Topic 2: 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 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.



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