Market Update – November 2022

Indian equities ended the month of October with decent gains, along with the rebound witnessed in global equity markets. US Dow Jones Index gained a whopping 14% in October, while the gains in tech-heavy Nasdaq was down 2.1%. NIFTY50 was up 5.4% for the month, thereby turning positive for YTD’CY22. The broader markets ended marginally positive with S&P BSE Midcap and S&P BSE 250 SmallCap being up 2.0% & 1.8% respectively. The rally was seen across the sectors led by the rate sensitive sectors like Banks, PSU’s and Autos. Almost all sectoral indices closed higher than the previous month. FIIs turned net buyers in last 15 days of the month. Strong domestic inflows continued with domestic institutions buying ~USD 1.1 bn in the month of October.

Indian economy and markets have shown remarkable resilience and “de-coupling” in this global uncertainty. Indian economy continues to do well and is expected to grow 6.5% to 7% for the next two years. Corporate profitability also is trending well and earnings are expected to grow in mid-teens for the next two years. Domestic demand is trending up well, with the onset of the festive and wedding season and should provide an additional tailwind for consumer and economy facing companies. Global markets and scenario also seems to be stabilising. There is also an increasing realisation that emerging market funds might not be the best way of participating in the growth of Indian economy and we are seeing early signs of smart India country specific allocations coming in. This is reflected with positive foreign flows being witnessed regularly, lending additional strength to Indian equities.

However, volatility should be expected regularly as the world still is grappling with multiple macro-economic issues as well as geo-political concerns. A balanced approach in investing is highly recommended, with focus on profit growth and valuations.

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