How was 2024 for investors? | Groww Digest Annual Summary
Published on: 29 December 2024
This is the last edition of the Weekly Groww Digest in 2024.
In the last week of December, Weekly Groww Digest is mainly about summarising the year.
Let’s get into it:
2024 was a year of major elections.
Two major elections were held – India’s General Elections & the USA’s Presidential Elections.
Elections can be a nervous event for some investors.
It is a time for change – and unfavorable change is not welcomed by investors.
Governments often start preparing for elections a few months earlier.
They try to attract the voters towards them. The opposition levels blame and charges against the ruling government.
But then, this happens every few years. It is nothing new to the stock markets or investors.
Wars
For about 2.5 years now, fears of war have spooked the markets a bit.
It started with the Russia-Ukraine war in 2022.
Back then, it did shake up the markets for a period.
Wars are not good – even for countries that are not involved.
They can massively affect supply chains, increase costs, and cause global trade to falter.
The world runs on crude oil — which is supplied to various countries via giant pipelines and ships.
To make matters worse, wars can spread.
The World Wars happened only about 100 years ago. Lessons from that are very much in the minds of most investors and economists.
This is why, whenever big countries get involved in conflicts, fear and panic spread.
After a few months of conflict, the world seemed to be reasonably sure that the conflict would not spread.
And then, the trouble started in the Middle East.
The Israel-Gaza conflict threatened to draw more members in. Israel’s altercations with Iran worsened the fears.
The conflicts seem to have been factored in by the markets – at least for now.
But we have to note, both those conflicts are not over yet.
Indian Elections
Every 5 years, we have the General Elections in India.
Investors are particularly interested in knowing the results – they usually like stability.
We saw two budget announcements by the government this year.
One before the elections in Feb 2024; and one after the elections in July 2024.
The government changed income tax slabs to provide relief to middle-class earners. It also increased the standard deduction under the new tax regime.
At the same time, the STCG tax and LTCG tax for equity was increased a bit. LTCG tax on real estate was reduced – but indexation benefit was removed.
GST tax collection has been good with April 2024 being a new monthly high (Rs 2.10 lakh crore).
The number of income tax filers and payers has gone up this year; and so has the collection.
US Elections
Donald Trump won the US elections.
This seems to have been received positively by US investors.
His pro-America stance is well-known. He advocates for more industries, more manufacturing, and more jobs in the US.
What does that mean?
Many investors think this means that the US economy will do better than before — it will grow faster, create more jobs, have more spending, and all that.
And that implies that their stock markets will also do better.
This led to many foreign investors taking out money from other countries’ stock markets and investing in the US stock markets.
As a result, a lot of money flowed out of India around the time Trump won the elections.
Foreign investors form a considerable part of the Indian stock markets’ ownership.
Interest Rates
During the 2020-2022, most major central banks had reduced interest rates.
Reducing interest rates leads to more people borrowing money. That causes more economic activity.
But there’s a downside to that.
When the interest rates are kept low for too long, people borrow too much money. And they spend that money.
When that happens, you get higher inflation.
This was the problem the world was facing towards the end of 2022.
Central banks all over the world dramatically increased interest rates to control inflation.
The worry was that inflation would keep shooting up.
In 2024, we saw inflation being successfully controlled.
The inflation (as measured by the consumer price index) was mostly in the 4 to 6% range in India.
Following this, now, some people fear that high interest rates might be damaging economic growth.
The US central bank finally started reducing interest rates.
But India’s central bank has not done so yet.
Oil
Crude oil prices are one of the first to be affected by global conflicts. There were a few scares in the Middle East this year.
Crude oil prices massively affect inflation in India.
The international crude oil prices have remained stable this year despite the scares. Indian petrol and diesel prices have been quite consistent this year too.
IPO
IPOs have become very hot over the last few years.
Some investors tend to think that this is a golden ticket to multiply wealth.
Which can be true. But it can also be false.
It’s not a sure-shot path to returns. Investors must research carefully before applying.
We had a total of 87 IPOs and a whopping 245 SME IPOs in 2024.
2024 vs Others
The Nifty 50 grew by about 11% in the last 1 year.
Over a period of 20 years, the Nifty 50 has given returns of around 13% per annum.
Over the last few years, the Nifty has grown extremely well (when taken year-by-year).
It grew:
21% 2023,
24% in 2022,
24% in 2021,
17% in 2020, and so on.
Back in 2018 though, it was at 2.4%.
Gold prices have shot up by around 20% this year — when the stock markets have cooled a bit.
They are hovering around Rs 7,800 per gram or Rs 78,000 per 10 grams.
Over the last few years when the stock markets were buzzing, and gold returns were a bit cold.
This is somewhat in line with how investors expect the stock markets vs gold relation: they are inversely related.
Indian mutual fund investors seem to be well aware of the ups and downs of the markets.
The fact that the number of SIPs has consistently increased every month validates this point.
The point is, that markets are almost never smooth. Some years are great, some are bad, and some are average.
2024 seems to have been an average kind of year.
But — that’s just how investing works.
Happy investing in 2025!
Quick Takes
+India’s current account deficit decreased marginally to $11.2 billion in the July-Sept quarter (vs $11.3 billion in the same quarter last year). The merchandise trade deficit rose to $75.3 billion (vs $64.5 billion): RBI.
+India's forex reserves fell by $8.4 billion to $644.39 billion during the week that ended on 20 December.
+UltraTech will acquire around 8.69% stake in Star Cement for Rs 851 crore.
+EPFO reported a net addition of 13.4 lakh members in October. Maharashtra, Karnataka, Tamil Nadu, Delhi, and Haryana were the top 5 states in net additions (collectively having a 61% share). The total number of new members was 7.50 lakh, out of which the 18–25 age group had a 58.49% share.
+China accounted for 80% of global EV sales growth in 2024. The total EV sales in the first 6 months of 2024 rose to over 4 million (vs. over 3 million in the same period in 2023), according to an IEA report: ANI reported.
+TVS Motor acquired an additional 39.11% stake in DriveX (used 2-wheeler marketplace), making it a subsidiary of the company. The total stake now stands at 87.38%.
+PNB raised Rs 3,000 crore via unsecured bonds with a 7.43% coupon rate on a private placement basis.
6-Day-Course
Theme of the week: most important ratios in stocks investing
We’ve reached the end of this week’s course that started on Monday. Here’s a test you should take. Get pen and paper!
Question 1:
A PE ratio of 100 indicates that a company’s earnings per share is 100 times ____________ than its share price.
-Higher
-Lower
Question 2:
PE ratio is the most important metric to judge if a company/industry is worth investing in.
-True
-False
Question 3:
Dividend yield of a company is calculated by dividing the dividends paid ___________ by the current share price.
-Quarterly
-Half-yearly
-Annually
Question 4:
If a company’s debt-to-equity ratio is gradually rising it might indicate a financially difficult time for the company.
-True
-False
Question 5:
What does the Price-to-Book (P/B) ratio help investors determine?
-If a share is underpriced
-The company’s market cap
-The annual dividends paid
Answers:
Q1: Lower
Q2: False
Q3: Annually
Q4: True
Q5: If a share is underpriced
The information contained in this Groww Digest is purely for knowledge. This Groww Digest does not contain any recommendations or advice.
Team Groww Digest