Category: Market Outlook

The much-awaited results of the General elections of India were announced on June 4, 2024. In a surprise turn of events, the outcome of the elections has come as a negative surprise to the equity markets. Particularly as expectations sky-rocketed after the very optimistic forecasts by exit pollsters over the weekend.

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Here’s a glimpse of Abakkus’s outlook on market, post the election results, featuring Mr. Sunil Singhania (Founder, Abakkus Asset Manager LLP).

Global equity markets had a mixed performance in April 2024, amidst bouts of risk-off and risk-on. US markets ended the month sharply lower and so did many other global equity markets.  Indian markets too were volatile but managed to end the month in positive territory with Nifty gaining a modest 1.2% for the month. The broader markets though, rebounded sharply after the correction in March, with the S&P BSE Midcap and S&P BSE SmallCap250 gaining a good 7.1% and 9.8% respectively. Sector-wise, most indices closed in the green except for IT, which dropped by 4.3%. Metals, power, and realty were up 10.8%, 7.7%, and 7.5% respectively. Foreign Institutional Investors (FIIs) recorded net outflows of USD 1.04 billion during the month. On the other hand, Domestic Institutional Investors (DIIs) continued to see net inflows, amounting to USD 5.3 billion. The INR for the month was stable and closed at ~83.50. India’s 10-year G-sec yield ended the month at 7.19%. Brent crude price rose marginally to USD 87.86 per barrel in April’24.

Market Outlook

After a sharp correction in March in the broader markets, mid and small-caps rebounded sharply in April. Despite near-term FII selling, Indian markets have held up well as domestic funds and investors have taken the opportunity of every correction in the markets to build up long-term positions. In the near term, markets are expected to remain choppy and rangebound. There seems to be a consensus on election results and hence positive surprise from that aspect is unlikely. Corporate results for the March quarter are coming mixed and therefore unlikely to be a tailwind. US interest rate outlook has also been changing too frequently, though of late the scare of 10-year yield again touching 5% has ebbed.

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Equity markets globally continued the positive momentum in March 2024, with most ending the month with strong gains. Taiwan (+7.0%), Germany (+4.6%) and UK (+4.2%) were the major gainers, while Malaysia, Brazil, Philippines, and Indonesia were among the few that ended up losers. Indian markets saw a roller coaster ride with Nifty hitting all-time highs in the first couple of weeks of March, followed by a sharp corrective phase lasting for ten days and then recovering again to end of the month with small gains of 1.6%.

Broader markets bore the brunt of the correction, with quite a few stocks correcting sharply as views of exuberance in small caps started to cause nervousness. However, there was a rebound towards the end of the month, with the S&P BSE Midcap & S&P BSE SmallCap250 down by a modest -0.6% and -3.8% respectively. Sector-wise, capital goods, auto and metals were the top performers with gains of 6.1%, 5% and 5% respectively, whereas IT, realty and FMCG declined 7.2%, 1.2% and 0.7% respectively in March.

Market Outlook

Indian equity markets, on a monthly basis, looked pretty stable in March. However, huge swings were witnessed during the month. The mid and small caps corrected very sharply intra-month amidst views floating of over valuation and exuberance. There was definitely a case for corrections, particularly in stocks that had moved far ahead of fundamentals and the fall was more pronounced in this category of stocks. Typical financial year phenomenon also added to the fall. Towards the end of the month though stocks recovered as expected. Strong economic indicators lent comfort to the markets, aided also by optimism on a consecutive 3rd term for the ruling Modi-government. Strength in global equity markets also helped.

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