Factsheet Index
Macro and
Equity Market
Outlook
GLOBAL MACRO & MARKETS
India’s NIFTY index ended the month flat in January 2024. The S&P500 (+1.6%), the Euro 50 (+2.8%), the Morgan Stanley Capital International World (MSCI) (+1.1%), and the Japanese NIKKEI (+8.4%) rounded a positive month for major global indices. Among Emerging Market (EM) indices, the Morgan Stanley Capital International (MSCI) Emerging Markets, the HANG SENG (Hong Kong) and the BOVESPA (BVSP) Brazil were all down in January 2024 by -4.7%, -9.2% and -4.8%, respectively. The Moscow Exchange (MOEX) Russia Index was up +3.7%, bucking the trend for EMs.
London Metal Exchange (LME) remained flat (-0.8%) in January 2024, as top consumer China’s demand outlook remained tepid in response to the property sector crisis in the country. West Texas Intermediate (WTI) and Brent Crude rebounded over the month, by +5.9% and +6.1% respectively as global oil markets remained volatile based on the sustenance of The Organization of the Petroleum Exporting Countries (OPEC+) production caps and the situation in the Red Sea.
The US Dollar index strengthened by +1.9% through January 2024, with the US Dollar depreciating by -1.8% vis-à-vis Emerging Market currencies and depreciating by -0.2% against the Indian Rupee on the spot market. India 10Y G-Sec yields fell by -0.2 bps, while US 10Y G-Sec yield rose by +23.9 bps, and the German Bund yield rose by +26.6 bps, with rates settling at 7.18%, 4.12% and 2.29% respectively. US yields falling were a function of the expectations of the Fed’s comments on potential rate cuts in 2024 with inflation moderating sharper than expected.
Domestic Macro & Markets
The S&P BSE SENSEX (-0.7%) remained flat in January 2024. S&P BSE Mid-cap and Small-cap indices outperformed the large cap index, up +5.3% and 7.1% respectively. Sector-wise, Oil & Gas, PSU, and Realty were the top 3 performers over the month, clocking +12.6%, +11.2%, and +9.4%, respectively. 10 of S&P BSE’s 13 sectoral indices ended the month in green.
Net Foreign Institutional Investors (FII) flows into equities were negative for January 2024 (-$3.35 Bn in January 2024, following +$5.85Bn in December). Domestic Institutional Investors (DIIs) remained net buyers of Indian equities (+$3.3Bn, from +$1.5Bn from last month).
India's high frequency data update:
Elevated levels of GST collections, festive season demand uptick, stable retail inflation, deflated input inflation, rising core sector outputs, and elevated credit growth augurs well for the Indian economy.
Manufacturing PMI:
Manufacturing PMI in January 2024 recovered to 56.5, at a four-month high and remained in expansion zone for the 31st straight month driven by mild input cost inflation and surge in new orders.
GST Collection:
Collections of INR 1.72 Tn (+10% YoY) in January 2024 concluded the twenty third consecutive month of collections over the INR 1.4 Tn mark, following record collections of INR 1.87 Tn in April 2023. Collections for 8 out of 10 months in this fiscal year crossed INR 1.6 Tn. Rising compliance, increased formalization of the economy, festive demand, and improved administrative efficiency have driven high tax collection buoyancy.
Core sector production:
The index of eight core sector industries grew by 3.8% in December 2023, against a 7.8% jump in November 2023, as an unfavourable base effect came into play for India’s eight core sectors. Seven of the eight constituent sectors recorded positive YoY growths, with crude oil recording a YoY degrowth.
Industrial Production:
Manufacturing Output as measured by the IIP index decelerated MoM to an eight-month low, with a rise of 2.4% in November 2023, vs a growth of 11.6% YoY in October, driven by muted, but positive YoY growths in all 3 constituent sectors- Mining, Manufacturing and Electricity.
Credit growth:
Scheduled Commercial Bank Credit growth reached 20.3% YoY as of 12th January 2024 against a YoY growth of 16.47% as observed on 13th January 2023.
Inflation:
December 2023 CPI inflation rate rose to a four-month high, and reached 5.69%, accelerating from 5.55% in November 2023. Food inflation remained elevated and accelerated, coming in at 9.53%. WPI inflation reached a nine-month high, with the December print at +0.73%, 47 bps up from November’s at +0.26%, as WPI inflation printed positive for the second month in a row.
Trade Deficit:
Indian Merchandise Exports rose by +0.97% YoY to $38.45 Bn in December 2023, while Imports fell by -4.85% YoY to $58.25 Bn. Merchandise trade deficit narrowed to a $19.8 Bn as the global economic situation remained uncertain.
Interim Budget for Fiscal 2024-25 key takeaways:
A well-balanced budget with commitment to fiscal consolidation, policy continuity and macro stability
Amidst various uncertainties the Central Government continued the path of fiscal consolidation. FY25 deficit was set at 5.1% of GDP signalling the intent to get to the medium term fiscal deficit target of 4.5% of GDP in FY26.
Fiscal math appears credible with very reasonable assumptions on tax and non-tax revenues growth for FY25.
On the expenditure side the focus has been on the supply side. Effective capex allocation has been increased by nearly 17%yoy while revenue expenditure is budgeted to see very modest growth in FY25.
Events to watch out for in January 2024:
Oil Prices:
The OPEC+ rolled over its production cut policy for the first quarter of 2024, with expectations of a revisit in March of 2024. Current production cuts remain at 2.2 Mn BPD (Barrels per day), with Saudi Arabia maintaining a 1 Mn BPD voluntary cut in production. Talks of impeding ceasefire between Hamas and Israel, the situation in the Red Sea, unforeseen refinery shutdowns in the USA, US rate cut expectations etc may lead to higher volatility in global markets.
China Macroeconomic situation:
China’s manufacturing activity contracted for the fourth month in a row in January 2024, with the government’s fiscal stimulus measures providing little support for a deflationary situation that has enveloped the economy. Major Chinese developer Evergrande’s $330 Bn default has also created a drag on the property market of the country, which accounts for a much as 20% of real activity in the country, according to the IMF. Risks of contagion through the high-risk shadow banking system in China remains a key monitorable for global equity markets.
Monthly Performance for Key Indices:
Source: Bloomberg .*Calendar year returns.

