“Risk comes from not
knowing what you are doing.”– Warren Buffet
Indian benchmark equity
rallied a record high in Mar24. S&P
BSE Sensex and Nifty 50 ended higher with 3.34% and 3.33% month-on-month.
Sectoral indices ended mixed, with capital goods, auto and metal gaining the
most. S&P BSE Capital goods rose 6.15%, while S&P BSE Auto and S&P
BSE Metal were up 4.96% and 3.81%, respectively. Loses were observed in IT,
realty and FMCG. S&P BSE IT was down 7.20%, S&P BSE Realty fell 1.21%,
and S&P BSE FMCG slipped 0.67%.
In between Mid & Small
Cap Index also corrected sharply falling 6.05% & 11.05% respectively.
SEBI’s comments on caution in markets due to high valuations + Stress test
conducted on Mid & Small Cap mutual fund schemes led to this sharp fall.
But by the end of the month, entire losses were recovered.
Key Events So Far
- The Monetary
Policy Committee (MPC) of the Reserve Bank of India (RBI) maintained the repo
rate under its liquidity adjustment facility (LAF) at 6.50% for the seventh
consecutive time at its policy review meet. - GDP projection
for FY24 is estimated at 7.6% and 7% for FY25, with risk evenly balanced. CPI
Inflation for FY25 is projected at 4.5%. - US economy
expanded an annualised 3.4% in Q4CY23, higher than estimate 3.2%, compared with
4.9% in Q3CY23. Fed left key lending rates unchanged at 5.25-5.50% 5th
consecutive meeting. - FIIs and DIIs
were net buyers in Mar-24, similar to the last month. In Mar-24, FII bought Rs
35,098 billion Indian equity compared to sale of Rs 15.39 billion in Feb-24.
DIIs bought Rs 563.6 billion compared with Rs 253.8 billion. FPI Flows into
India Hit Record ₹ 3.33 Lakh Crore This Fiscal Year. - India’s March
Manufacturing PMI Climbs to A 16 – Year High Of 59.1. GST Collection in March
Surges To ₹ 1.78 Lakh Crore. - Gold prices
touches record high of Rs 71,150/- per 10 gm. The expectation of rate cuts from
Fed, rising Middle East tensions and central bank purchases lift the gold
price. - Brent Crude
crosses 90$ per barrel. The rupee rose sharply to Rs 83.58 against the US
dollar.
April Outlook
The current valuation of
Nifty stands at 20.9X FY25E, 4% premium to its 10-year average of about 20X.
All indices are near or above 5-year PE average. Market is rising up because of
no major negative news, continuous heavy inflow of funds, hope of Modi Govt
returning back for 3rd term, Central Banks cutting rates sooner, normal
monsoon, inflation easing and better than expected corporate results.
Any negative news on above
front will trigger a decent correction of 5-7%. Any escalation of war in Israel
& Ukraine region will also be a major trigger for market correction.
Recently Iran threatened to attack Israel after its embassy in Syria was bombed
by Israel killing key personnel.
Markets in the near
term would take cues from economic
data, announcements relating to the upcoming Lok Sabha elections and the timing
and quantum of easing in the interest rate cycle, both globally and in India.
Poll of top 10 brokerage
houses in India shows a December-end Nifty target of 23500-24000 max. which
means 5-6% returns from current levels. Since we expect a healthy 5-7%
correction broad based in markets, buying in dips will enhance overall yearly
returns from single digit to double.
Please note we do not expect
a long-term correction and only a sharp short one, good enough to enter at
lower levels which will enhance portfolio yield by 4-5% even if markets
underperform the whole year.
