Stock Market Recap 2023: Six key factors impacting the Indian stock market

In 2023, the Indian equity market experienced a tumultuous journey, facing challenges such as significant FII outflows and the Adani-Hindenburg controversy. Despite these obstacles, the market concluded the year positively, propelled by a late IT stock surge and victories for the BJP in state elections.

Surge in US Treasury Yields:

September 2023 witnessed a sharp decline of USD 2.2 billion in FII investments, one of the most substantial monthly drops since January 2023. The surge in US Treasury yields, with the 10-year note reaching 4.88% and the 30-year offering hitting 5.05%, contributed to extensive selling by overseas investors.

Adani-Hindenburg Row:

The Adani Group faced challenges following a report by Hindenburg on January 24, 2023, revealing offshore shell companies among Adani Group shareholders. This led to a 7.4% correction in the Nifty Next 50 Index as Adani Group stocks, constituting 14% of the index, came under severe selling pressure.

US Shutdown Scare:

Ongoing clashes between Democrats and Republicans over US budget matters in 2023 raised concerns about a government shutdown. The Indian stock market initially responded positively to the potential shutdown on October 1, 2023, but later witnessed a sharp correction, reflecting the impact of such events on foreign flows by FIIs and FPIs.

El-Nino Scare:

India experienced a deficient monsoon season in 2023, marked by the driest August on record. Cumulative rainfall was reported at 9% below normal, impacting the FMCG industry, which saw a 7.6% growth in value but a 0.3% decline in volume growth in October-December.

FOMC Meeting:

In December 2023, IT stocks surged up to 11%, aligning with gains in US peers, following the US Federal Reserve's decision to maintain unchanged interest rates and hinting at the potential achievement of the 2% inflation target sooner than expected.