admin
The calendar year 2024 has been witnessed by several Global events that has resulted in significant volatility in the Indian stock market. The Nifty -50 index and BSE Sensex achieved all time high of 26,277 and 85,978 respectively but could not sustain the peak level. The benchmark indices ended with 23,645 and 78,139 with a moderate growth of 8.8% and 8.1% respectively. The broader market indices, Nifty Midcap and Nifty SmallCap, have shown comparatively better performance when both surging of 23.9% each over close value of last calendar year.
| Index | 31st Dec 2023 | Change | % Change | 31st Dec 2024 | 52W High | 52W Low |
| NIFTY 50 | 21,742 | 1,903 | 8.8% | 23,645 | 26,277 | 21,137 |
| BSE-30 Sensex | 72,272 | 5,867 | 8.1% | 78,139 | 85,978 | 70,002 |
| Indices | 31st Dec 2023 | Change | 31st Dec 2024 | 52W High | 52W Low | |
| Nifty Small Cap | 15,144 | 3,626 | 23.9% | 18,769 | 19,716 | 14,085 |
| Nifty Midcap | 46,182 | 11,018 | 23.9% | 57,199 | 60,926 | 45,293 |
| NIFTY 500 | 19,470 | 2,906 | 14.9% | 22,375 | 24,573 | 19,081 |
Here we want to highlight the series of events that has occurred during 2024 that has created market volatility.
Nifty Chart for 2024 (Courtesy: Trading View)
- General Election 2024:
The Election Commission of India (ECI) announced the dates of Lok Sabha election on March 16, 2024, and voting were conducted in 7 phases from April 19 to June 1. Since the announcement of election, the domestic equity market remained rangebound investor adopted wait and watch approach. Once the results were declared, the ruling party BJP missed the magic figure (276seats) and could secure only 240 seats, formed a coalition Government in Centre with 286 seats. Feeling the uncertainty of a multiple party government, the investors community started offloading their holdings and for a short span the market remained unpredictable. There was volatility of 2104 points in Nifty-50 index.
2. Union Budget 2024:
Post the announcement of Union Budget (presented on 23rd July) by the newly formed Government there was a significant impact over the stock market as the Finance Minister Nirmala Sitaraman decided to hike the Capital Gain tax. The Short-Term Capital Gain (STCG) on stocks was raised from 15% to 20% while Long Term Capital Gain Tax (LTCG) was increased from 10% to 12.5% with no indexation benefits. The Security Transaction Tax (STT) were also hiked in F&O segment from 0.02-0.10%.
The exemption limits of the Capital Gain Tax on Financial assets were increased from INR 1 Lakh to INR 1.25 Lakhs.
3. Israel – Iran War
The cold war or proxy conflict between Israel and Iran remained for decades which were aggravated when Iran suspected Israeli air strike on Tehran embassy in Damascus followed by Drone and missiles strike by the former on the latter by April 15 this year. This was in continuation of the ongoing war between Hamas and Israel for more than a year and location of the conflict expanded to Syria, Lebanon, West Bank, Jordon, Yemen, Red Sea and Mediterranean Sea.
Due to this geopolitical tension, there was an increase in crude oil prices and induced bearish sentiment in the Indian stock market. The rise in oil prices spiked inflation rate and resulted in increase in Trade deficit.
4. US Federal Reserve Rate Cut
As a part of easing monetary policy US Federal reserve reduced its key interest rate by 50 basis points in September 2024 to lower policy rate target to 4.75-5.00%, this was followed by two more cuts of 25 basis points in November and December month to bring the rates between 4.25-4.50%. This has resulted in Global equity market sell off including India as reduction of interest in US will make Indian Asset less attractive to foreign investors. A weaker rupee means higher trade deficit and rising inflation rate due to high import cost caused by fossil fuel.
5. Presidential Election in the US
The Republican candidate Donald Trump is back in White House as President when he defeated Democratic Candidate Kamala Harris 312-226 electoral votes. Returning of Trump in the White House raising hopes among investors for the economic resilience in the US, however, his protectionist policy measures can create uncertainty in the Global Market and potential trade war especially with China and India.
6. Economic Stimulus in China
The People’s Bank of China announced economic stimulus packages in September and October 2024 to boost its domestic economic growth that was slowing down to 4.6% in 3 months ending September. The economic package includes reduction of interest and mortgage rates. The Chinese central bank allocated considerable funds to lend more to business and individual. The economic stimulus in China induced Foreign Institutional Investors to sell Indian stocks and shift focus on China.
7. The Foreign Investors Selling Indian Equities
The higher valuation in domestic stocks coupled with Chinese Government’s stimulus package to its boost economy prompted FIIs to sell shares in India. According to Economic Times data in October and November FIIs sold equities worth INR 94,017 Cr and INR 21,612 Cr respectively, total more than INR 1.15 Lakh Crore.
8. Bank of Japan increased interest rate
In March 2024, Bank of Japan ends its negative interest rate regime and raised short term rates to 0.25%. This has shocked the entire Global Investment communities as several FIIs borrow yen from Japanese Banks at a lower rate to invest in high yielding market like India. Policy shift coupled with volatile yen resulted in 4% drop in benchmark indices in the last week of March 2024.
9. Hindenburg Research accused SEBI Chief
The US based short -seller Hindenburg Research accused Adani with serious accusations of Stock manipulation, accounting malpractices, related party transaction through offshore entities etc. In August 2024, this Research unit from New York came up with another report with a new allegation against SEBI Chairperson Madhvi Puri Buch and her husband Dhaval Buch that they allegedly made investments in offshore fund which is linked to Adani group.
The US entity alleged that the Head of Indian regulatory authority used her personal email account to send business emails in her husband’s name. Both the regulator and Mrs. Puri came up with separate statements and rejected allegations as completely baseless.
Despite these events of uncertainty Indian Stock Market remained resilient showcasing its potential to overcome the challenges and created while offering opportunities to grow further. Moving forward investors must be cautious to monitor geopolitical and macro-economic developments before investment.
