Market Update – May 2024

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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