Equity Market Outlook:
The U.S. election results played a pivotal role in shaping market performance in November 2024. Donald Trump's presidential victory, coupled with the Republican Party securing a majority in both chambers of Congress, has sparked optimism about policies that could reinforce American economic and market leadership. Market sentiment reflects expectations of a pro-growth agenda, though potential tariffs under the Trump administration could pose challenges for global trade, especially impacting countries like China, Canada, and Mexico. These policy developments could ripple through the global economy, influencing trade dynamics and investment flows. In contrast, India faced domestic economic challenges, with Q2 FY25 GDP growth slowing to a seven-quarter low of 5.4%, down from 8.1% in the same period last year and 6.7% in the previous quarter. The slowdown was driven by weaker consumption, subdued government spending, tighter credit regulations by the RBI, and adverse weather affecting key industries. Despite these headwinds, India's economic fundamentals remain robust, and the outlook for growth is supported by rising demand, a revival in government expenditure, and favorable macroeconomic indicators. Looking ahead, the Indian equity markets appear well-positioned, benefiting from a stable macroeconomic environment characterized by moderate growth, controlled inflation, and balanced interest rates. Microeconomic factors, such as corporate earnings, improving balance sheets, and a positive capital expenditure outlook, further reinforce this optimism. While earnings growth in the first half of the fiscal year was subdued, a recovery is anticipated in the second half, supported by stronger business activity and policy measures. The recent correction in broader equity markets has alleviated some valuation concerns, creating opportunities for investors to focus on long-term growth drivers. This period of market volatility should be viewed as an opportunity to accumulate high-quality, fundamentally strong businesses at attractive valuations. To navigate the uncertain market environment, investors should maintain a diversified portfolio, capitalize on opportunities in the primary market, and focus on sectors poised for sustained growth. This strategy not only mitigates risks but also positions investors to benefit from the future growth potential of the Indian and global markets.

Debt Market Outlook:
Globally, inflation seems to be cooling off. This gives ammunition to the Central Bankers across to tackle muted growth projections with an agile Monetary Policy action, which is primarily driven by the lowering interest rates. The US is leading the rate-cut cycle, albeit with caution due to the regime change and its impact on the future economic landscape. China is continuing with strong economic support and has unveiled a new $1.4 Tn debt package to ease the financial strains of the local governments. China vowed to adopt a loose monetary policy for the next calendar year as well. CPI Inflation, especially food inflation, has been a bane in RBI's monetary policy action, leading to deferment of the rate cut to the next calendar year. However, for the first time in 4.5 years, RBI has reduced the Cash Reserve Ratio (CRR) by 50 bps to 4% which will be implemented in two phases of 25 bps each, taking effect on December 14 and December 28. In coming quarters as slack in growth becomes more visible, we can expect policy priority to shift from restraining inflation to supporting growth. Hence, for RBI there is an increased trade-off between growth and inflation. Growth is already moderating while inflation is yet to moderate in the coming months. The inflation pain might further extend owing to the expected capex spending from the government, picking up of rural spending due to a good monsoon, and a bumper wedding season. The Indian Bond Yield curve is anticipated to remain stable amid favourable demand-supply dynamics. Investors should consider medium- and long-duration funds like gilt funds with higher coupon rates offering good risk-reward trade-offs without undue duration risk.