“Don’t follow the crowd blindly in
investing. Sometimes the
best opportunities are found in the place’s others overlook.” –
Warren Buffet (American business magnate, investor, and
philanthropist)
Nifty index kick started the July
month on a positive note above 19200 zone
and bulls continued its strength from the previous three months, to touch a new
lifetime high of 19991. Any minor declines were converted into buying
opportunity and bulls were seen active throughout the series. It took a
fortnight for the fastest 1000-point rally in the index, and it finally closed
with gains of 3% in July.
Rise was driven by positive investor
sentiment due to optimism about domestic economic growth, sustained foreign
fund investment and impressive corporate earnings updates. Almost all the key
S&P BSE sectoral indices ended higher during the month.
On the sectoral front we have
witnessed buying interest in Media, Energy, Pharma, Realty, PSU Banks, Auto and
Metal sector while some profit booking was seen in FMCG and IT sector.
INFLATION:
after easing to a 25-month low of 4.25% in May-23, Consumer Price Index
(CPI)-based inflation surged to 4.81% in June-23 due to a steeper-than-expected
spike in prices of vegetables. Wholesale Price Index softened to 4.1% in
June-23.
India’s GDP growth rose to 6.1% in
Q4FY23 from 4.4% in Q3FY23. The economy is in the middle of the business cycle,
wherein growth remains strong. Slowing global growth had impacted India’s GDP
last fiscal as exports and industrial activity were sluggish. Impact may be
deeper this fiscal as global economic activity decelerates further. Domestic
demand was supportive for growth last fiscal. While domestic indicators remain
steady and structural positives are getting built up, managing global front may
be a key challenge for Indian GDP.
POSITIVES in JULY:
- Decent Q1FY24
earnings indicates domestic cyclical demand momentum continues. - GST collections
were up 11.7% YoY, in line with the 3-month trends to Rs,1.6Trn. - FIIs pumped in
13,922 Cr in Indian markets, 5th consecutive month of net buying. - Monsoon continued
its good spell and wiped-out June deficit in July. - Morgan Stanley
upgrades India to Overweight. - Record 6.77cr
ITRs for AY 2023-24 filed till July 31; 53.67L first-time filers.
NEGATIVES in JULY:
- The Fed hiked
interest rate by 25 bps to 5.25-5.50% range. Accompanying policy statement left
the door open to another increase. - Fitch ratings
downgrades US Credit from AAA to AA+. - Consumer Price
Index (CPI)-based inflation surged to 4.81% in June-23 due to a
steeper-than-expected spike in prices of vegetables. - Crude oil surged
up from 75$ per barrel in June to 85$ per barrel in July.
AUGUST Forecast: Though markets briefly touched the all-time peak in July, but it
corrected sharply in the first week of August, triggered by downgrading of US
credit ratings by Fitch and prospects of further rate hikes by US Fed.
This correction should be seen as an
opportunity, as though markets have peaked but valuations have not. Nifty is
still trading at a PE of 22.8, as compared to 5-year average of 26.38. Hence
another 10-15% rally from here cannot be ruled out by December 2023.
Good time to park any lumpsum investments
below Nifty 19500 levels and SIPs should continue as defined based on cashflow.
Happy
Investing!!!
