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HAPPY ENDINGS WITH GOOD HOPE

On December 29, 2023, the last trading session of the year, the Nifty 50 settled at 21,731.40, and the Sensex closed at 72,240.26, breaking their five-day winning streak.

INFLUENCERS FOR INDIAN MARKETS: 2024

The year 2023 ends with a bang for the Indian markets, reaching new milestones fueled by stricter regulations and emerging on new podiums. Market capitalization
The information contained herein (the “Information”) may not be reproduced or disseminated in whole or in part without prior written permission from the Company. The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The document has been prepared based on publicly available information, internally developed data and other sources believed to be reliable. The directors, employees, affiliates or representatives (“Entities & their affiliates”) do not assume any responsibility for, or warrant the accuracy, completeness, adequacy, reliability and is not responsible for any errors or omissions or for the results obtained from the use of such information. Readers are advised to rely on their own analysis, interpretations & investigations. Certain statements made in this presentation may not be based on historical information or facts and may be forward looking statements including those relating to general business plans and strategy, future financial condition and growth prospects, and future developments in industries and competitive and regulatory environments. Although the Company believes that the expectations reflected in such forward looking statements are reasonable, they do involve several assumptions, risks, and uncertainties. Readers are also advised to seek independent professional advice to arrive at an informed investment decision. Entities & their affiliates including persons involved in the preparation or issuance of this document shall not be liable in any way for direct, indirect, special, incidental, consequential, punitive or exemplary damages, including on account of the lost profits arising from the information contained in this material. Readers alone shall be fully responsible for any decision taken based on this document.
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On December 29, 2023, the last trading session of the year, the Nifty 50 settled at 21,731.40, and the Sensex closed at 72,240.26, breaking their five-day winning streak. Profit booking in a few selected heavyweights, in line with the mid and small-cap indices, resulted in substantial gains. The BSE midcap and smallcap indices reached fresh record highs of 36,889.87 and 42,728.21, respectively. Despite peaking out in November 2023, the winning streak continued in the last month of 2023. During the last five trading sessions of December, the BSE Sensex rallied around 1904 points, i.e., 2.70%, and the Nifty gained around 628 points, i.e., 2.97%. The Nifty 50 surged more than 7% in December alone. Additionally, a major positive factor was the expectation of rate cuts by the US Fed and a cooling global inflation scenario. December also witnessed noteworthy performances across various sectors, amid both domestic and global geopolitical challenges. The win in three state elections by the current party assures political stability in the upcoming 2024 elections.

In 2023, Nifty 50 and BSE Sensex rose by around 20%, marking their second-best year since 2017. Indian stock investors added a significant ₹81.90 lakh crores to their wealth in 2023. The major gainers were the small-cap and mid-cap indices, gaining around 55.62% and 46.57%, respectively, in 2023, outperforming blue chips despite valuation concerns. The bull run was supported by sustained domestic mutual fund inflows, foreign capital inflows, better-than-expected economic growth, and robust corporate earnings. Nifty 50 marked the eighth consecutive year of positive returns.

Last month in November 2023, India became a stock market superpower with the market capitalisation surpassing the $4 trillion mark securing fifth position after the US, China, Japan and Hong Kong. US is currently the leading market across the world, with a total valuation of over $50 trillion. The economic slowdown in the West didn't stop the US stock exchange from growing, which was up by 22.6% this year. While US and India saw a boost in their stock exchanges by over 20% each, the second largest market in the world - China - fell by around 9% in 2023, A report by Ernst and Young shows that the Indian stock market had over 150 listings of new companies in first 9 months, while Hong Kong had just 42. Foreign portfolio investors (FPIs) were net buyers in the Indian stock market this year with a sharp uptick in December after having reversed their 3-month selling streak in November. The inflows intensified during December on strong global cues after the US Federal Reserve signalled the end of its tightening cycle and raised expectations of a rate cut in March 2024. This led to a crash in US bond yields and triggered foreign fund inflows into emerging markets like India. As of 29th December, FPIs have bought ₹66,135 crore worth of Indian equities and the total inflow stands at ₹84,537 crore as of December 29, taking into account debt, hybrid, debt-VRR, and equities, according to National Securities Depository Ltd (NSDL) data. FPIs heavily bought stocks in financial services, according to analysts. For the entire calendar year 2023, FPIs bought

₹1.71 lakh crore in Indian equities and the total inflow stands at ₹2.37 lakh crore taking into account debt, hybrid, debt-VRR, and equities, according to NSDL data. FPIs' net investment in Indian debt market stands at ₹68,663 crore during 2023. Bonds are risk-averse investments that act as income generators and serve as a hedge against the stock market. However, the year 2023 was significantly volatile for the bond markets due to geopolitical tensions in the Middle East, a pause in rate hikes, and open market operation (OMO) announcements by the RBI. The increase in yields had an impact on returns from debt instruments, with the price of bonds decreasing as yields rose. Nevertheless, the RBI's decision to pause rate hikes had positive implications for debt investments, as a decline in interest rates tends to enhance the value of debt securities. Debt funds managed to generate returns ranging between 6.5% and 7% in 2023. The US bond market was also highly volatile, pulling FIIs from emerging markets due to US Fed announcements, causing market fluctuations. In the current financial year 2023-24, ending September 30, the total value of outstanding bonds in the Indian market was Rs. 205.3 lakh crore. In the last five years, the total bond market value has surged over 77% to Rs 192.4 lakh crore in the financial year (FY) 2023 from Rs 108.8 lakh crore in FY18. In the domestic bond market, government bonds have a 78% market share, while corporate bonds have a 22% share.

