The month of November 2023 brings back the lustre which was lost during the last 2-3 months. The festive month started with a dreary note, but then the Nifty 50 paced up touching all-time highs. Indian stock markets stood 4th around the world touching $4 trillion of market capitalisation. The market valuation of BSE-listed companies crossed a record $4 trillion for the first time on November 29, on the back of positive market sentiment in Indian equities. The market capitalisation of BSE-listed companies reached ₹333 lakh crore, or $4

trillion at the exchange rate of 83.31. It has climbed over $600 billion since the beginning of the year. BSE-listed firms hit the $1-trillion market cap milestone in May 2007 and it took over 10 years to double. The market cap surpassed $2 trillion in July 2017. BSE m-cap had hit the $3 trillion mark in May 2021. Small-cap and mid-cap categories have outperformed amid the global easing policy actions. This was triggered post US banking crisis and strong margin outperformance driven by input cost moderation.

The major factors contributing to this upsurge were robust economic numbers, favourable exit polls, and the return of Foreign Portfolio Investors (FPIs) to the Indian markets. The Indian economy grew by 7.6% during Q2FY24, maintaining its position as the fastest-growing major economy globally. India's Q2 GDP growth surpassed both market estimates and projections by the Reserve Bank of India. Recently, CLSA stated that it anticipates India's soaring GDP growth will propel it to the top three of the world’s largest economies, increasing from $3.4 trillion today to surpass Japan’s by 2027, reaching $29 trillion by 2047, and further expanding to $45 trillion by 2052. By then, only China and the US will

have larger economies, with the possibility of India overtaking the US economy in size by 2052 if significant reforms unleash efficiencies. The exit polls for the five state elections indicate political stability ahead of the General Elections in 2024. A decisive win for the BJP would strengthen the consensus view that the party is well-positioned for the 2024 general elections. This outcome is likely to further boost market confidence, as policy continuity is viewed positively for medium-term growth. The market favours political stability and a reform-oriented, market-friendly government."

After a two-month hiatus, Foreign Institutional Investors (FIIs) made a comeback as net buyers of Indian equities, injecting a total of ₹13,474 crore over only six sessions. In November, Foreign Portfolio Investors (FPIs) ended a two-month selling streak, recording a net inflow of ₹9,001 crore. This marked a significant shift from the over ₹39,000 crore worth of shares sold in September and October. Foreign portfolio investors displayed a distinct preference for larger sectors, particularly financials, FMCG, and oil and gas. Moreover, FPIs in the domestic debt market reached a six-year high in November, driven by robust yields and the inclusion of domestic bonds in JPMorgan's Emerging Market Global Bond Index. Data from the National Securities Depository Ltd. reveals that foreign portfolio investors infused Rs 14,556 crore as of November 29. The decline in US treasury yields and the softening of the dollar, coupled with rising speculation that the US Federal Reserve has concluded its key interest rate hikes, have triggered foreign fund inflows into emerging markets, including India.

Last month, global pressures took a favourable turn. Oil prices sharply dropped to $80/bbl due to a slowdown in the growth of China and European nations. Additionally, the expected soon-to-be Venezuelan crude supply added to the decline. The decrease in crude oil prices is anticipated to help India improve its current deficit projections. Lower-than-expected inflation readings led to a significant correction in US bond yields. From close to 5%, 10-year yields dropped to approximately 4.5%. This subtle change also attracted Foreign Portfolio Investors (FPIs) inflows. The US market rallied almost 10% in the month of November. US 10-year bond yields and the dollar index were cooling off, providing strength to the market. This decline in yields gained momentum amid growing speculation that the U.S. Federal Reserve might initiate interest rate cuts next year. FOMC minutes stated that in the upcoming months, data would help clarify the extent to which the disinflation process was continuing, aggregate demand was moderating in the face of tighter financial and credit conditions, and labour markets were reaching a better balance between demand and supply. As markets reach new highs, the prevailing risk cannot

be ignored. Amid expectations that the central bank will maintain the benchmark interest rates, the rate-setting monetary policy panel, led by RBI Governor Shaktikanta Das and consisting of six members, will commence deliberations in the upcoming week. The three-day meeting is scheduled from December 6 to December 8, with the decision to be announced on Friday. The RBI has held the repo rate steady at 6.5% since February of this year. This marks the central bank's fourth MPC meeting for fiscal 2023-24 and the final one for the calendar year 2023. The market anticipates the central bank to retain its current stance, given that India's retail inflation persists above its 4% target. The US Fed chairman mentioned that inflation is steadily slowing, but it is premature to declare victory or discuss potential interest rate cuts. Powell reiterated the central bank's commitment to a cautious approach on interest rates, noting that the hoped-for 'soft landing' of the US economy appears to be materializing. Meanwhile, global markets, including the European Central Bank, are experiencing bullish trends. The European Central Bank concluded its rate-hiking cycle in response to easing inflation.

As markets move at lightning speed, regulators are closely monitoring derivatives traders and major sectors, particularly banks. SEBI has issued repeated warnings to retail investors, emphasizing the need for caution in derivatives trading. In the Indian market, the banking sector, a favourite among investors, has seen impressive gains. However, the RBI is actively working to address defaulters and implement changes in rules and regulations.

As we approach December, several significant challenges loom on the horizon, including the FED rate decision, MPC meeting, global festivals, unpredictable geopolitical tensions, and global inflation. All these factors could potentially impact market movements in the future. Despite these challenges, there is hope that the year will end on a positive note for the Indian stock markets.

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