 "Israel war, Budget, Fed rate cut: Top events that shaped markets in 2024")
Top stock market events in 2024: As the calendar year 2024 draws to a close, the Indian stock markets are poised to deliver moderate returns, with high single-digit gains on the cards. Among the major indices, the BSE Sensex has risen by 8.7 per cent, while the Nifty50 has posted a gain of 9.3 per cent year-to-date till December 23, 2024.
The broader market indices, Nifty MidCap and Nifty SmallCap, have shown a more nuanced performance with a surge of 23.6 per cent and 23.4 per cent, respectively.
As we bid farewell to 2024, here are the key events and factors that shaped the trajectory of the stock markets throughout the year:
1) Lok Sabha Elections 2024:
One of the most pivotal events impacting investor sentiment was the outcome of the 2024 General Elections. The Bharatiya Janata Party (BJP) secured only 240 seats, falling short of the 272 needed for a clear majority. However, the National Democratic Alliance (NDA) managed to win 286 seats.
While the BJP formed a coalition government with the support of regional parties such as the Telugu Desam Party (TDP) and the Janata Dal United (JDU), the markets were left, somewhat, nervous due to the uncertainties surrounding a coalition government.
2) Union Budget 2024:
The Union Budget of 2024 saw one major announcement that had a significant impact on the stock markets. In July 2024, Finance Minister Nirmala Sitharaman proposed hikes in capital gains taxes. Short-term capital gains (STCG) tax was raised to 20 per cent, from 15 per cent, and long-term capital gain (LTCG) tax saw an increase to 12.5 per cent for all asset classes, from 10 per cent.
The budget also removed the indexation benefit for unlisted assets, including real estate properties. The government, however, has given real estate investors a choice between the old and new tax regimes for properties acquired before July 23, 2024.
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3) Iran-Israel War:
The geopolitical tensions surrounding the Iran-Israel conflict created global instability, with oil prices spiking and market sentiment turning bearish. This situation had a ripple effect on Indian markets, particularly in energy stocks, as rising crude oil prices threatened to stoke inflation and impact India's trade balance.
4) US Fed Rate Cut:
The Federal Reserve's decision to begin easing monetary policy in September 2024 was another important development for global markets. The Fed cut its key interest rates by 50 basis points, followed by two more 25-basis-point cuts, bringing the Fed’s key rate to 4.25-4.5 per cent as of December 2024.
5) US Presidential Elections:
In one of the most closely contested US Presidential elections, Republican candidate Donald Trump defeated Democrat Kamala Harris. Trump’s return to office raised hopes of an economic rebound in the US, but his protectionist policies has also sparked concerns over inflation and potential trade wars. The uncertainty surrounding his administration's approach to taxes and tariffs has kept global markets, including India’s, on edge.
6) Japan’s Interest Rate Hike & Yen Carry Trade:
In March 2024, the Bank of Japan (BOJ) announced the end of its negative interest rate policy. By July, it had raised its short-term target to 0.25 per cent. This decision sent shockwaves through global equity markets, especially in the light of the unwinding of the yen carry trade, which involves borrowing yen at low rates to invest in higher-yielding assets elsewhere. The BOJ’s policy shift, combined with a volatile yen and impending rate cuts in the US, caused a sharp 4 per cent drop in Indian benchmark indices over just two days back then.
7) China’s Stimulus Measures:
China government unveiled a series of stimulus packages in 2024, to support its faltering economy. The People’s Bank of China also lowered interest rates and mortgage rates, while allocating substantial funds for government investment projects. This shift towards China prompted a pullback in Indian stocks, with foreign institutional investors (FIIs) possibly pivoting towards China and selling Indian stocks.
8) FII Selling:
The stimulus measures in China came at a time when corporate earnings in India disappointed in Q2FY25. This, coupled with high valuations in the Indian stock market, led to a wave of profit-booking by foreign investors. As of December 2024, FIIs had net sold equities worth Rs 2.49 trillion, with Rs 1.64 trillion of this occurring in the last quarter (October to December).
9) Investors rush for IPOs:
Investors were spoilt for choice as calendar year 2024 saw a rush for initial public offerings (IPOs). As many as 91 mainboard and over 200 SME IPOs hit the markets this year, raising Rs 1.8 trillion in 2024, 2.6 times the Rs 57,600 crore raised in 2023.
According to a Motilal Oswal Financial Services report, new listings through IPOs in 2024 contributed nearly 3 per cent (Rs 14 trillion) to India's market capitalisation, the highest-ever in absolute terms. READ MORE
10) Hindenburg-Sebi case:
After accusing Adani Group of stock manipulation and accounting fraud in 2023, US-based short-seller Hindenburg Group levelled fresh charges against market regulator Securities and Exchange Board of India (Sebi) chairperson, Madhabi Puri Buch, in 2024.
Showing copies of personal emails claimed to be of Buch, Hindenburg alleged that "Buch used her personal email to do business using her husband's name while serving as a Whole-Time Member of Sebi."
On their parts, Sebi and Buch each issued separate statements, rejecting all the allegations as baseless and accusing Hindenburg Research of character assassination. READ MORE