“Speed is the
currency that you want to maximize on today. Most people just go too slow. They
think too long, and they never take any action.”
– Grant Cardone (Entrepreneur, author, speaker, investor, and coach)
Nifty gained
2.6% to 18,534 in May’23,
closing higher for the third consecutive month. The benchmark is now just a few
points away from its all-time high of 18,887 recorded in Dec’22. Broader market
witnessed higher action with Nifty Midcap 100 up +6.3%, while Nifty Small cap
100 rose +5.6%, sharply outperforming Nifty.
If you had
bought the top 5-6 blue-chip stocks, then you’re already down by -40%, while
index is trading at a life high.
Positives in
May:
- RBI
kept the repo rate unchanged at 6.50% on expected lines. - India’s
Q4FY23 GDP rises to 6.1% in Q4, FY23 clocks growth rate of 7.2%. - Retail
inflation eases to 4.7% in April; March IIP falls sharply to 1.1%. - GST
collection grew 12% to Rs.1.57 lakh crore in May’23, crossing the Rs.1.5 lakh
crore for the 5th time since introduced. - Q4
corporate earnings have been impressive, with Profitability in line with our
expectations. Nifty’s earnings grew 16% YoY (vs. est. of +14% YoY) in 4QFY23. - India’s
trade deficit in April, falls to lowest in 21 months.
Threats
ahead:
- Fed
further hiking rates in June meeting. - Weaker
monsoon due to El-Nino effect. - Rise
in inflation due to subpar rainfall.
How to
predict Indian Markets with Oil prices? India is heavily dependent on imports for its oil
requirement. India’s reliance on imported crude oil is at record high of 87.3%
in FY23. India’s domestic consumption of petroleum products in 2022-23 rose over
10 per cent year-on-year to a record 222.3 million tonnes, making us world’s
third-largest consumer of crude oil and also one of its top importers.
Who impacts
Indian market? Indian-listed
firms are majorly owned by private promoters and foreign investors (FIIs).
Private promoters owned around 45.13% of Indian listed companies, followed by
foreign investors (FIIs) whose ownership is around 20.15% currently.
This makes FIIs
the largest non-promoter shareholders in the Indian market. On the other hand, mutual
funds owned around 7.75%. Retail investors, meanwhile, hold around 7.42% of the
domestic market.
Since promoters
of company do not indulge in trading and just hold onto their stakes, it is the
FIIs which determine the path of Indian markets. FIIs strategy is to invest in
India when crude oil prices are down and withdraw when it is rising (a
historic trend).
Oil is a major
input for several industries. When crude oil prices rise, naturally, input
costs and overall production costs also rise. This causes profit margins to
fall which in turn reduces the stock price of that company. Conversely, a fall
in oil prices produces the opposite effect. For every US $10 increase in the
cost of oil, the current account deficit increases by 0.55% and
the Consumer Price Index (CPI) increases by 0.3%.
Crude oil
prices are expected to trade in the range of 65-75$ per barrel for the next 6
months. Reason being, recessionary pressure in US & European markets,
rising interest rates has led to global economic slowdown. Start of summers in
European countries means lesser fuel burn for heating purpose, till next
winter.
Hence India
will be a bigger beneficiary of lower crude prices in coming months. With
valuations in fair zone, decent corporate earnings, good monsoons, festive
seasons and robust consumption, will clearly lead markets touching new highs. We
expect Nifty crossing 20K levels by Diwali.
Happy
Investing!!!
