Indian Equity Markets Analyzed
Indian stock markets have calmed down after a bumpy start to the year. For the first six months, the Sensex and Nifty – the two main measures of the market – jumped and fell quickly, sometimes by more than 1%. But things have gotten much steadier recently, with just a few big swings.
Key Points
- Market volatility decreased significantly in the second half of 2023.
- US tariffs and trade uncertainties initially fueled market instability.
- Domestic institutional investment (DII) provided crucial market support.
- Elevated valuations and IPO activity impacted investor behavior.
- Foreign Portfolio Investors (FPIs) sold more than Domestic Investors.
- Market needs positive trade or earnings news to trigger large moves.
The reasons for this change are a few. In the first half, investors were worried about news coming out of the United States, like trade disagreements. Also, companies weren’t doing as well as people hoped, which caused the stock prices to drop and rise quickly.
However, things have improved recently. Investors started to believe that the United States wouldn’t impose tariffs (taxes on imported goods) at a high rate. Also, some companies started reporting better results than expected. This made the market more stable.
Lots of money is going into new companies through Initial Public Offerings (IPOs) – when companies sell shares to the public for the first time. This is taking some money away from the existing stock market, which is also helping to keep things calmer.
Foreign investors (FPIs) sold a lot more stocks in the second half compared to the first. But, domestic investors (DIIs) were buying more stocks, which helped to balance things out. Essentially, it’s the combination of FPI selling and DII buying that is keeping the market from dropping too much.
To see the market really jump again, investors will need to hear good news about trade deals with the United States, and companies need to show even better results than people are already expecting. If that happens, the market could grow by 10 to 11 percent in the next year.
“Ultimately, the market’s next big move will depend on whether we see a resolution to the trade issues and stronger corporate earnings.”
