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Merisis Wealth Monthly Outlook - November 2024 ðŸ“Š

 

📅 November 2024 update:

Economic Updates 

The global economy is facing slowing growth, particularly in developed markets, with inflation moderating in advanced economies but continuing to impact emerging markets like India. The Indian rupee has been under pressure against a strong U.S. dollar, while commodity prices, especially oil, remain volatile. Indian equities are navigating global headwinds, but sectors like tech and energy are showing resilience. Geopolitical tensions and central bank policies, particularly the Fed’s actions, are creating both risks and opportunities for Indian investors.

Market Highlights - India 
Indian equities are mixed, with tech and energy stocks showing strength, while sectors like real estate and consumer discretionary are facing challenges due to high inflation and interest rates. Global bond markets have seen rising yields, which could affect foreign investment flows into India. The real estate sector is under pressure from higher mortgage rates, but the urbanization trend in India provides opportunities for long-term growth.

Market Highlights - International

China’s slowdown is affecting global demand, particularly in commodities, which may impact Indian exports. The Eurozone continues to face sluggish growth, which could dampen India's trade with Europe. Emerging markets are facing diverse challenges, with Latin American countries benefiting from higher commodity prices, while African nations struggle with inflation and fiscal issues that could lead to more cautious investment flows into India.

 In the News
In the U.S., GDP growth slowed, but the labor market remains robust, which could influence global market sentiment. Inflation is moderating globally, but Indian inflation remains a focus for the RBI. Geopolitical developments, particularly in Eastern Europe and the Middle East, continue to impact global markets, leading to volatility in oil prices, which is a key concern for India. Indian corporate earnings have been mixed, with the tech sector holding up well, but other sectors like retail and manufacturing facing higher input costs and lower margins.

Economic Indicators 
Growth in developed markets is slowing, which could affect global trade and India’s export prospects. Inflation in India remains a concern, although it has eased from recent highs. The Reserve Bank of India (RBI) continues to adjust interest rates to manage inflation while supporting growth, creating a challenging environment for borrowers and investors.

Currency Performance 
The Indian rupee has weakened against the U.S. dollar, which is strengthened by higher interest rates in the U.S. This could increase the cost of imports and impact India’s trade balance. Other emerging market currencies are facing similar pressures.

Commodity Performance 
Volatile oil prices remain a key concern for India, as higher oil prices lead to increased inflationary pressures and strain fiscal policies. Gold, traditionally a safe-haven asset in India, has remained stable but faces headwinds due to the stronger dollar. Prices of other key commodities like metals and agricultural goods have fluctuated due to global supply and demand shifts.

Key Takeaways
The global economy is experiencing slower growth, which could affect India’s export and growth prospects. Inflationary pressures, especially in India, are moderating, but the Reserve Bank of India may continue to tighten rates, impacting lending and investment sentiment. Currency volatility, especially the weakening rupee, could increase import costs and affect the trade balance. While global markets are volatile, sectors like Indian tech, energy, and urbanization-focused real estate remain resilient. The outlook for 2024 is uncertain, but investors should remain cautious while looking for opportunities in select growth sectors and asset classes.

 

To access the full Monthly Market Outlook, click on the below link and download the report.

 

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Authors

  • Naresh Bulchandani, CFA, CAIA