FY24 closes on a sweet note!

After a volatile Q4, markets picked back steam in the last week of March, closing the year near the all-time highs. Broad markets ended the financial year at a 30% upside at the back of strong earnings growth.

Financial Year 2024-25 expectations

GDP growth

India has already surpassed the GDP growth projections for the last fiscal year. Additionally, major rating agencies have raised their expectations of India's GDP growth for the coming financial year.

Inflation

Inflation hasn't softened as much as expected this financial year. For the next FY, RBI has forecasted inflation at 4.5% while the current rate stands at 5.4%.

Interest Rates

Last year, we saw exceptionally high interest rates. Based on the recent Fed commentary, there are 3 rate cut announcements expected this year. RBI will also follow suit and cut rates which should further boost liquidity, job creation and earnings.

Election

Historical data of the last 20 years show that markets usually react positively in the year following elections, with 2019-20 being the only exception due to Covid. Data also shows that the average 1 year return following elections has been around 18%.

Overall, current macroeconomic indicators show that the growth trajectory of Indian markets is well placed for the coming years, provided valuations stay in control.

The mix of election year, high
GDP projections and rate cut
expectations can make this an
exceptional year for Indian
markets. Allocating investments
to segments with good earnings
visibility and moderate valuations
will reap good rewards!