The Month that was : August 2024
In August, Indian markets experienced a sharp decline early in the month due to weaker US employment data, a sell-off in Japan, and geopolitical tensions in the Middle East. Despite this volatility, the Nifty Index ended the month with a 1% gain. Sectoral performance was mixed: healthcare (+7%), consumer durables (+4%), and IT (+4%) saw gains, while PSU (-4%), realty (-4%), and capital goods (-3%) faced losses. Globally, Brazil, Indonesia, and the Philippines showed gains of 6.5%, 6%, and 4%, respectively, while South Korea, China and Mexico experienced declines of 3.5%, 3%, and 2% respectively. The US S&P500 gained 2%. Key developments during the month included Bank of Japan's decision to hold off on rate hikes, Indian government's proposal to restore indexation benefits for property market, RBI maintaining steady interest rates, Supreme Court's ruling on state mineral taxes, and US Federal Reserve's comments indicating a potential rate cut. Fitch affirmed India's rating at 'BBB-' with a stable outlook. FPIs sold US$320 million of Indian equities, while DIIs bought US$5.8 billion during the month. India's economic indicators showed CPI inflation decreasing to 3.5%, WPI inflation dropping to 2%, IIP growth at 4.2%, and real GDP growth easing to 6.7% for 1QFY25.
Market Outlook
The outlook for the Indian stock market remains cautiously optimistic. India's economic indicators remain robust, with CPI inflation easing to below 4% and real GDP growth steady at 6.5% - 7%. However, global uncertainties, including potential interest rate changes by major central banks and economic performance in key regions like the US, China, and Japan, could impact market sentiment in near term.
The Indian economy is expected to continue its growth trajectory, supported by ongoing capex cycles and recovery in domestic consumption especially during the upcoming festive season. Sectors such as Banking, Healthcare, IT, and Consumer Durables are likely to remain strong. Overall, while market volatility presents risks, it also offers opportunities to invest in quality stocks in a favorable macroeconomic environment.
Happy Investing !
