Market Overview – December 2024
Global growth held near 3.2% in 2024 despite protectionism and weak outlooks for the Euro-zone and China.
Global economy
- Global growth held near 3.2% in 2024 despite protectionism and weak outlooks for the Euro-zone and China.
- The US surprised on the upside for a second year, while hopes of recovery in Europe and China were partly dashed.
- Baseline forecasts expect global growth of 2.6% in 2025.
- The policies of the new Trump administration are a major unknown for the global outlook.
Indian economy
- The Economic Survey projects GDP growth of 6.3–6.8% for 2025-26, after 8.2% in 2024-25.
- CPI inflation eased to 5.22% in December 2024 from 5.48% in November.
- The RBI cut the repo rate by 25 bps in February 2025, alongside a ₹1.5 lakh crore liquidity infusion.
- Rural demand, government spending, tax relief and the Union Budget 2025-26 should support growth; geopolitical risks and a strong dollar remain threats.
Indian stock markets
- Markets have trended down since their September 2024 peaks, with sharp falls in January and February.
- Continued FII selling has produced four consecutive months of negative returns.
- The FII stake in Indian listed equities fell below 18% by September 2024, from 22.5% over the past ten years.
- The broader market has corrected far more than the Nifty, which has seen only a modest decline.
Corporate performance
- BSE 500 companies posted 8% top-line growth in Q3 FY25, the seventh consecutive quarter below 10%.
- Profit growth slowed sharply to 8%, after exceeding 20% in FY24.
- BFSI led earnings, while Cement, Chemicals, Consumer Durables, FMCG, Oil & Gas and Metals remained under pressure.
- The earnings upgrade/downgrade ratio of 0.3x is among the weakest since Q1 FY21.
Outlook
- 72% of Nifty Midcap and 83% of Nifty Smallcap stocks have fallen more than 25% from their 52-week highs.
- Consensus expects BSE 500 PAT growth of 14–16% for FY26 and FY27, versus 9% in 9M FY25, likely to disappoint.
- Domestic flows could moderate, or redemptions follow, if the correction deepens.
- Potential recovery triggers include public spending, a revival in consumption, RBI liquidity support and easing tariff fears.
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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