Market Overview – September 2024
Global growth is projected at 3.2% for both 2024 and 2025; the short-term outlook is stabilising, though vulnerabilities remain.
Global economy
- Global growth is projected at 3.2% for both 2024 and 2025; the short-term outlook is stabilising, though vulnerabilities remain.
- G20 headline inflation is expected to fall from 6.1% in 2023 to 5.4% in 2024 and 3.3% in 2025.
- US markets rose about 5% in the month after the US election, on expectations of tax cuts and higher spending.
- Medium-term risks include deglobalisation, high trade tariffs and currency volatility that could strengthen the dollar.
Indian economy
- We have turned cautious after three bullish years, as post-COVID growth momentum normalises across sectors.
- RBI tightening of easy credit, a key driver of consumer spending, is expected to dent demand.
- Government capex has been tepid, at 37% of budget estimates, among the lowest in 15 years.
- October CPI inflation rose to 6.21%, a 14-month high, so interest rates may remain elevated.
Indian stock markets
- The Nifty 50 hit 26,000 in September 2024, then fell 6.2% in October, its steepest monthly drop since March 2020.
- Record FII selling of over ₹1 lakh crore and geopolitical tensions drove the correction.
- Broader markets fell harder: 1,181 companies (about 38%) were down 30% or more from their 52-week highs.
- Small- and mid-cap P/E ratios trade at 49% and 36% premiums to long-term averages, versus roughly in line for the Nifty 50.
Corporate performance
- Profit growth slowed for a fifth consecutive quarter, and profits declined 3.4%, the first decline since March 2023.
- Industrial commodities, construction, power, steel, FMCG and automotive were sluggish; IT and BFSI performed reasonably well.
- Earnings downgrades exceeded upgrades by a wide margin, after four years of healthy double-digit growth.
Outlook
- A good monsoon has eased rural conditions; tractor sales and reservoir levels support optimism for the rabi season.
- October exports grew 17%, the first double-digit growth in 28 months.
- Q3 results should bring more clarity on the domestic manufacturing recovery.
- We see the correction as an opportunity to reshuffle portfolios toward non-discretionary sectors that should recover faster.
Disclaimer. This overview reflects the views of the Care PMS investment team at the time of publication and is for information only. Investments in equities are subject to market risk. Past performance is not indicative of future returns. Please read the disclosure document carefully before investing.
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