Financial Year Recap: How Nifty50 Performed Compared To Gold, Bitcoin And Other Asset Classes

As the financial year of 2024 draws to a close, investors are a happy lot. Various asset classes, from equities to cryptocurrencies, gave stellar returns during this period and some of this was fueled by the high global geopolitical tensions witnessed in the past 12 months.

The Nifty and the Sensex soared to new heights, with the former rising over 5,000 points and surpassing the 22,000 mark and the latter breaching 74,000 jumping over 15,000 points.

The traditional and alternative asset classes alike experienced substantial gains too. Gold, a traditional safe-haven asset, witnessed a surge hitting a new high.

Simultaneously, the cryptocurrency market, led by Bitcoin, achieved a new peak.

Over the course of the past year, the S&P BSE Sensex has demonstrated notable strength, posting a gain of over 28%. Similarly, the Nifty 50 index has exhibited robust performance, recording a gain of over 31%.

Gold hit a new high on March 21, 2024 after the U.S. Federal Reserve kept its key interest rate steady for the fifth straight time and continued to signal three rate cuts this year.

The yellow metal moved higher on the back of rate-cut hopes, according to analysts. The price of the MCX gold reached a new all-time high of Rs 66,679. It advance over 13% in the last 12-months, whereas Nifty 50 has seen an surge of over 27% during the period.

Morgan Stanley expects gold prices going up to $2,300 per ounce in 2024, but price action is likely to be choppy as uncertainties remain over U.S. data and rate cuts by the Federal Reserve.

However, if the 10-year real yields come down further, there is a scope for gold to move higher from the current level. The yellow metal also tends to rise after the first Fed rate cut, while elevated geopolitical and political risk in 2024 should also provide support, the research firm said in March 15 note.

Bitcoin has seen an impressive year jumping nearly 150% in the last 12-months and surpassing a market capitalisation of $1 trillion. The alternate asset class surpassed $73,000 following a widespread rally in the cryptocurrency market.

This achievement was notable as it was the first time since December 2021 when market capitalisation crossed $1 trillion mark, according to Bloomberg data.

During this surge, Ether, the second-largest token, witnessed a record high of $4,092 rallying a tad over 100%.

The Indian rupee was the best-performing currency in Asia in the financial year, underpinned by factors like a reduction in the current account deficit and strong foreign exchange reserves.

The local currency has exhibited resilience, rebounding from its perceived low of Rs 83.50 against the dollar on November 11, 2023 and currently indicating signs of a sustained upward trend.

The Indian currency weakened by 1.42% in the last 12 months against the greenback. Meanwhile, the dollar index rose by 1.87% in the 12 months period.

The yield on the 10-year bond decreased after JPMorgan and Bloomberg emerging market indices inclusion and Union government announced a lower-than-expected borrowing plan for the first half of the next financial year.

The yield on the 10-year bond decreased 24 bps or 3.33% during the last 12-months.

Indian government bond inclusion in both the JPMorgan and Bloomberg emerging market indices would attract foreign inflows worth $40–50 billion annually, according to analysts.

Historically, such inclusions have led to increased investor interest and inflows, according to Venkatakrishnan Srinivasan, founder and managing partner at Rockfort Fincap LLP. “The extent of the increase would depend on various factors, including prevailing yields, expectations of rate cuts, investor sentiments, securities to be made available under the FAR route, and the attractiveness of Indian bonds compared to other investment options available to FPIs.”