Year-End 2024: A Year in Markets Reflection with Case Studies of 6 Stocks

From various policy decisions to significant changes in global economic tides, 2024 has brought moments of both challenge and triumph.

The Union Budget 2024-2025 announcement outlined an ambitious spending plan of ₹48.21 lakh crore, aimed at revitalizing industries with capital investment of ₹11.1 lakh crore in infrastructure, ₹2.66 lakh crore for rural development and ₹1.48 lakh crore. The aim is to promote the education sector, jobs and skill development through technological advancements and equip the workforce with the necessary skills.

Another important moment came with China’s announcement of a $1.4 trillion stimulus package in October. Aimed at re-igniting its slowing economy, the move had a huge impact on global markets. In India, it triggered a record outflow of ₹85,000 crore by foreign institutional investors (FIIs), who were lured by lucrative opportunities in China. However, Domestic Institutional Investors (DIIs) rose to the occasion, investing around ₹1 lakh crore in the market and ensuring stability. The stimulus also boosted commodity-linked sectors such as metals and mining, as it raised concerns about manufacturing industries facing tougher competition from China.

While markets adjusted to these global trends, India’s IPO story was making history. As of December 2024, 298 companies have gone public, raising a staggering ₹1.406 trillion – an increase of 139% over the previous year. Retail investors played a significant role in driving this momentum, their enthusiasm driving a surge in both mainboard and SME listings.

Amid this development, Systematic Investment Plans (SIPs), reached unprecedented heights. By October, the monthly contribution had risen to ₹25,323 crore – a 20% increase over the previous year. This steady flow of funds from retail investors became a stabilizing force, especially as global pressures began to reshape the market.

Globally, central banks faced economic uncertainty, cutting interest rates to stimulate growth. The US Federal Reserve, the European Central Bank and the Bank of England all cut rates, reflecting a cautious approach to inflation and sluggish growth.

The Nifty 50 index has returned 13.23% annually. While this was lower than 2023’s gain of 19.42%, it underscores the market’s ability to weather external shocks and maintain investor confidence.

As we explore the year’s market trends, the performance of individual stocks provides a compelling narrative. Based on broader market movements and sector shifts, these six companies show how financial health, operational strategy and external pressures shaped the year’s stock market dynamics.

Sundaram Brake Linings, a major player in the automotive materials manufacturing sector, emerged as a steady performer in 2024, with its stock gaining an impressive 50.33%. It manufactures friction materials for automotive, non-automotive, railway and industrial, such as – brake linings, brake pads and clutch facings.

Based on factor analysis conducted by Share.Market Research, this stock rates 3/5 on Momentum, 4/5 on Quality and 3/5 on Low Volatility. The stock is considered to have good quality fundamentals, exhibits low price volatility and is slightly expensive compared to its peers.

Sundaram Brake Lining’s strength lies in its established expertise in braking solutions and presence in both OEM and aftermarket segments. The company sees opportunities due to growing demand for braking systems, especially after growth in the electric vehicle segment. Due to this increased demand, the company also faces increased competition. A major challenge that the company may face is its limited product diversification. However, the company’s strong quality helps it become a steady performer in the automotive space.

IST Limited, a company specializing in precision components for the automotive industry, demonstrated its strength as an industry leader, with its stock surging 33.92%.

This stock rates 2/5 on Momentum, 5/5 on Quality and 5/5 on Low Volatility. The stock shows excellent quality with low price volatility but is lagging in momentum.

The company’s ability to meet growing export demand and maintain a diversified product portfolio proved beneficial. As industrial activity picked up, IST was well positioned to take advantage, both in domestic and global markets. However, the cyclical nature of industrial demand presents challenges, emphasizing the importance of further diversification into sustainable and emerging sectors.

CEAT’s 40.03% share price growth reflects its ability to ride the electric vehicle (EV) wave. With innovative tire solutions and increased focus on export markets, the company tapped the growing demand for EV components. While CEAT’s growth story is exciting, it faces hurdles in managing raw material costs and staying ahead in a competitive market. Its ability to innovate and expand into new markets will play an important role in maintaining its upward trajectory.

The stock rates 4/5 on Momentum, 4/5 on Quality, 4/5 on Value, 5/5 on Low Volatility and 4/5 on Sentiment. It is viewed as an outperformer with strong fundamentals and low price volatility.

Cochin Shipyard emerged as one of the top performers of 2024, with its stock gaining 146.36%.

This stock rates 3/5 on Momentum, 4/5 on Quality, 2/5 on Value and 1/5 on Low Volatility. The stock is believed to have good quality fundamentals but exhibits higher price volatility compared to its peers and is somewhat expensive.

The company capitalized on a strong order book supported by government spending on defense and commercial shipbuilding. Its ability to secure global contracts highlights its expanding footprint. However, the cyclical nature of the shipbuilding industry remains a challenge, making diversification into stable revenue streams a key consideration for future growth.

Not all stocks share the same upward momentum. Chennai Petroleum Corporation saw its stock fall 14.56%, reeling from volatile crude oil prices and competitive pressure.

This stock rates 1/5 on Momentum, 4/5 on Quality, 5/5 on Value and 3/5 on Low Volatility. Despite being extremely undervalued and maintaining good quality, the stock exhibits weak momentum and moderate price volatility.

A strain on refining margins has compounded its woes, marking a difficult year for the company. However, with a strategic push towards petrochemical and downstream product expansion, Chennai Petroleum has opportunities to recover even as global uncertainties continue to cast a shadow over its performance.

For CreditAccess Rural, 2024 was a year of significant challenges, with its stock down 41.03%.

The stock rates 1/5 on Momentum, 1/5 on Quality, 5/5 on Value, 5/5 on Low Volatility and 1/5 on Sentiment. The stock is undervalued with low price volatility but suffers from poor quality.

Operating in the microfinance sector, the company faced economic uncertainties in rural areas, which affected borrower repayments. While it has been a leader in financial inclusion, operational risks in volatile rural markets have proven to be a major hurdle. The company’s ability to strengthen its risk management framework will be key to regaining momentum in the coming years.

These stocks cover the highs and lows of the market dynamics of 2024. From the phenomenal growth of Cochin Shipyard to the struggles of CreditAccess Grameen, each company’s journey highlights the interplay between opportunity and risk.

As 2024 draws to a close, it serves as a reminder of the dynamic and interconnected nature of global markets. This year’s journey, marked by various global events, policy decisions and sectoral changes, underscores the importance of being able to adapt and make informed decisions in an ever-changing landscape. Despite the ups and downs, the market’s resilience is evident through developments such as a strong pick-up in IPO activity, increase in SIPs and continued confidence of DIIs while FIIs reduced their exposure. Thus reflecting not only the trend for the year, but the market’s ability to recover and adapt in uncertain times.

(Author Sujit Modi is CIO, Share.Market. Opinions are his own)