The Indian stock market in 2024 was a stage of immense action—soaring highs, volatile turns, and groundbreaking developments. From record-breaking IPO activity to geopolitical turbulence and policy shifts, this year showcased the market’s resilience and adaptability. Investors witnessed a year where infrastructure growth stole the spotlight, while global uncertainties and elections kept traders on edge. Let’s dive into the critical events that shaped 2024, making it a year to remember for investors.
September marked a shift in global monetary policy as the US Federal Reserve began rate cuts. By December, the Fed’s key rate was reduced to 4.25-4.5%, influencing global capital flows and boosting market sentiment.
The revised projections indicate that by the end of CY 2025, this rate could fall from 3.75% to 4%. Stock markets were disappointed with the Fed's projection. The S&P 500 and Nasdaq crashed 3%. The Sensex and the Nifty 50, suffered losses of a percent each. European markets also reacted sharply, with CAC, DAX, and FTSE indices plunging up to 2%.
Geopolitical tensions in the Middle East created fluctuations in global oil prices, impacting India’s energy-dependent economy. Stocks in energy sectors, including Reliance Industries and ONGC, experienced sharp movements amid this volatility.
For a nation that imports a significant portion of its oil, the Iran-Israel conflict brought renewed focus on energy security. Crude oil prices fluctuated wildly, testing the resilience of energy companies and raising costs across industries. Despite these challenges, Indian markets managed to hold their ground, thanks in part to diversified growth in other sectors.
The Bank of Japan’s departure from ultra-loose monetary policy, including rate hikes to 0.25%, led to the unwinding of yen carry trades. The yen’s 13% appreciation in a month made yen-funded positions costlier, prompting rapid unwinding.
This development had a cascading effect on global markets, including India. While the impact was relatively contained, it highlighted the interconnectedness of global financial systems and the need for vigilance.
China’s economic stimulus and rate cuts prompted foreign institutional investors (FIIs) to redirect funds, leading to selling pressure in Indian markets. Combined with high valuations and mixed Q2FY25 earnings, this resulted in significant FII outflows.
China's stock market has been one of the worst-performing markets in recent years among major economies. However, we have seen an excellent rally off-late, with the CSI 300 index gaining more than 20% after the introduction of the Stimulus package. However, after some time market has corrected some experts believe that the stimulus given may not be enough to revive the economy.
Despite these, domestic institutional investors (DIIs) played a crucial role in stabilizing the Indian market. Their continued faith in India’s growth story helped mitigate the impact of FII outflows, showcasing the growing maturity of India’s financial ecosystem.
Donald Trump’s win over Kamala Harris in the US presidential election introduced new dynamics to global markets. While expectations of a US economic recovery brought optimism, concerns about protectionist policies kept investors cautious. For India, Trump’s presidency presents opportunities in IT, pharma, EMS, and defense, balanced against potential risks like tariffs and geopolitical issues.
The domestic equity market witnessed a different trend, as the benchmark indices gained over 1% in the trade amid news developments that Trump was set to become the 47th president of the United States. Even the next day, the market made a sharp comeback and ended higher. Benchmark Sensex recovered its early losses to close higher by 694 points. The global markets reacted with a mix of optimism and caution, reflecting the complex interplay of opportunities and risks.
India’s aggressive push for infrastructure development set the tone for 2024. The government allocated a massive ₹11.11 trillion ($132.85 billion) to infrastructure spending, equaling 3.4% of GDP. Key projects under PM GatiShakti revolutionized logistics, boosting sectors like steel, cement, and construction.
The focus on infrastructure also underscored India’s commitment to building a foundation for long-term economic growth.
The April-May general elections saw the BJP secure 240 seats and form a coalition government. Historically, Indian markets tend to rally in the months leading up to elections, reflecting optimism about economic direction and government stability.
Investors’ wealth jumped Rs.12.48 lakh crore on June 3, 2024, after exit polls predicted a massive win for the Bharatiya Janata Party-led National Democratic Alliance in the Lok Sabha polls, with India’s equity benchmarks gaining more than 3%. However, once the actual results came out on June 4, BSE Sensex tanked by 5.74% and Nifty50 tanked by 5.93%, leading to nearly Rs.30 lakh crore losses for investors. In the later half, the market recovered, a recovery driven by the promise of policy continuity and economic reforms.
Post-election, the government’s budget emphasized infrastructure, green energy, and digital initiatives. This approach offered growth opportunities across sectors. Key changes to capital gains taxation included:
Short-term capital gains tax increased to 20% (from 15%)
Long-term capital gains tax raised to 12.5% (from 10%)
While the tax changes sparked debates among investors, the budget’s focus on long-term growth themes provided reassurance. Sectors like renewable energy and digital technology emerged as key beneficiaries, aligning with global trends and investor preferences.
Foreign institutional investors remained net sellers throughout 2024, As of December 2024, FIIs had net sold equities worth Rs. 2.49 trillion, with Rs.1.64 trillion of this occurring in the last quarter (October to December). Domestic institutional investors (DIIs), however, played a stabilizing role, offsetting some of the selling pressure.
This dynamic highlighted the growing importance of domestic investors in shaping market trends. As India’s retail investor base continues to expand, their collective influence on market stability is becoming increasingly evident.
The IPO market experienced a record-breaking year:
-91 mainboard IPOs
-Over 200 SME listings
-Funds raised: ₹1.8 trillion (2.6x higher than 2023)
-IPO contributions to market capitalization: ₹14 trillion
-BSE IPO Index surged by 34.83%
The stellar performance of the IPO market underscored the depth and vibrancy of India’s capital markets. From fintech startups to manufacturing giants, a diverse array of companies tapped into public markets, providing investors with exciting new opportunities.
The market underwent corrections due to a combination of global and domestic factors:\
Major Impact: Sectors like Oil & Gas and Energy saw declines exceeding 21% from 52-week highs.
Global Uncertainty: Geopolitical risks and protectionist policies heightened caution.
Commodity Price Swings: Energy price fluctuations impacted the Oil & Gas sectors.
Investor sentiment on Dalal Street has turned increasingly cautious as the Nifty has dropped over 10% from its record high of 26,277, while the Sensex has tumbled over 8,500 points from its peak.
These corrections served as a reminder of the importance of valuation discipline and diversification in investment strategies. For long-term investors, they also presented opportunities to enter quality stocks at more reasonable prices.
Despite numerous challenges, the Indian stock market showcased remarkable resilience in 2024. The BSE Sensex gained 8.2%, while the Nifty50 rose 8.8% year-to-date as of December 31st. Broader markets outperformed, with Nifty MidCap and SmallCap indices surging over 24%. With strong economic fundamentals, India remains on a promising growth trajectory. As the nation moves toward its goal of becoming the third-largest economy by 2030, its stock market’s adaptability underscores its maturing stature and global relevance.
