Category: Market Outlook

The “risk-on” momentum continued for equity markets globally in July and Indian markets too participated in this, logging in fresh all-time highs. The favorable macro back drop – moderating inflation, peaking rates, stable growth and support from both domestic and FIIs inflows has led to renewed momentum in the Indian markets since April’23. NIFTY50 was up 2.9% for the month, while broader markets S&P BSE Midcap and S&P BSE 250 SmallCap were up sharply by 5.7% and 7.4% respectively. Foreign Portfolio Investors, who have now been net buyers for fifth consecutive months, invested another USD ~5.7 bn in July while DIIs flows were marginally negative to the tune of USD ~0.3 bn. Pharma sector was the star performer with Pharma index rising 9%, followed by PSU, Power and Realty sector.

Market Outlook

Indian markets have participated in the ongoing global rally and are now trading at an all-time high. The good news is this rally has been accompanied by a strong economy, robust corporate profit outlook and improving macros. The initial fear of the El Nino effect induced lower monsoons have been allayed with widespread rains all across the country and forecasts of a normal rainfall for the latter part of the monsoon season. Having said that, in the near-term markets have had a very strong run-up since April – 23 and there is a fair chance that it can take a breather at current levels. Valuations are at just about 10% higher than the long-term average and any correction might be short and swift.

While maintaining our strong and positive view on Indian equities, we would continue to advise restraint. FOMO (Fear of Missing Out) is high and momentum and theme-based stock movement have been very prevalent. We would advise discipline and staying away from greed-based investing in the current optimistic scenario. From our perspective, we continue to follow our fundamental and value-focused way of investing. We believe in being “Rightly invested, rather than fully invested” and are prepared for any opportunity that comes across due to short corrections with the cash in our portfolios. All our portfolios have done significantly well, outperforming significantly and we intend to stick to our core investment philosophies even at the cost of sacrificing near-term returns, if any.

You can also download the PDF file by clicking here

India is poised to become a “brighter spot” in the world economy and a key contributor to global growth in the coming year. While Global Leaders’ optimism about India is evident, we can take pride in their positive sentiments towards the country as we closely observe their views.

You can also download the PDF file by clicking here

June was another strong month for equity markets globally, as investor sentiments remained buoyant. Amidst a clear risk-on, almost all markets in the world did well. Indian equities too had a strong performance and hit all-time highs. Benchmark NIFTY50 was up 3.5% for the month, while broader markets S&P BSE Midcap and S&P BSE 250 SmallCap continued their positive momentum and were up by 6.2% and 6.4% respectively. The strength in the markets was helped by strong FIIs flows – to the tune of USD ~5.7 bn, highest monthly buying since August 2022. FIIs have now been net buyers for four consecutive months. After a marginal contraction in May, DIIs flows were back to positive to the tune of USD ~0.5 bn.

Market Outlook
Global macro-economic indicators look like turning more comfortable as we head to the second half of 2023. Inflation, on the back of softer commodity prices and base effect, should inch down gradually. Thus, despite the US fed’s commentary of more rate increases, our view is that we are now behind the interest rates increase cycle and in fact we should start hearing murmurs of rate cuts towards the end of the year. Lower crude prices are an added big positive for the Indian economy and we are already seeing signs of having a Balance of Payment surplus for FY24. Strong FPI flows also are a positive and given the sentiments globally in favour of India, the flows look like only increasing from here on. PM Modi’s visit to US has also been an added catalyst, with large global companies like Alphabet, Apple, Tesla, Micron, Amazon and others committing multi-billion USD investments in India. Monsoons started off slowly and the risk of El Nino appeared to be real. However, there has been a decisive pick-up in rainfall across India and with a normal monsoon forecast for July, the small risk from monsoon front seems to have receded.

Interest in investing in India appears very strong from both businesses as well as portfolio allocators. Thus, markets look like being in a sweet spot both fundamentally as well as from strong investor interest. From an immediate near- term perspective, June’23 quarter corporate results will set the tone for further movement in the market. While overall markets are trading at a small premium to it’s 10-year average, there are quite a few pockets of froth emerging, particularly in smaller companies. While maintaining our strong and positive view on Indian equities, we would advise restraint in rushing into investing out of Fear of Missing Out.

You can also download the PDF file by clicking here