D-Street investors have experienced a significant rise in wealth in 2024, as their combined net worth increased by ₹110.57 lakh crore. This growth comes as the Indian stock markets have been on a record-breaking rally. The surge has been fuelled by strong corporate earnings, robust domestic liquidity, and resilience against foreign institutional investor (FII) outflows.
Investors who invest in stocks have seen handsome returns, particularly in midcap and smallcap stocks, which have outperformed broader indices.
Stock market performance in 2024
The Indian stock markets have shown strong performance throughout 2024, with benchmark indices such as the BSE Sensex and NSE Nifty hitting new highs. At the start of the year, the BSE Sensex stood at 72,271.94 points and has since risen to 84,266.29 points, representing a 16.64% increase so far this year. This rally has been driven by a mix of strong corporate earnings, high domestic liquidity, and optimism about India’s economic fundamentals, making it a fruitful year for those who invest in stocks.
The BSE Sensex soared by 12,026.03 points during the year, breaching several milestones along the way, including an all-time peak of 85,978.25 on September 27. The market capitalisation of BSE-listed firms has surged by ₹110.57 lakh crore to reach ₹4,74,86,463.65 crore. As of September 27, the total market valuation of BSE-listed companies hit an all-time high of ₹477.93 lakh crore.
Factors driving the market rally
Several factors have contributed to the sharp rally in the Indian stock markets. One key reason is the strong domestic liquidity, supported by consistent inflows into the mutual fund industry. Despite the pressure from FIIs selling off Indian equities, local retail and institutional investors have remained bullish, continuing to invest in stocks.
Santosh Meena, Head of Research at Swastika Investmart Ltd, noted that 2024 had been an outstanding year for retail investors, with midcap and smallcap stocks outperforming significantly. The BSE midcap index has risen by 34.32%, while the smallcap index has gained 34.62% year-to-date. Many investors who decided to invest in stocks within these segments have been rewarded with multi-bagger returns.
Impact of global factors on Indian markets
Despite challenges in the global economy, including geopolitical tensions and economic slowdowns in major economies, the Indian stock markets have remained resilient. Analysts have attributed this resilience to the strength of the Indian economy, supported by low inflation and robust corporate earnings, encouraging more investors to invest in stocks.
Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd, highlighted that the recent rally was influenced by the expectation of an interest rate cut by the US Federal Reserve, which provided a positive trigger for global equity markets, including India. The expectation that the Reserve Bank of India (RBI) might follow suit also contributed to improved market sentiment.
Wealth gains and market milestones
Investors have witnessed a steady rise in wealth throughout the year. On September 17, 2024, the 30-share BSE Sensex closed above the 83,000 level for the first time in history. It breached the 84,000 mark on September 20 and climbed above the 85,000 level on September 25. These milestones have been reflective of the strong rally in the broader market, benefitting investors who continued to invest in stocks during the year.
Reliance Industries remains the most valuable company on the BSE, with a market capitalisation of ₹19,82,265.88 crore, followed by TCS, HDFC Bank, Bharti Airtel, and ICICI Bank. The combined valuation of these firms highlights the concentration of wealth in a few large companies, which have also contributed to the overall growth in market capitalisation in 2024.
Outlook for the rest of 2024
Looking ahead, the outlook for the Indian equity markets remains positive, though some analysts have warned of potential corrections in certain segments. As the US presidential election approaches, global uncertainties may increase, leading to periods of market volatility. However, Meena remains optimistic about sector-specific opportunities driven by domestic liquidity and strong economic fundamentals. For investors planning to invest in stocks, this may present opportunities to buy at lower valuations.
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