THe Month that was ; Janurary 2024
In the month of January, Nifty50 showed minimal change after two consecutive months of gains. However, the mid-cap and small-cap indices continued their winning streak for the third month, rising by 5% and 7% respectively. Among sectors, oil & gas, PSUs, and realty sectors displayed notable gains, while Banking, FMCG, and metals sectors declined. The market movement during the month was influenced by factors such as the 3Q result season, US FOMC meeting, interim budget, and escalating tensions in the Middle East. Global markets ended the month with mixed results.
Key developments during the month included positive GDP growth estimates for India and the US Federal Reserve maintaining benchmark rates. On the economic front, CPI inflation in December was 5.7%, and WPI inflation increased to 0.73%. Factory activity moderated to 2.4% in November from 11.6% in October. Foreign Portfolio Investors (FPIs) sold US$3.1 bn of Indian equities, whereas Domestic Institutional Investors (DIIs) bought US$3.3 bn during the month.
Market Outlook
The outlook for Indian markets remains positive, driven by strong domestic macro economic parameters, expectation of stable political outcome in upcoming General Election and supportive global liquidity going ahead as interest rate hike cycle reverses. As US Fed starts cutting interest rates around middle of 2024, resumption of FII inflows towards Indian markets should act as a tailwind. Post recent state election results with a favourable outcome for BJP, markets factors in a comfortable win for ruling party in upcoming national elections. On going capex cycle and revival of domestic consumption will be key to Nifty50 companies posting earnings CAGR of nearly 15% over next 2 years. Sectors like Capital Goods, Healthcare, Consumer Durables, IT, Real Estate and Energy are expected to do well going ahead. Investors are suggested to consider taking advantage of any intermediate correction in equity market to increase allocation.
Happy Investing!