Navigating Turbulence with Triumphs in 2023, scaling new heights and optimism for the New Year
The Indian stock market emerges as a beacon of resilience and growth, defying global uncertainties and geopolitical tensions in the year 2023. Investors witnessed a remarkable ascent, with the Nifty 50 scaling past 21k and Sensex scaling past 70k marking their second-best performance since 2017. Against a backdrop of subdued global economic growth, the Indian stock market showcased its ability to overcome challenges, recording impressive gains and achieving significant milestones.
The markets in the month of December out performed earlier months with around 8% gain on Nifty & Sensex. It was best month this year as it surpassed November gain of 7%. The year ended at lifetime high with Nifty 21731 and Sensex 72240. This year has also been one of the best performing year with nifty gain of 19.4%. This can be attributed to various factors like good earnings result by Companies, global markets rally, FII & DII buying, favourable macro like GDP growth, high GST collections, falling crude prices and recent states election results in favour of ruling party. Indian market has performed very well on monthly and YTD basis along with US & Europe market rally. The current year 2024 is critical with many macros & events which can impact the market like favourable macros, strong digital growth, geo political conflicts, fear of Covid resurgence, Indian elections in May’24 & global macros.
Recap of 2023 stellar performance, pivotal events & important lessons
This year will be remembered for many significant events. From witnessing soaring inflation, record-high bond yields and the collapse of 3 banks to the indefinable rally of small-cap and mid-cap stocks, the unpredictable twists and turns of the year imparted valuable lessons for investors.
Global Market & events -The first half of the year witnessed collapse of 3 banks in the US namely Silicon Valley Bank (SVB), Signature Bank and First Republic Bank due to a run on their deposits caused by higher interest rates and losses on their bond portfolios. The latter part of the year witnessed jitters from surging Inflation which impacted the bond yields as they touched record-high levels of 5% since the Global financial crisis of 2007. As the Fed continued its hawkish stance, market expectations regarding future interest rates shifted, with investors anticipating further rate hikes in 2024 and beyond. However, the Fed’s December meeting did cool off the bond yields as it signalled benchmark policy rate lower by the end of 2024. This year also witnessed conflict between Israel & Palestine amidst Russia & Ukraine crisis which impacted economy & global trades. The world is more connected than ever and global events have an important impact on all markets.
Adani-Hindenburg saga – The first quarter witnessed Adani-Hindenburg saga which shook the Adani group stocks as the group lost about $100 billion in market value in few week. Hindenburg released a detailed report alleging various financial and accounting irregularities at Adani Group companies. Supreme Court eventually gave a clean chit to Adani recently. But the damage was already done. However, the group has recovered around 75% of the market cap so far. This highlights the importance of diversification as some Investors got adversely impacted because of concentrated portfolio with Adani Stocks.
DII, FII Inflows & Retail Interest – The Indian markets growth continues with record inflows from retail Investors of Rs.1.8 lakh crores while the FIIs withdrew 17,029 crores in 2023. The number of demat accounts rose to 13.93 crores as at the end of 2023 on attractive returns from the equity markets. This showcase the robust influence of retail investors and their crucial role in sustaining market strength.
Indian stock market growth – India’s market capitalisation crossed the $4 trillion mark. The Indian stock market is ranked fourth in the world in terms of market capitalisation, following the United States, China & Japan. NSE has secured a prominent global position, standing as the third-largest exchange worldwide based on the number of trades in the cash market segment with 10.8% share. NSE also became the world’s largest equity derivatives exchange with 73.7% global share in the number of contracts traded in equity derivatives.
IPO Buzz – The primary market was also buzzing with IPOs due to bull run and strong retail interest. There have been 46 IPOs in 2023, raising a cumulative Rs 41095 crores. Comparatively Rs 59301 crores was raised through 40 IPOs in 2022. The record-breaking blockbuster year of 2021 with 63 IPOs raising a whopping Rs 1,18,723 crores is still the benchmark.
Sectoral performance – It will be remembered as the best year for mid-cap and small-cap rally completely outperforming largecap. Smallcap shined with 48% return, followed by Midcap 43% return Vs Largecap return of 20%. The top performing sectors were – Realty 80%, auto 47%, Infra 38% whereas the sectors which lagged behind were – bank 11%, metals 16% and Media 18%. Overall the rally was broad based with over 85% of stocks ending on the positive note.
Important lessons – This year underscore the timeless wisdom that successful investing involves a combination of resilience, patience, discipline, diversification, focus on quality companies and the importance of equity as an asset class to generate wealth in long term. This time is best to reap benefits of Investing in Indian growth story.
2024 outlook
The market outlook for 2024 remains bullish, although expectations include continued volatility. Multiple domestic & international factors are poised to influence market dynamics this year, contributing to the anticipated fluctuations & shaping the overall trajectory of the Indian stock market.
Jan’24 monthly outlook on Fundamentals & Technical
Fundamental outlook: The market started Jan’24 with volatility throughout the first week. The market is consolidating around 21500 considering the run up seen in 2023 and last month December. January month & first quarter is generally volatile in terms of past years performance. The valuations are appearing stretched though as of now markets taking support around this level and not showing signs of any bigger corrections. The key event for the year is the May’2024 central Government Election and till then market seems to have limited upside with minor pullbacks likely in between with volatility. Some rebalancing in the portfolio is advised at this stage; SIPs may continue and can invest more on healthy correction after consultation with your investment advisor.
Technical outlook: Indian market is volatile and consolidating on basis of technical for this month. The market is taking a breather after strong uptrend of last 2 months. The RSI on weekly and monthly basis is in range of 75 to 80 which indicates market is in overbought zone. This month target for nifty is 22000 and may face strong resistance at 22450. The immediate support for nifty is seen at 21000 and major support at 20350.
