PrøvGOLD- Free

India's Stock Market in 2024 and What's Weighing on it Next Year

Mint Mumbai|December 26, 2024
Surging bond yields are predicated on fears of rising inflation expectations in the world's biggest economy
- Ram Sahgal
India's Stock Market in 2024 and What's Weighing on it Next Year

India's stock market enjoyed a bull run over the past five years, but several factors, chiefly rising US bond yields and a risk of slowing domestic corporate earnings, are likely to weigh on it in 2025.

Rising US bond yields amid disappointing domestic corporate earnings growth and high stock valuations in India have resulted in a recent rush of foreign fund outflows. While domestic institutional investors (DIIs) can absorb some of the sales by foreign investors, increasing primary issuances mean a glut in stock supply, which can impinge the stock markets negatively in 2025.

US bond yields have risen even as the US Federal Reserve has cut its key policy rate by 100 basis points since mid-September, to 4.25-4.5% now. This has resulted in global fund outflows from emerging markets such as India to the safety of the US dollar. (A basis point is one-hundredth of a percentage point.)

Surging bond yields are predicated on fears of rising inflation expectations in the world's largest economy, fuelled by a resilient US economy, and threats of higher import tariffs by US president-elect Donald Trump once he takes office on 20 January.

While the US 10-year bond yield has risen from 3.71% on 18 September—when the Fed began to cut rates—to 4.52% on 20 December, the Nifty fell 7% to 23,588 points over the same period, reducing the returns for the year.

This has caused the yield gap—the difference between the Nifty earnings yield (the inverse of the price-to-earnings ratio) and the US 10-year bond yield—to shrink to near zero from 40 basis points on higher foreign portfolio investor (FPI) outflows from India in that period.

The Nifty earnings yield should typically be higher than the US treasury yield as stocks are a riskier investment than the US benchmark bond. If the yield gap is near zero or negative, that acts as a disincentive for FPIs, who prefer the safety of US bonds over Indian equities.

Denne historien er fra December 26, 2024-utgaven av Mint Mumbai.

Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9500+ magasiner og aviser.

Denne historien er fra December 26, 2024-utgaven av Mint Mumbai.

Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9500+ magasiner og aviser.

FLERE HISTORIER FRA MINT MUMBAISe alt
Mint Mumbai

Cheaper Inputs Set Stage for FMCG Volume Growth

Lower prices of grains, cut in oil import duties allow firms to pass on benefits

time-read
3 mins  |
June 06, 2025
Reduce uncertainty at the base of our socioeconomic pyramid
Mint Mumbai

Reduce uncertainty at the base of our socioeconomic pyramid

A reduction in road accident injuries will raise household savings and foster a sense of well-being among large numbers

time-read
3 mins  |
June 06, 2025
US crackdown on foreign students threatens to disrupt inventor pipeline
Mint Mumbai

US crackdown on foreign students threatens to disrupt inventor pipeline

The U.S. hosted over 1.1 million international college students in the 2023-24 academic year, as per IIE

time-read
5 mins  |
June 06, 2025
Mint Mumbai

IRCTC stays on slow track in Q4

Indian Railway Catering and Tourism Corp. Ltd (IRCTC)'s results for the three months ended March (Q4FY25) proved unimpressive versus expectations of a solid quarter due to the Mahakumbh-related push.

time-read
2 mins  |
June 06, 2025
A New Shot Prevents HIV—Breathes Life Into a Stagnant Biotech
Mint Mumbai

A New Shot Prevents HIV—Breathes Life Into a Stagnant Biotech

Later this month, the Food and Drug Administration is widely expected to approve a groundbreaking twice-yearly injection to prevent HIV—a milestone in the decades-long fight against a devastating disease.

time-read
3 mins  |
June 06, 2025
Mint Mumbai

Can the monsoon become urban India's hero again?

It had been a week of bad news—of water filling homes, streets, even a presciently named Aqua Line metro station. The early monsoon brought little more than grim headlines of flooding and landslides, like a livestream of the effects of unplanned construction, deforestation and pure apathy.

time-read
3 mins  |
June 06, 2025
Mint Mumbai

Risk of Narratives: When Everyone Saw Them Coming But Still Got It Wrong

An X post recently illustrated an age-old truth about markets and human nature perfectly. The author said India's macroeconomic indicators are looking splendid—gross domestic product (GDP) growth exceeding estimates, inflation under control, currency stability, and room for rate cuts. The conclusion? We're entering a \"virtuous cycle\" of prosperity.

time-read
2 mins  |
June 06, 2025
Mint Mumbai

Retail frenzy fizzles as IPO market cools

India's public listing party has lost its allure for retail investors this year amid heightened global tensions, steep valuations, and weak listing performance.

time-read
3 mins  |
June 06, 2025
Mint Mumbai

Sebi pings bourses for plan details before expiry shift

As the battle for market share between India's top two stock exchanges heats up, the capital markets regulator has directed both to furnish modalities on a proposed shift in their weekly index options settlement dates by 15 June before it approves any changes, two people aware of the matter said.

time-read
3 mins  |
June 06, 2025
Cognizant picks up $1 bn deal
Mint Mumbai

Cognizant picks up $1 bn deal

Cognizant might have renewed its partnership with UnitedHealth Group, according to people in the know

time-read
3 mins  |
June 06, 2025

Vi bruker informasjonskapsler for å tilby og forbedre tjenestene våre. Ved å bruke nettstedet vårt samtykker du til informasjonskapsler. Finn ut mer