Crude futures lost over 10% in 2023 in a volatile year of trading, reporting their biggest annual drop since 2020, marked by geopolitical conflict in the Middle East and concerns about the oil output levels of major producers worldwide. OPEC cut the output by around 6 million barrels per day, representing about 6% of global supply. Geopolitical tensions in the Middle East escalated on the last day of 2023 as Israel intensified its attacks in southern Gaza, putting upward pressure on prices. Brent crude on Friday, the last trading day of the year, settled at$77.04 a barrel, down 11 cents or 0.14%. US West Texas Intermediate crude settled at $71.65 a barrel, down 12 cents or 0.17%. Both contracts slipped more than 10% in 2023, closing out the year at their lowest year-end levels since 2020. Crude oil benchmark Brent futures have moved sideways in the last one year until December 2023, mainly due to the supply cuts announced by the OPEC+ as well as the Israel-Hamas war. Oil majors, including Saudi Arabia and Russia, have since then defended the oil production cuts as a precautionary measure and helped stabilize the oil market.

The domestic currency had declined from levels around 74 in January 2022 to 82.78 by December 31, 2022. The 10% decline against the US dollar had led many experts to predict that it might touch the level of 85 dollars in 2023. Surprisingly, the Indian currency in 2023 showcased a robust performance, even after reaching its lowest level of 83.395 (closing level) against the US dollar. The rupee fell only 0.65% against the US dollar in 2023 (till Dec 26), a significant improvement compared to the 10.25% loss it experienced in 2022. Several factors contributed to the resilience of the local currency, including a shrinking trade deficit, lower-than-expected current account deficit, and strong foreign portfolio investment (FPI) inflows in both equity and debt during the second half of 2023. The positive turn in various macroeconomic factors for the Indian economy resulted in an influx of funds from overseas investors.



The year 2023 ends with a bang for the Indian markets, reaching new milestones fueled by stricter regulations and emerging on new podiums. Market capitalization breaks records, making it the 4th largest in the world. The prompt implementation of stricter regulations by regulatory authorities aims to preserve the interests of investors. Lastly, new investment platforms for Indian debt and forex are introduced to the world. As 2024 unfolds, some factors influencing the Indian markets can be summarized as follows:

Global Interest Rates:
The reduction of interest rates plays a significant role in market sentiments worldwide. The pressure of inflation on the world economy will determine the phase and scope of rate cuts in the coming year. This is a major factor in deciding the progress of all major investments in the future, including stocks, debt, forex, and commodities.

Elections 2024:
After the recent victories in 3 state elections – MP, Chhattisgarh, and Rajasthan, by the NDA has driven the markets southwards. India will hold General Elections in April-May 2024, and the anticipation of a stable government is expected to reap profits. If the NDA achieves a clean win, it could lead the markets into positive territory, while its defeat may cause a negative short-term reaction. The strong fundamentals and corporate results cannot be ignored, considering the initiatives taken by the current government in infrastructure, manufacturing, import substitution, strict regulatory conditions, etc., which are expected to fuel economic growth over the medium term, barring short-term reactions.

Budget 2024:
In February, the budget will be a Vote on Account ahead of the 2024 Election, but after the new Government forms, the July Budget will be a key event for the markets in 2024. Budget 2024 is expected to guide the path of fiscal deficit targets, focusing on infrastructure development and manufacturing competitiveness. The capex sector and a few income tax initiatives could lead the markets positively.

Monsoon Effect:
The El Nino impact is expected until June 2024, potentially impacting monsoon patterns and the cultivation of essential crops, posing a notable threat to the rural economy. The risk to the production and supplies of rice, wheat, palm oil, and agricultural products could adversely affect our agri-based economic conditions. Since the monsoon season significantly affects various aspects of India's economy, such as inflation, rural income, consumer demand, trade, and farming productivity, the agricultural sector, contributing approximately 18% to the country's total output, heavily depends on the monsoon for its success.

Geo-Political Factors:
Despite the ongoing conflicts in Ukraine-Russia and Israel-Hamas, the markets somehow maintain their profits. The fluctuating crude prices significantly impact the economic conditions of countries, shaking stock markets and unsettling forex values abruptly. Hence, debt market yields and government key policies are also influenced. Conflicts across borders bring unexpected volatility in the markets, affecting the profits of investors and corporates too.



The information contained herein (the “Information”) may not be reproduced or disseminated in whole or in part without prior written permission from the Company. The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The document has been prepared based on publicly available information, internally developed data and other sources believed to be reliable. The directors, employees, affiliates or representatives (“Entities & their affiliates”) do not assume any responsibility for, or warrant the accuracy, completeness, adequacy, reliability and is not responsible for any errors or omissions or for the results obtained from the use of such information. Readers are advised to rely on their own analysis, interpretations & investigations. Certain statements made in this presentation may not be based on historical information or facts and may be forward looking statements including those relating to general business plans and strategy, future financial condition and growth prospects, and future developments in industries and competitive and regulatory environments. Although the Company believes that the expectations reflected in such forward looking statements are reasonable, they do involve several assumptions, risks, and uncertainties. Readers are also advised to seek independent professional advice to arrive at an informed investment decision. Entities & their affiliates including persons involved in the preparation or issuance of this document shall not be liable in any way for direct, indirect, special, incidental, consequential, punitive or exemplary damages, including on account of the lost profits arising from the information contained in this material. Readers alone shall be fully responsible for any decision taken based on this document.
Copyright © 2021 Fintso