From the Chang Mai Lantern Festival in Thailand, the Blackpool Christmas Lights in England and the Niagara Falls festival of lights, November is a month that marks festivities and celebration, largely connected to lights. In India too, Diwali is a festival of lights that is celebrated with a lot of fervor across the country. It’s a month that brings in the warm fuzzy feeling as we inch closer towards Christmas and the end of another stupendous year.

This sentiment of positivity is reflected across global markets especially as there have been signs of economic activity expanding across the globe. Disinflation, a lower rate of unemployment and a positive uptick in retail consumption led to the Russell 2000 index witnessing a reversal since the previous month as the index posted a 9% growth during the month. US bond prices also witnessed an uptick as treasury yields plunged during the month and bodes well for the soaring Bond markets.

Indian markets too have continued to remain resilient and this is reflected in the country’s GDP growth rate of 7.6% in Q2 FY 24. This is supported by a higher capex spending, a growth of over 12% in the infrastructure output and the increasing demand for real estate, automobiles and other discretionary products. The month of November is a significant one, owing to multiple reasons ranging from IPO frenzy, the outcome of the OPEC meeting – the positive impact of falling oil prices on the Indian economy and the overall increase in domestic consumption as a result of the festive season.

 FII inflows also turned a net positive for the month, a trend that’s likely to continue as the MSCI Emerging Markets index increases its weightage to India. Another factor that will attract FII investments is the benchmark switch that US Federal Retirement Thrift Investment Board is making, to an MSCI index that includes Indian stocks for its International Stock Index Investment Fund (I Fund). This will lead to increased FII flows into the country and help bost our growth further.

Domestic investors have continued to remain rooted and have been driving the economy forward despite the fact that flows into mutual funds have tapered off slightly compared to previous months. This was largely owing to increased valuations in the markets and expectations around the General Assembly elections that were held across the 5 States of Mizoram, Madhya Pradesh, Chhattisgarh, Rajasthan and Telangana during the month. Having said that, retail investors have been taking to equities in a big way as can be seen from the increasing number of demat accounts that have been opened. On mutual funds, we’ve been witnessing a significant increase in the last reported net SIP numbers (as of October 2023), which have gone up by 18% over the past month.

With expectations around continued development and digitalization, India Inc. is well poised for continued growth. Positive factors like expectations around the outcome of the elections and the softening of yields are likely to only fuel the economy further. We at Capricorne Mindframe are well positioned to ensure that our investors are able to make the most of this growth story as it continues to unfold.