3 Global Events That Shaped 2024 Markets

This year has been a rollercoaster for global markets, with three major events leaving an indelible mark: India’s 2024 General Election, the Israel-Palestine conflict, and India’s unprecedented IPO boom. Each of these events had wide-reaching consequences, influencing not only the stock markets but also broader economic trends. Let’s dive into the details.

1. India’s 2024 General Election: The Market’s Political Barometer

Elections in the world’s largest democracy are always a spectacle, and the 2024 General Election was no exception. As India headed to the polls in April and May, political uncertainty gripped the nation—and the markets.

Pre-Election Volatility

The months leading up to the election saw heightened market volatility. Investors were on edge, closely monitoring opinion polls, political alliances, and potential policy shifts. The Sensex and NIFTY experienced sharp swings as institutional and retail investors braced for what could be a significant pivot in governance.

Post-Election Market Rally

When the results rolled in, signaling continuity in government policies, markets breathed a collective sigh of relief. Key sectors like defense, infrastructure, and public sector banks surged, driven by optimism about increased infrastructure spending and favorable policy frameworks.

The defense sector, in particular, emerged as a star performer, benefiting from anticipated government contracts and increased budget allocations. Infrastructure stocks also rode the wave, with companies reporting significant upticks in order books. For instance, Larsen & Toubro, a bellwether for the sector, saw its stock rise by 15% in the month following the election.

Impact on FDI and Investor Confidence

The election’s outcome also reinvigorated foreign direct investment (FDI) inflows, as global investors viewed the political stability as a green light for long-term investments. According to the Reserve Bank of India (RBI), FDI inflows grew by 8% year-on-year in the quarter following the election.

2. The Israel-Palestine Conflict: A Global Ripple Effect

The Israel-Palestine conflict, which reignited in early 2024, sent shockwaves through global trade and energy markets. The Middle East, a region critical to the world’s oil supply, became a hotspot of geopolitical tension, leading to disruptions in global supply chains.

The Surge in Oil Prices

Brent crude prices soared past $120 per barrel at the height of the conflict, a 40% increase compared to the previous year. For oil-dependent economies, this surge translated into higher transportation and manufacturing costs, ultimately pushing up consumer prices. Countries like India, which imports over 80% of its oil, saw inflation climb by 1.5 percentage points within months.

Impact on Global Inflation

Inflation wasn’t confined to oil-importing nations. Developed economies, already grappling with post-pandemic supply chain challenges, faced renewed pressure. Central banks, from the U.S. Federal Reserve to the European Central Bank, had to reassess their monetary policies, delaying anticipated rate cuts to curb rising prices.

Consumer Confidence and Spending

The ripple effects extended to consumer confidence. In countries like Germany and Japan, where disposable incomes were already under strain, higher fuel and utility costs forced households to cut back on discretionary spending. Retail and automotive sectors reported significant declines in revenue during this period.

3. India’s IPO Boom: A Beacon of Resilience

Amid the chaos of geopolitical tensions and market volatility, India’s IPO market emerged as a bright spot in 2024. The BSE IPO Index, a benchmark for newly listed companies, rose by a staggering 34% over the year.

Tech and Consumer Goods Lead the Charge

Tech startups and consumer goods companies dominated the IPO landscape. Companies like Shiprocket, Mobikwik, and Vishal Mega Mart became household names as their public offerings garnered overwhelming interest. Shiprocket’s IPO, valued at ₹2,400 crore, was oversubscribed by 20 times, while Mobikwik’s IPO witnessed a 50x oversubscription. Vishal Mega Mart’s debut was equally impressive, with strong grey market activity indicating high demand.

Investor Enthusiasm and Market Sentiment

The success of these IPOs highlighted the bullish sentiment among both retail and institutional investors. Factors like improved digital infrastructure, rising disposable incomes, and a growing middle class contributed to the appetite for equities. Foreign portfolio investors (FPIs) also played a significant role, pumping in nearly $4 billion into Indian IPOs during the year.

Broader Economic Implications

Beyond stock market gains, the IPO boom provided a significant boost to capital formation. Companies used the proceeds to expand operations, invest in technology, and repay debts, contributing to overall economic growth. The surge in listings also showcased the depth and maturity of India’s equity markets, making them an attractive destination for global investors.

Also Read: Bajaj Housing Finance IPO Shatters Records

A Year of Contrasts

2024 was a year of stark contrasts. Political stability in India provided a much-needed anchor for markets, while geopolitical tensions in the Middle East underscored the fragility of global supply chains. Amid these challenges, India’s IPO market stood as a testament to the resilience and potential of emerging economies.

As we look ahead, these events serve as critical lessons for policymakers, investors, and businesses. Whether it’s navigating political uncertainty, mitigating the impacts of global conflicts, or capitalizing on growth opportunities, 2024 has been a masterclass in the interplay of risk and reward.