Note: Market scenarios are not reliable indicators for current or future performance. The same should not be construed as investment advice or as any research report/research recommendation.
Past performance may or may not be sustained in future.
Market View
India continues to be one of the fastest growing major economy supported by demographic advantage, deregulation & policy reforms, digitization and demand (aspirational spending).
Overall outlook towards domestic capital markets remains optimistic, supported by resilient domestic demand and the signs of bottoming of global & domestic monetary tightening cycle.
Prudent interim budget with a focus on fiscal consolidation, policy continuity can help reduce external risks and aid in attracting global investors.
Going forward the sentiment appears to buoyant supported by India’s relatively better macros, possibility of higher foreign flows and the narrative around policy continuity in the upcoming general elections.
From an equity market perspective, some of the positives appear to be considered in valuations and therefore return expectations from near term perspective should be moderate.
We believe Large Cap oriented strategies appear to be better placed on a risk- reward basis while Asset allocation products can help to manage the downside risks
Asset allocation in line with investment goals and risk appetite is important for better risk – return optimization. Herein asset allocation funds can help in lowering volatility and provide better balance to the overall portfolio mix.
Chart of the month :

Central Government chooses fiscal prudence over populism.

The path to fiscal consolidation continued in the interim budget announcement, with the fiscal deficit reaching 5.8% in 2024, and estimated to be 5.1% of GDP in FY25. The Central government remains on the fiscal glide path of 4.5% by FY26.
Source:
Budget Documents, BE – Budgetary Estimates, NIMF Research, CEIC
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*The sectors mentioned are not a recommendation to buy/sell in the said sectors. Details mentioned above are for information purpose only.

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