Dalal Street rewarded investors immensely in FY24, making them wealthier by Rs 129 lakh crore. The 50-blue-chip index delivered its second best yearly return in five financial years, exiting FY24 with a gain of almost 29 per cent. The bulls had their last fantastic financial year 2021, with the Nifty recording a staggering return of 70.8 per cent, thanks to a stunning recovery following the COVID-caused crash in 2020.

Here’s how the headline index has fared in the past 10 financial years:

Nifty 
 Return 
FY24 29%
FY23 -0.60%
FY22 18.80%
FY21 70.80%
FY20 -26%
FY19 14.90%
FY18 10.20%
FY17 18.50%
FY16 -8.80%
FY15 26.60%

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The Nifty’s annual return has averaged at 15 per cent between FY15 and FY24.

In FY24, the domestic market displayed a blend of volatility and robust recoveries, with the Sensex starting from 59,000-odd levels all the way up to 73,651 to register a return of 24 per cent, said CA Rakeshh Mehta, Chairman of Mehta Equities.

What were the key factors behind the market rally in FY24?

The massive gains on Dalal Street  were primarily led by robust economic growth, higher retail investor participation, the government’s capex push, robust corporate earnings, and a favourable monetary policy situation. 

“It was loaded by the upgrade in FY24 economy growth, as the Indian GDP forecast was uplifted on a QoQ basis from 6.4 per cent to 7.3 per cent during the year. There was a rampage in corporate earnings growth, like with the 23-24 per cent YoY EPS forecast for the Nifty50 index,” said Vinod Nair, Head of Research at Geojit Financial Services.

Here are some of the other key factors that supported the upmove, according to Nair:

-- Retail inflows remained robust supported by direct investments as well as investments through MFs

-- The number of trading accounts held by domestic investors grew to 16.7 crore, underscoring increased market participation

-- FIIs exhibited improved net buying activity, buoyed by the country’s economic outperformance relative to other EMs experiencing slowdowns

Mehta pointed out that the market remained resilient, despite facing 8-10 declines every alternate month, buoyed by domestic investors' confidence in the prospects of the domestic economy.

Top Nifty gainers in FY24

Within the blue-chip Nifty index, two-wheeler major Bajaj Auto delivered a handsome return of 136 per cent, more than doubling investors’ wealth in FY24. While auto stocks Tata Motors and Hero MotoCorp surged 135.5 per cent and 101 per cent respectively, PSU mining giant Coal India’s shares rose 104 per cent.

Top Nifty losers in FY24

HDFC Bank, the country’s largest private sector lender, emerged as the top loser from the Nifty pack, with a negative return of 11 per cent in FY24. FMCG major Hindustan Unilever’s stock declined 10.5 per cent.

Sectoral performance 

While all of NSE’s 13 sectoral indices strengthened in FY24, the Nifty Realty, the Nifty PSU Bank, and the Nifty Auto were the top gainers with rallies to the tune of 70-135 per cent.

Nifty sectoral indices Return % in FY24
Nifty PSU Bank  88.6
Nifty Auto 75
Nifty Financial Services  16
Nifty Realty  133
Nifty Metal 50
Nifty Pharma 58
Nifty FMCG 17.5
Nifty Oil and Gas             60
Nifty Private Bank 14
Nifty IT 22
Nifty Media 5.65
Nifty Healtcare  58
Nifty Consumer Durables 34.5

Broader markets performance

Even though amid frothy valuations, broader market indices showed steep correction recently, nonetheless, they had a good run-up, with Nifty Midcap 100 index ending the fiscal year with over 60 per cent gains. Similarly, Nifty small cap 100 index clocked gains of nearly 70 per cent.

What lies ahead in FY25?

Mehta of Mehta Equities is of the view that the current bull run in the capital market will continue, though volatility will persist primarily influenced by global events. Strong participation from domestic investors such as DIIs, HNIs, and retail investors is expected to bolster the market further, he said.

The current market setup is favourable, driven by expectations of policy continuity due to the upcoming national elections and the anticipation of PM Narendra Modi-led BJP retaining power at the Centre, and by expectations of rate cuts by the RBI and the Fed, he said.

Nair is bullish on sectors like pharma, capital goods, and infrastructure in FY25, viewed as key growth drivers supported by both domestic and external demand. 

He also anticipates that the currently underperforming FMCG and IT sectors will also see a turnaround driven by expectations of a normal monsoon and increased US demand following the Fed's rate cut. 

The focus is on largecap stocks as the premium valuation of midcaps could have a hiccup in the short to medium-term, added Nair.