Year Ender 2023: Indian Equity Market Emerges As The Second Best Performer In Global Market List
The Indian equity market fared well in 2024 as benchmark indices Nifty50 and BSE Sensex hit record highs consecutively with a yearly gain of 20 percent and 18 percent, respectively. With this, the Indian equity market emerged as the second-best performer, following Brazil in the top 10 best-performing global markets list. The achievement is noteworthy given the fact that in early 2023, Indian stock markets started on a tough note, experiencing a notable decline and reaching a 52-week low.
The rally helped Indian equities raise their significance in the MSCI Emerging Market Index, prevailing over Taiwan, as India secured a 15.5% weightage while Taiwan gained 15.1%, which is a significant rise from 12.97% at the end of January.
The broader indices outperformed benchmark indices as the Nifty Midcap 100 and Nifty Smallcap 100 indices surged 46 percent and 55 percent, respectively. On the sectoral front, the Nifty Realty index emerged as the star performer of 2023, with a surge of over 80 percent. The Nifty Auto, Infrastructure, and PSU Bank indices were also among the top performers in 2023.
The high-voltage performance of equity market underscored the exuberance of Indian economy given the fact that Indian markets faced of two wars: Russia-Ukraine and Israel-Hamas, leading to commodity price hike, dented exports, weakness of Indian rupee, etc. Brent crude price reached a decadal high of $123 per barrel before cooling down to $80 below with rising bond yields and dollar indexes.
However, the Indian equity market outperformed its global peers on the back of strong corporate earnings growth, cooling inflation trends, aggressive buying by domestic investors, retail exuberance, and dovish Federal Reserve stances over the course of the year.
There are many factors, such as easy monetary policy expectations, hopes of a stable government formation post-2024 general elections, dipping bond yields, and a cooling of commodity prices, that influence retail investor”s risk appetite.
However, early 2024 is expected to be a period of correction given the overbought condition of the market before a robust run-up.
