The recently concluded financial year was one of the best years for Indian investors as most sectors and indices ended on the positive side. If you are still unable to make positive returns in the Indian Stock market, you need to revisit your investment strategy or look for the best equity advisor in India. Coming back to FY24, let us look at the details.
The FY24 Performance: Record Run
In FY24, Nifty50 jumped by 28.6%, while the Sensex was up 24.8% – outperforming the major markets across the globe. The Nifty50 index, which comprises top 50 companies in India, hit multiple highs in FY24. To start with, Nifty50 crossed the 19,000 mark in June. The next milestone of 20,000 and 21,000 were busted in September and December, respectively. Within a month, in January, the Nifty50 index breached the 22,000 mark and hit a high of 22,525 on 7 March.
The top-performing sectors in FY24 were infrastructure and Central Public Sector Enterprises (CPSE). They gained over 100% in the previous financial year. One of the most popular sectors in the financial year was Public Sector Banks (PSUs) – giving excellent returns to investors. Some of the stocks in the sector witnessed even multi-fold returns (up to 5X) in the financial year.
One out of five stocks or 110 stocks from the BSE 500 index have more than doubled in the financial year 2024 – which is amazing, right? The top gainer in BSE500 was Indian Railway Finance Corporation, which zoomed by 439%, followed by Suzlon Energy which increased 411% in FY24. Not all was great though! Some stocks ended the financial year in negative territory. In the Nifty500 index, 51 stocks were in the negative territory in the year.
Why did the stock market increase in FY24?
Here are some of the reasons why the Indian stock market outperformed its global peers:
- Strong economic growth: A strong Indian economy with a positive GDP growth rate boosted investor confidence and led to a rise in stock prices. As per reports, India will be the fastest-growing economy among G20 nations. Also, the forecast for GDP growth for FY24 and FY25 is highest among major economies.
- Corporate earnings growth: India reported strong earnings growth during FY24, which signaled their profitability and potential for future growth, attracting investors to the stock market.
- Government reforms: The Indian government implemented reforms that improved the business environment and made it more attractive for investors, leading to a rise in stock prices.
- Increase in foreign investments: An increase in foreign investments in the Indian stock market provided additional liquidity and drove up stock prices. Indian equities garnered Rs 2.08 lakh crore from FIIs in FY24. Capital goods received the largest share at Rs 46,935 crore. It was followed by consumer services, auto, and financial services with inflows of Rs 32,186 crore, Rs 29,862 crore, and Rs 28,793 crore, respectively.
FY25 Outlook
If experts are to be believed, the optimistic trend in the Indian financial markets will continue into the current financial year. However, there would be some volatility, mostly triggered by events happening around the world. It is believed that the market will be supported by strong participation from domestic investors, including retail investors, DIIs, and HNIs.
Some experts believe that the outlook for Indian equities in FY25 appears promising, supported by various factors such as economic recovery, stable government, increasing focus on reforms, and increasing foreign investments.
Several domestic factors, including the budget and the election, are expected to make the upcoming financial year volatile. Many other countries are also having elections this year, which will probably add to the already high level of volatility.
The Indian Finance Ministry’s positive outlook on inflation, indicating cooling even further, suggests a broad-based moderation in price pressures. The emphasis on summer sowing to help reduce food prices further aligns with efforts to maintain stable inflation levels. Additionally, the inclusion of Indian bonds in Bloomberg’s emerging market index could attract even more foreign investment (between $3-4 billion in FY25). It will not only enhance the depth of the Indian bond market but also indirectly support equities by improving overall market sentiment.
While the Indian market’s performance has been strong, investors must stay cautious because of high valuations. The current Price-to-Earnings (P/E) ratio and the market capitalization to GDP ratio, which have reached high levels, raise concerns about the sustainability of these valuations, especially in the small and mid-cap segments.
Before you go, As discussed above, the market is expected to perform well this financial year. To make the most of the market, you must have a strategy in place. If you don’t have it yet and are struggling to make money from the market, you can check Jarvis Invest – an AI-based platform that helps you pick stocks according to your risk profile and investment horizon. The best part is it even lets you with short-term investments. Check the website now!