Indian market FY24 review: Strong returns and optimism for key sectors

Indian market FY24 review: The fiscal year 2023-24 (FY24) witnessed robust performance in the Indian market, with notable returns across various segments. The Sensex rose 25 per cent in FY24 and Nifty50 index zoomed 29 per cent.

Large caps recorded a notable 33 per cent return, while midcaps surged by 56 per cent and small caps impressed with a remarkable 63 per cent rise, as indicated by broad market indexes.

The performance was largely fuelled by an upgrade in the economy's growth forecast, with the Indian GDP projection climbing from 6.4 per cent to 7.3 per cent on a quarter-on-quarter (QoQ) basis. 

Additionally, corporate earnings growth saw a surge, with the Nifty50 index forecasted to achieve a year-on-year EPS growth of 23-24 per cent.

Retail inflows remained robust, supported by both direct investments and investments through mutual funds, with the number of trading accounts held by domestic investors reaching 16.7 crore, highlighting increased market participation.

Foreign institutional investors (FIIs) exhibited heightened buying activity, with shares worth Rs 2,04,169 crore being bought in FY24 after two consecutive years of net selling. The increased activity was driven by India's economic outperformance compared to other emerging markets experiencing slowdowns.

Vinod Nair, Head of Research, Geojit Financial Services said, “While the year ended on a subdued note with substantial selling pressure till March 20, recent trading sessions have shown some relief as pressure from leveraged selling eased and buying activity improved, albeit at lower volumes.

Looking ahead to the first week of April, market participants anticipate a flurry of economic data releases, including PMI data in the US and India, factory orders, and unemployment data in the US. 

Attention will also be on signals regarding policy rates, particularly from the Reserve Bank of India (RBI), and India's Q4FY24 result forecasts, expected to reflect a healthy performance.

Optimism prevails towards sectors such as Pharma, Capital Goods, and Infrastructure as key growth drivers, supported by both domestic and external demand.

Nair further said, while some sectors like FMCG and IT face challenges due to subdued demand, a turnaround is anticipated, driven by expectations of a normal monsoon and increased US demand following the Fed's rate cut.

However, the focus remains on large caps, with some caution regarding midcaps' premium valuations in the short to medium-term.

Market experts anticipate continued positive momentum, with a focus on large caps, as global cues and key economic data releases shape investor sentiment. Auto stocks are expected to be in the limelight amid the release of monthly auto sales numbers, while government-centric stocks may garner attention with the start of elections in April. 

The upcoming earnings season will be critical in gauging the robustness of earnings momentum and assigning earnings multiples.