Category: Market Outlook

It was a very volatile month of June for Indian equity markets. The markets witnessed a sharp correction on June 4th, as the election results came in short of market expectations and much lower than the exit polls that were announced on May 31st. However, as participants started to build in a view of a third term for Modi-led NDA coalition and subsequent growth focused narrative by PM Modi, the Nifty witnessed a quick recovery. The fact that the pre-poll NDA alliance got a comfortable majority as well as retaining key Ministers in their previous terms responsibilities, also aided sentiments. Nifty closed at an all-time high level of over 24,000, gaining 7% for the month. Broader markets outperformed, with the S&P BSE Midcap rising 7.7% and the S&P BSE SmallCap 250 rising by 10.3%. Inflows into Indian equities continue unabated, and this has been one of the key reasons for the strong performance. Foreign Institutional Investors (FIIs) purchased US$2.7 billion in Indian equities, while Domestic Institutional Investors (DIIs) bought US$3.4 billion.

Market

Indian equity markets demonstrated robust resilience, continuing their upward trend driven by strong liquidity and sentiments. The good news is that this sentiment is backed by strong corporate earnings and a pickup in economic growth. With another five-year term under the able leadership of PM Modi, there is optimism of strong growth-oriented policies leading to confidence of over 7% GDP growth over the medium term. Indian economy is in a sweet spot and the same is getting reflected in equity markets. Valuations too, while above historic averages are not too frothy, and this gives comfort that a rational return can still be made even from current levels. Positive monsoon progress lends optimism of the economy doing well and consumption reviving.

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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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