Market Update – November 2023

The month of October turned out to be a challenging month for global equity markets. The Israel-Hamas conflict, rising US bond yields, and concerns about slowdown in consumer demand; all contributed to a risk-off. In line with the global markets, NIFTY50 was also down 2.8% for the month, while broader markets S&P BSE Midcap and S&P BSE 250 SmallCap were down by 3.4% and 2.7% respectively. All sectoral indices declined, except Real-estate that gained 3.7%. Foreign Portfolio Investors (FPIs) reported net outflows of approximately USD 2.9 billion in October’23, while Domestic Institutional Investors (DIIs) saw net inflows amounting to USD 3.0 billion.

Market Outlook
Along with global volatility, Indian markets were also impacted and vindicated our stance that risks to Indian equities are more from global factors than local issues. On the global macro-economic front, the US FED left the rate unchanged in early November, though it voiced concerns that job gains are still strong, and inflation is still elevated. This led to US 30-year yields cooling off a bit to almost 4.64%, triggering a mini risk-on and the USD is weakening. After the initial spike post the West Asia conflict, crude prices too have corrected and are now hovering around USD ~85/ bbl. We expect inflation in US to cool off materially due to a correction in prices of all commodities as also recent correction in real estate prices. This should allay fears of yields rising from here. Global geopolitical concerns though continue to be a key monitorable. 

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