Despite the recent fall, Indian equity markets are on track to close 2024 with positive returns for the ninth consecutive year, marking the longest streak of annual gains on record, according to a report by Standard Chartered bank.
This achievement reflects the resilience of the Indian economy and the performance of its financial markets.
The report highlighted that 2024 was a year of two distinct halves for Indian equities and bonds. The first half (H1) saw strong growth, supported by robust economic activity and corporate earnings.
However, the second half (H2) was marked by heightened volatility due to slowing economic growth and earnings. This slowdown came against a backdrop of higher-than-usual interest rates as the RBI prioritized curbing inflation and managing credit risks.
It said “2024 was a year of two halves with H1 seeing strong performance of Indian equities and bonds on strong economic growth and corporate earnings delivery. However, H2 witnessed a surge in volatility”
The report also noted that these factors led to record foreign investor outflows from Indian equities, dampening market sentiments.
Indian Markets: More Details
Despite these challenges, the Nifty 50 index has gained 9.21% so far this year, while the Sensex index has risen by 8.62%, showcasing the resilience of Indian markets.
Looking ahead, the report expressed optimism about 2025, expecting economic growth to improve. This recovery is likely to be driven by higher domestic demand, boosted by increased government spending and better private consumption. Rural incomes are expected to see an uptick, further supporting this recovery.
However, the report flagged uncertainties surrounding US President-elect Donald Trump’s proposed policies. These particularly include increased tariffs, as a significant risk for emerging markets like India. An intensified trade war could adversely affect India’s growth outlook.
Nevertheless, the report suggested that India’s large, domestically focused economy and its relatively small contribution to US imports (around 3%) might shield it from the worst impacts of global trade tensions. This resilience, combined with improving domestic conditions, is expected to support India’s economic and market performance in the coming year.
