stocks have released their results thus far, and their net income rose 1.9% year over year, which is less than the 4.5% growth which we had anticipated.

Foreign Portfolio Investors (FPIs) were aggressive sellers to the tune of US$12.4 billion of Indian equities in the secondary market, whereas Domestic Institutional Investors (DIIs) continued to be buyers at US$12.8 billion for the month.