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"The recent rally in the Indian market has been driven by positive political developments, a recovery in corporate stocks, increased foreign investments – both in primary and secondary markets and broad sector participation. Historical data shows that the Nifty index has closed higher in 71% of December since 2000, with significant gains noted in 2023 and 2020.

The Reserve Bank of India (RBI) enhanced liquidity by lowering the Cash Reserve Ratio (CRR), likely boosting market sentiment. Additionally, India's Consumer Price Index (CPI) inflation dropped to 5.48% in November from 6.21% in October, enhancing investor confidence and raising hopes for potential monetary policy easing by the RBI.

Outlook for 2025
While moderate economic growth is projected for India in 2025, various challenges could impact the sustainability of this growth. Easing monetary policy from central banks could help by lowering borrowing costs.
- Weak Urban Demand: The urban middle class, a key driver of consumption, is slowing due to high food inflation and stagnant wages, which are reducing disposable income.
- Global Economic Uncertainties: India is influenced by global economic conditions, and slowdowns in major economies can affect exports and foreign investments.
- Labour Market Challenges: Job creation has to catch up with the growing labour force, leading to inconsistent hiring, potential increases in unemployment, and reduced consumer confidence.

In summary, favourable conditions and positive investor sentiment have supported recent market movements. However, the outlook for 2025 indicates a cautious optimism in light of potential challenges."

 

 

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