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The bull market galloped through the first half of the year in the most celebratory fashion, kicking up its heels and hitting new highs as if to taunt experts' modest expectations. As we reach the midpoint of the year, 2024 continues to demonstrate strong potential for corporate earnings growth worldwide. Indian companies are leading, helped by a resilient domestic economy, strong pricing power and, of course, leadership positions in the all-important capital goods sector. The hunt for positive growth momentum and attractive valuations is starting to shift investors’ focus away from the US and towards a more regionally-diversified exposure.

June was a good month for returns from both equities and fixed-income. Ongoing investor optimism about the economic outlook supported risky assets, with developed market stocks delivering returns of 4.5% over the month. Indian bonds also generated positive performance with markets still anticipating rate cuts this summer albeit with some divergence in the timing between the US and India. Expectations of declining interest rates benefited Growth sectors, leading them to outperform Value sectors. Small-cap stocks also gained traction, producing an alpha over large caps.

India’s current account surplus for January–March 2024 highlights its emerging role in services exports and the formidable strength of its diaspora. This marks a stark contrast from 33 years ago, when India had barely enough foreign reserves to cover three weeks of oil imports, and from 2013, when it was deemed one of the 'fragile five' due to a substantial current account deficit. The January–March 2024 surplus is a testament to India's remarkable economic journey, underscoring its solid foundation and forward-looking growth trajectory.

Income Distribution by Age

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