Markets at life time high amidst volatility, Both BSE & NSE’s listed companies market cap crossed $ 5 trillion
The markets in the month of April traded in a narrow range and closed moderately positive with a gain of 1.2%. Nifty traded in the range of 22k to 22800 and Sensex in the range of 73k to 75k. Market also made new all time high in apr’24 with nifty touching 22783 on 30th apr and Sensex touching 75124 on 10th apr’24. Since then market sharply corrected in May’24 within first two weeks before recovery and rally in last two weeks making new life time high yet again. Nifty closed on 24th May’24 at lifetime high of 22957 and Sensex at 75410. So far in May, nifty have delivered around 1.5% returns. The total market cap of all BSE-listed & NSE-Listed companies reached $5 trillion in both exchanges (over Rs 414.46 trillion), showing a climb of over $633 billion since the start of the year. It is now within striking distance of Hong Kong, which commands a market-cap of $5.39 trillion currently. India thus occupies the Number 5 slot, after the US, China, Japan, and Hong Kong, in the pecking order of top stock exchanges in the world in terms of market-cap. This milestone of $5 trillion market-cap achieved on May 22 marks a significant moment in India’s economic rise. It signals India’s growing economic strength and potential to challenge established financial centers.
The markets have been facing heightened volatility since Jan’24 with broad positive trend. FII has been sellers mostly this year and it intensified last month and current month. On the other hand DII has been compensating for this selling and the market did not see much correction because of this. Recent RBI’s Rs 2.1 lakh cr bonanza to govt brought cheer to stock market. RBI’s dividend payout for FY24 was double what the government projected, hence, providing it with extra funds to ramp up capital expenditure, lower the fiscal deficit, or a mix of both. The global markets have been positive and US markets are also near record high. An important event of election results in 1st week of Jun’24 will drive the market from here on. Nifty is at 23k which is critical level. Geo political risks still continues and need to be closely tracked.
Sectoral performance & outlook
The sectoral performance has also been in line with the Markets and in positive territory with volatility. Sectors that have done very well last month and current month are metals, auto and realty. Midcap has outperformed large cap and small cap in this period. The sectors that have done moderately well are PSUs, FMCG, Energy and Infra. The sectors that were laggards are IT, banking and pharma. The sectoral performance and market performance in coming month will depend on Election results.
Outlook for the Indian Market
Amidst global economic uncertainties, gold and silver still continues to outperform other asset classes including equities. Gold and silver touched all time high around Rs 72k /10 gm and 91k / Kg respectively. Multi asset allocation provides diversification and stability in returns over long run. Hence, it is advisable to balance and diversify portfolio with mix of equity, debt and commodity and do rebalancing on corrections. Indian Markets and global markets have been volatile this year with positive trend. Indian markets are poised for bullish run in long term. Clear Market direction is expected after election results in 1st week of Jun’24.
Fundamental outlook: Valuations across large cap, mid cap and small cap are at premium compared to historical averages. This can be attributed to strong fundamentals and strengthening economy. Macros contributing to this economic growth are strong GST collections, good corporate earnings, high PMI, good GDP growth, lower NPAs, digital revolution and infrastructure. However, there are also headwinds like geo political events, weather events, inflation risk, unemployment and impact of AI. The global events and domestic events need to be tracked closely. Those who are already invested or doing SIPs can continue considering good long term Indian market prospects. New investors or investors with surplus funds can wait for election results and invest on favourable opportunity. Some rebalancing in the portfolio at sectors and market cap level is advised after election results. Consult and review your investments with your investment advisor.
Technical outlook: Indian market was volatile this month and crossed 22500 after retracing and taking support at 22k few times. 23k is an important level and may act as resistance. Nifty is currently trading mix on basis of various technical parameters. The RSI is in overbought zone of 81. The immediate resistance for nifty is 23200 and may face strong resistance at 23500 level. The immediate support for nifty is seen at 22500 and major support at 22000.
