Mr. S.Sridharan, Founder, https://www.walletwealth.co.in/
Investment Ideas Note –
January-2025 – Wallet Wealth
Mr. S.Sridharan, Founder, https://www.walletwealth.co.in/
RECAP - 2024
We will see the important events that made 2024 an unforgettable year. When we look back at the previous year, there are so many events of national and global importance that impacted the markets for a short span or for a longer time.
The global and national events have an impact on financial markets, as they can affect the environment in which businesses operate. Any changes in investor confidence, company's profitability and economic stability contribute to market movements.
GENERAL ELECTIONS
The general elections happened in India from April 19 to June 2024. As a result of which the BJP led alliance secured the majority of Lok Sabha seats, making them retain the power.
RAM MANDIR INAUGURATION
Ram Mandir, which is the sacred place for Hindus to worship, was inaugurated in Ayodhya. The event became national importance as most prominent people graced the occasion.
WORLDCUP
In June 2024, India clinched the T20 World cup title, defeating south Africa in a thrilling finale. The matches took place in West indies for the 2nd time and USA for the first time in history.
Olympics 2024
The Summer Olympic 2024 was held in Paris. Many champions around the world proved their mettle in the tournaments conducted. USA topped the list of medals with 40 gold medals, which was followed by China. India too secured places in Javelin throw, shooting, wrestling, badminton, and hockey.
USA Presidential elections
The US presidential election took place in November 2024. Donald Trump made a comeback by securing a majority of states, while Kamala Harris lost to him. He will be taking power from January 20, 2025 as 47th president of the United states.
CONFLICTS ACROSS GLOBAL COMMUNITY
The Israel-Hamas war that started by October 2023, continued into 2024. This war led to loss of human lives, shelter, and displacement of lakhs of families. By October 2024, Israel launched missiles on Lebanon leading to geo-political tensions. There were many internal conflicts across the globe including Sudan conflict, Myanmar conflict and conflicts in Ethiopia.
Market Outlook :
There will always be a December effect in the last month of the year. This is attributed to the festive season, year end spending and celebration mood around the world. Also, more foreign investors tend to invest more in Indian markets. Concurrently there have been challenges in December like inflation rate and GDP forecast, which can impact the financial markets.
Now lets us see how the financial markets performed in December 2024
| Index Performance December-2024 |
|
| ||
| Date | December 02 2024 | December 2024 | 31 | Gain/Loss |
| BSE Sensex | 80248.08 | 78139.01 |
| -2.63% |
| BSE Midcap | 46555.59 | 46444.66 |
| -0.24% |
| BSE Small cap
| 55662.71
| 55180.6
|
| -0.87%
|
Let's discuss more about the reason for the market's modest performance in December, 2024
• FII selling
Throughout 2024, FIIs were in selling mode with a record outflow of 2.96 lakh crore. But Nifty 50 gained 9.24% throughout the year due to participation of domestic retail investors
• IT stocks
IT conglomerates like HCL, Tech Mahindra underperformed in December majorly attributed to global economic factors and higher U.S treasury yields.
| NIFTY 50 | -2.6% |
| Nifty midcap 150 | -0.17% |
| Nifty Bank | -2.4% |
Nifty 50 fell by 2.6% in December, compared to November where the decline was 1.54%. Similarly Nifty midcap 150 and Nifty Bank fell by 0.17% and 2.4% in December 2024.
Though there was a downfall in sectors of the stock market, the SIP contribution for October and November 2024 surpassed Rs.25,000 crores, signifying the domestic investor sentiment.
| MF/FII activity | FII | MF |
| Equity | 11085.77 | 29159.08 |
| Debt | 3767.14 | -53532.22 |
| Total | 14852.9 | -24373.1 |
FIIs bought Equity worth Rs.11085.77 crores in December 2024, compared to selling of Rs. 18258.59 crores during November 2024. Similarly, FIIs bought Rs.3767.14 crores of debt in December compared to Rs.875.73 crores buying in 2024.
A total of Rs.24,373 worth of equity and debt was sold combining both in mutual funds, which was Rs. 1165.5 selling of equity and debt by mutual funds.
WHAT CAN WE EXPECT in 2025?
As we look ahead to 2025, several key factors are likely to drive global markets. The incoming US government in January 2025 and its policies will play a significant role in setting the global market tone. Additionally, the monetary policies of central banks and slowing global growth will be crucial. The imposition of tariffs by the US could lead to higher inflation, and any rate cuts might be modest. The US economic growth is expected to remain strong while Europe's growth may remain sluggish, with central banks shifting their focus from high inflation to low growth. Japan might raise interest rates throughout the year, with its economy continuing to normalize and experiencing better-than-expected growth. China could face challenges from tariffs, and any countermeasures will need to be monitored but China may continue with stimulus measures.
GDP Growth in India (2025)
The International Monetary Fund (IMF) projects India's real GDP growth at 7% in 2025, underscoring its economic resilience. Key growth drivers include strong domestic consumption, advancements in infrastructure, and a thriving services sector, which collectively contribute to sustained macroeconomic growth.
Inflation in India (2025)
Inflation is expected to ease, offering the Reserve Bank of India (RBI) flexibility for potential rate cuts. The RBI forecasts inflation at 4.8% for 2024-25, while the IMF predicts a slightly lower rate of 4.2% in 2025, signalling improved price stability.
Concerns for the Indian Economy (2025)
• Global Factors: External factors like geopolitical tensions or slowing global demand may affect trade and capital inflows.
• Inflationary risks: driven by potential external shocks or supply chain disruptions.
• Currency volatility, necessitating careful policy interventions to maintain financial stability.
Equity
The market cap over GDP ratio is currently at 117.16. This shows that the market is modestly overvalued. The zone indicates being a little cautious while investing for a short term.
The investors can focus investing on large cap & momentum funds and investors who would like to take a little risk can enter into technology funds at this juncture.
It is advisable not to invest lumpsum and invest into equity mutual funds over a 20–24-week period. As the valuations of small cap is on the higher side and hence one can wait and watch before investing in small cap. It's advisable to book profits in small caps if there are near term goals. We are of the opine that the large & mid cap funds would outperform the small cap this year.
Debt
The 10-year G-Sec is trading at 6.85% and the 5 Year G-Sec is trading at 6.83%. One can start looking at high quality corporate bonds and banking & PSU bonds with the maturity of 3 years could possibly generate a decent double-digit return. The best time to enter duration management funds would be faring better during this point in time. If one would like to look at parking money for a period of less than 1 year can look at investing in ultra short/money market funds.
We strongly recommend the investors to avoid credit risk funds now.
Mr. S.Sridharan, Founder, https://www.walletwealth.co.in/
If you need any advice on investments, do call us at 9940116967.
Team Wallet Wealth,
AMFI Registered Mutual Fund Distributor
2nd Floor, No.8A, 2nd Main Road, Nanganallur,
Chennai – 600 061
Ph: 044-48612114
Disclaimer: The above information and views are personal and confidential. The information herein is based on information obtained from sources believed to be reliable, but the Company does not make any representation or warranty, express or implied, as to its accuracy, completeness, timeliness, or correctness for any particular purpose. Opinions expressed are of our personal and subject to change without notice.
