The month that was : December 2023

In the Month of December, Nifty closed with a robust gain of 8%, with the Mid-cap and Small-cap Indices also posting commendable increases of around 7% each. Among sectoral indices, power, PSU, and oil & gas stood out with gains of 18%, 15%, and 12%, respectively.

Globally, Indian markets emerged as the best-performing in December, outpacing Australia (+7%), Mexico (+6%), and Singapore (+5%). Key developments during the month included the RBI maintaining status quo on interest rates, BJP securing victories in key states, US Fed keeping rates steady and outlining future rate cut plans. On the economic front, CPI inflation in November rose to 5.6% from October's 4.9%, primarily driven by higher vegetable prices. Foreign Portfolio Investors (FPIs) bought USD4 bn of Indian equities in the secondary market during the month, while Domestic Institutional Investors (DIIs) purchased USD1.6 bn.

Outlook for Indian markets remains positive, driven by strong domestic performance, stable political outcome, and supportive global factors. The continued inflow of foreign investments and optimistic economic projections further contribute to the positive sentiment. While uncertainties around results of General Election this year could create some volatility in the markets, structural levers of consumption uptick and capex growth should aid markets over medium term. Sectors like Banking, Consumer Durables, Cement, Real Estate and Capital Goods should do well. Investors should stay invested in Indian markets for long term owing to underlying resilience and attractiveness of the Indian economy. 

Happy investing!