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No November Rain 🌤️

Last week, the Nifty 50 hit an all-time high, again! The month of November saw a sharp rally of 6% on large caps, and even sharper rally of 9-10% on mid and small caps.

The mood was so positive that 10 IPOs successfully went through. With listing day returns as high as 140% for Tata Tech, 88% for IREDA, and 76% for Gandhar Oil, successful would be an understatement.

All this positivity in November seems like a dramatic change from the previous month, where yields in the US were off the roof, sending chills throughout emerging markets. What changed in November?

1. Better Control on Macros

Over the last two years, the number one driver of direction on the markets has been inflation. Latest data from the US indicated steady inflation, and a slowing job markets, which tilts opinion against yet another rate hike by the Fed.

In India too, inflation eased to a four-month low of 4.9% in October, giving some respite against fears of rate hikes.

2. GDP Surprise

In a surprising turn of events, while experts and even the RBI expected a 6.8-7.0% growth in GDP in November, the 7.6% number was a much-appreciated result.

A vital highlight has been the growth in the industrial sector, showcasing a 13.2% growth in the July-September quarter from 5.5% in the previous quarter, on the back of double-digit growth seen in key areas below!

3. Taxes, Taxes and More Taxes

November saw a whopping Rs. 1.68 lakh crore in GST collections on the back of festive demand. While this may not have been the highest incurred this year, it is still a welcome inflow at the time of a major GST audit.

November 2023 even reflected a 15% improvement from November 2022, making this the fastest pace at which indirect tax has grown YoY since 2017!

Moreover, direct tax collections have also recorded a massive inflow of a little over Rs. 10 lakh crore, making up for around 58% of the target estimated in the FY24 Union Budget - good news again!

4. Favourable Exit Polls

According to various exit polls, the BJP is set for a comfortable win in Madhya Pradesh, and also leads in Rajasthan. A BJP victory in these two states has been taken positively by the markets.

The General Elections also usually cause anxiety amongst foreign investors, and news-flow like this bodes well to ease those pressures.

5. More Foreign Money

The MSCI Emerging Market index went through its periodic rebalance and nine new Indian stocks got included with no exclusions, resulting in an increase in India’s weight to 16.3% now, from 15.9% earlier. This is likely to bring in an inflow of US$ 1.5 billion as the rebalance kicked in on November 30, 2023.

All these reasons not just explain the rally last week (and month), but also set the stage for positivity to continue. Tailwinds are likely, yet let’s not put nazar as there exists the possibility of short-term volatilities as always, but at least there is no November Rain!

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