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Below the Equity Outlook for by Vinay Paharia,CIO,PGIM India Mutual Fund. 

Nifty50 closed with strong gains of 7.9% in December 2023, and ended CY2023 at near all-time high, on the back of retail  participation, strong FPI/DII flows, domestic macroeconomic stability and positive earnings momentum. The NSE MidCap 100 Index and NSE Small Cap 100 Index were up around 7.6% and 6.9% respectively. At sectoral level, all sectoral indices ended on a higher  note for the month; Energy, Infrastructure, Information Technology and Realty sectors outperformed the broader market, while Auto and  Pharma sectors underperformed.  

During CY2023, Nifty50 index generated 20% returns and Indian markets emerged as one of the top-performing equity markets. During  2023, Indian Mid Cap and Small Cap indices outperformed the Large Cap indices, and were up 47% and 56% respectively for the year.  FPIs bought $ 6.9 bn of Indian equities in the secondary market, whereas DIIs bought $ 1.6 bn for the month of December. During  CY2023, FPIs were net buyers to the tune of $ 21.1 bn.  

In other key developments, BJP – the ruling party at the Center – won three of the four state elections conducted during November. On  the macro-economic front, the RBI maintained the status quo on rates and kept the stance unchanged, the US Fed held rates at  5.25%-5.5% for a third straight time and laid out the timeline for rate cuts in 2024 and beyond. CPI inflation in November spiked up  to 5.6% from 4.9% in October, largely due to higher vegetable prices and October 2023 IIP was up 12% YoY vs 6.2% seen in  September 2023. 

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