Indian Stock Market Faces Volatility in 2024, But Ends Strong

Mumbai:It was a rollercoaster ride for the Indian equity markets in 2024 with benchmark stock indices Sensex and Nifty making decent gains in the first half but losing in the second half of the year due to geopolitical tensions, FII outflows, change in the US government, lesser than anticipated rate cuts by the US Federal Reserve. The Sensex and Nifty have decent annual returns of 8.9 per cent and 9.6 per cent in 2024 respectively compared to 20 per cent profit in 2023.

The market capitalisation of BSE-listed firms soared by Rs 77.66 lakh crore to Rs 4,41,95,106.44 crore ($5.16 trillion). For the first time, the market cap crossed the Rs 400-lakh crore milestone on April 8, having surpassed Rs 300-lakh crore just last year.

The Indian stock market while managed to post decent returns, it lagged behind most major global indices in 2024. The US markets stole

the show, with the Dow Jones up 14.1 per cent, the S&P 500 soaring 25.2 per cent, and the NASDAQ-100 dominating with a stellar return of

27.6 per cent in 2024. Japan’s Nikkei 225 shone with a 20.4 per cent return, while Hong Kong’s Hang Seng rebounded sharply with a 17.9 per

cent gain, clawing back from its steep 16 per cent drop in 2023.

On January 1, 2024, the BSE Sensex opened flat at 72240 points and the Nifty at 21741 points but soon touched an all-time high on January 15

with Sensex at 73327 points and Nifty at 22097. Since then the markets experienced a remarkable upswing delivering impressive returns across

sectors. The Sensex touched an all time high of 85978 on September 27 and the Nifty at 26277.35 but profit-taking at elevated levels

triggered a sharp correction of 11 per cent (9,176 points) till November swing low.

For the year 2024, the BSE HC Index leads the charge with an outstanding 41.5 per cent gain, followed closely by BSE Realty, which has delivered 35 per cent returns. Other standout performers included BSE Auto, Healthcare, and Power, each showcasing significant gains.

Notably, sectors such as Consumer Durables, Power, Capital Goods, Auto, and IT also contributed to the broad-based rally, reinforcing the market’s bullish momentum. The BSE Midcap and Smallcap indices delivered outstanding performances in 2024, posting impressive gains of 25.8 per cent and 29 per cent, respectively, highlighting strong growth in broader market segments. All sectoral indices outperformed the Sensex, except Bankex (gained modest 7.1 per cent) and FMCG (0.8 per cent).

FIIs sold equities worth Rs 1.19 lakh crore in 2024 but buying by domestic institutional investors and a steady flow of funds through the SIP route helped stabilize the market. Monthly contributions through SIP consistently rose from Rs 18,838 crore in January to Rs 25,320 crore by December. Also Data shows that the selling spree by FIIs seen in October and November has declined in December.

However, experts anticipate equity markets to deliver lower returns in 2025. Investors are advised to remain cautious and focus on stock specific opportunities.Says Deepak Jasani, head of retail research at HDFC Securities, “2024 was a good year after a great 2023. Of course we saw some volatility post September and in 2025 we may see subdued returns, higher volatility especially post first quarter more on the downside than on the upside as valuations are already elevated. Also, various factors can go against the stock markets like geopolitical tensions, inflation, growth expectations, Donald Trump’s policies.

On the upside we don’t see the Nifty beyond 26400 and on the downside it can go to 18000 in a worst case scenario.”“Nifty 50 earnings per share is projected to grow by 7.6 per cent in FY25, with growth expected to accelerate to 13.7 per cent in FY26 and 11 per cent in FY27, reflecting a robust 14% CAGR over the FY23–27 period. This growth will be supported by the real estate cycle, private capex recovery, and strong construction activity during this period. Risks include global macro uncertainties, inflation pressures, and potential earnings downgrades post-Q3. Nonetheless, we remain optimistic about double-digit earnings growth over the next 2–3 years, driven by stable economic conditions, political continuity, and structural growth,” said Axis Securities in a report.