Market Update – March 2024

Global markets continued the positive momentum in February 2024, with most ending the month with good gains. Shanghai (+8.1%), Japan (+7.9%) and Hong Kong (+6.6%) were the major gainers, while US S & P 500 and Nasdaq soared to a record high gaining 5.2% and 6.1% respectively in February. Indian markets lagged global markets. While the large cap index Nifty 50 gained a small 1.2%, broader markets were flattish for the month with the S & P BSE SmallCap down by -1.1% and S & P BSE Midcap gaining 1.5%. Sector-wise, all sectoral indices ended with small gains, except for FMCG, which was down 2.2%.

Market Outlook

Macro-economic news flow for India continues to be strong, with almost all parameters showing strength and improvement. Corporate profits also continue to be strong with the next two years PAT growth expected to be 15-17% CAGR. Elections due in April/May 2024 are expected to be in line with expectations. Globally all things have stabilized with both inflation and interest rates having clearly peaked. Stable crude prices are also positive for India.

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Market Update – February 2024

January was a month where global equity markets witnessed significant volatility and contrasting performance. Japan (+8%), Malaysia (+4%) and Russia (4%) were the major gainers, while Hong Kong (-9%), Shanghai (-6%) and South Korea (-6%) were the major losers. Indian markets also witnessed swings, with Nifty 50 being flat after two consecutive months of gains. Broader markets continued their gains for the third consecutive month with the S&P BSE SmallCap and S&P BSE MidCap gaining 7.1% & 5.3% respectively. Sector-wise, the oil & gas, PSU, and realty sectors showed strong performances, with gains of 13%, 11%, and 9%, respectively. Conversely, the Bank, FMCG, and metals sectors experienced declines of 4%, 3%, and 1% respectively. Momentum rather than valuations or fundamentals was clearly in the fore.

Market Outlook

Strong domestic liquidity and money chasing returns have seen mid and small caps deliver 27% and 30% returns in the past six months vs just 10% of the Nifty. Owing to this we are seeing many strategists predict a mean reversal and expect large caps to outperform in the coming months. Instead of trying to preempt the market moves we remain focused on identifying companies with strong earnings growth visibility. Post the favorable state election outcome in December, we feel markets have already started to factor in the ruling BJP party coming back to power in the forthcoming general elections to be held in April/May 2024.

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Market Update – January 2024

December was a strong month for equity markets globally in what is usually termed as a “Santa Claus” rally. Indian markets emerged as the best-performing market with benchmark Nifty gaining a strong 7.9%. The RBI, as expected, maintained the status quo on rates and kept their stance unchanged, while the Fed held rates at 5.25%-5.5% for a third straight time and laid out the timeline for rate cuts in 2024. 

Market Outlook

Indian markets are entering CY24 on a high note and with a high base. India has been amongst the best performing markets and is at all time high levels. Crude oil prices have also corrected below $80 per barrel, despite the war in West Asia. We believe that a combination of higher US shale oil production, benign demand growth, attractive renewable energy prices and huge innovation related disruption like EVs, hydrogen, etc.; will ensure that oil prices stay meaningfully soft over the medium to long term.

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