Dalal Street Bull Run Dampened by FPI Selloff in Volatile Year
In Mumbai, Dalal Street investors experienced a rollercoaster ride in 2024, with highs and lows that left many on edge. The year started strong, with both the sensex and Nifty hitting record highs in the first nine months. However, a sudden wave of foreign fund selling towards the end of the year wiped out a significant portion of those gains, leaving investors reeling.
The sensex and Nifty, which peaked at 85,978 points and 26,277 points respectively in September, took a nosedive in the following months. By the end of the year, the sensex closed at 78,139 points (up 8%) and Nifty at 23,645 points (up 9%), marking one of the lowest yearly returns in recent memory.
Expert Analysis: Sheetal Malpani’s Insights
Sheetal Malpani, the chief investment officer and head of equity at Tamohara Investment Managers, shed light on the market trends that shaped 2024. According to Malpani, the first half of the year saw significant demand for stocks, driving benchmark indices to new heights. However, the influx of IPOs and public offers in the second half led to subdued annual returns, as the market struggled to absorb the increased supply.
Looking ahead to 2025, Malpani predicts a potential correction in the market. This correction could take the form of a price adjustment, where stock prices decrease to align with valuations, or a time correction, where earnings growth gradually reduces valuations to more reasonable levels. Investors, especially those who entered the market after April 2020, will face their first true test during this corrective phase.
Shift Towards Small and Midcap Stocks
In 2024, investors showed a growing preference for small and midcap stocks over traditional blue chips. Data from the NSE revealed that while the Nifty saw modest single-digit returns, the midcap 50 index returned 21.5% and the smallcap 50 index yielded over 25%. This shift highlighted a broader trend of investors seeking higher returns in riskier, yet potentially more rewarding, segments of the market.
Rise of IPO Investments
Another notable trend in 2024 was the surge in Indian investors’ interest in IPOs. Many investors opted to put their money into primary issues rather than established, secondary equities, showcasing a willingness to take on new opportunities and ventures in the market.
As we reflect on the events of 2024, it’s clear that the year was a test of resilience and adaptability for investors. While challenges may lie ahead in 2025, the lessons learned from the past year will undoubtedly shape the strategies and decisions of those navigating the complex world of finance.
