India Stocks' Multi-Year Record Rally Continues Despite Sour End: 2024 Markets Wrap

The NSE Nifty 50 and the BSE Sensex are set to close 2024 with gains of nearly 8.86% and 8.12% respectively.

NSE Bull statue, representing Indian Breed Bull with the people of India stands outside National Stock Exchange (NSE) headquarter building in BKC, Mumbai. (Source: Company)

Indian stocks extended the rally to a record ninth consecutive year in 2024, even as geopolitical tensions, valuation concerns and growth uncertainty weighed on domestic stocks.

The NSE Nifty 50 and the BSE Sensex are set to close 2024 with gains of nearly 8.86% and 8.12%, respectively. This makes it nearly 50% below the gains made in the previous year.

The benchmark indices saw gains similar to 2023 before global funds began their record exodus in India. The domestic stocks fell to the so-called 'correction zone' in November — a fall of over 10% from the 52-week high, triggered by the selloff by foreign investors.

The Nifty 50 saw a mixed performance this year, with some stocks surpassing analysts’ expectations and others falling below predictions. Forty-four companies out of the 50-stock index exceeded analyst estimates when India’s benchmark index closed at a record high on Sept. 27.

Rich valuations, volatility during the general election, growth shocker in the second quarter, and geopolitical tensions along with financial crises in Asia weighed on investors' sentiment during the year.

The broader market continued to gain over the benchmark index in 2024, albeit by a smaller rally than the previous year. Nifty Smallcap 250 index rose 25.6% this year against 48% in 2023. The midcap gauge advanced by 23.1% in 2024 against a 44% rally in the year before.

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Tug Of War

Despite the FII shocker, the market remained resilient buoyed by domestic inflows. In four of the five instances when markets fell the most this year, domestic investors mopped up nearly 50% worth of stocks the global funds offloaded.

So far in 2024, foreign funds have bought Rs 2,026 crore worth of stocks, net of primary and secondary market, according to data from the National Securities Depository Ltd. During the same time, domestic local funds have invested Rs 1.12 lakh crore, indicating the rising interest among retail investors to capitalise in the booming stock market.

During the market rout in October, FIIs took out a record Rs 1.6 lakh crore while domestic investors helped avoid a huge crash by buying stocks worth Rs 1.58 lakh crore, according to provisional NSE data.

However, analysts think this is a good entry point for investors given the current currency depreciation.

Once the rupee has also reached 85.5 and has depreciated a lot, it's a good entry signal for global funds, Parag Thakkar, Head Fund Manager, Fort Capital, told NDTV Profit. "You are entering a country that has not shown growth in the last year, but with very good macro."

Current account deficits are low, banking balance sheets are strong, and corporates are underleveraged, he said. "What is required is just a push and intent for growth, which can come in the budget, hopefully."

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Also Read: Rupee At 87? More Pain Ahead As Volatility Returns To India's Forex Market

Top Winners And Losers

The Tata Group's retail fashion chain Trent Ltd. is the top gainer among the blue chips this year with a rally of over 133%, as the company's expansion and pricing strategy attracted investors.

Mahindra & Mahindra Ltd. and Bharat Electronics Ltd. were among the other top companies in the Nifty 50 index this year.

IndusInd Bank Ltd. was the top loser this year in the benchmark index with a fall of nearly 40%, as margin pressures for the lender continued to hurt sentiments. Asian Paints Ltd. and Nestle India Ltd. were among the biggest losers this year.

India's pharma sector remained the space that saw most gains this year with the Nifty Pharma index rising over 39%. Nifty Real Estate also rose over 34% followed by gains in Nifty IT and Nifty Auto.

The media index on the NSE lost the most with a fall over nearly 24% in 2024, while the fast-moving consumer goods stocks closed with marginal losses amid mounting concerns about a bleak outlook for the year ahead.

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Also Read: Stocks For 2025: Axis Securities Picks Bharti Airtel, Ambuja Cements And More

India Falls Behind Asian Peers 

With gains of nearly 20%, Indian stocks were poised to post the second-highest returns among the major economies, falling only behind Wall Street. However, the FII selloff led the domestic stocks to fall behind their Asian peers at the year's close.

Wall Street's S&P 500 will be the top-performing index in 2024 with 28% gains, while the tech-heavy Nasdaq Composite index rallied 33% led by the surge in the shares of heavyweight Nvidia Corp.

While European stocks posted limited gains this year, Asian stocks shrugged off volatility in the region, with the benchmark in Hong Kong being one of the top performers. China's CSI 200 index advanced 16% this year as stocks recovered on a stimulus blitz to revive the economy.

South Korea's benchmark gauge will end the year on a negative note, partly weighed down by the political turmoil it witnessed after its President declared a short-lived martial law.

Pakistan's stock market gave the most returns in the Asian region with the KSE-100 index soaring 84% in 2024.

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Also Read: Pakistan Economy In Shambles But Stock Market Rallies 60% YTD — Three Reasons Why

2025 Outlook

Indian stocks along with emerging market equity will continue to face volatility in the quarters going ahead into the year.

Jefferies, in its outlook, sees Nifty 50 to scale 26,600 by December 2025. The earnings per share is expected to grow by 13% in fiscal 2026 and calendar year 2025. The investment upcycle should go on for another four to five years, according to equity analysts at Jefferies.

However, HSBC Global Research has cut the 2025 year-end target of India benchmark gauge—BSE Sensex—as risks of earnings downgrades amid high valuations weigh on the global brokerage.

The target for the BSE Sensex was cut to 90,520 from 1,00,080 for the end of 2025, implying a 15% upside from the current level, HSBC said in a note on Nov. 19.

Analysts warn global markets are expected to continue seeing heightened volatility in the first half of the calendar year 2025 as the new US administration under Donald Trump is likely to implement significant policy changes.

Also Read: Upcoming IPOs In 2025: LG Electronics, Tata Capital, Ather Energy, Zepto Among Key Public Issues

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WRITTEN BY
Sai Aravindh
Sai Aravindh is a desk writer at NDTV Profit, where he covers business and ... more
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