Positive Negative Neutral
|Inflation (CPI - India)
|Inflation decreased to 4.87% in Oct, 2023 from 5.02% reached in Sep, 2023.
|Brent crude price decreased by 6.72% In Nov, 2023
|Rupee depreciated by 0.12 % in Nov, 2023
|GDP growth of India is reported at 7.6% for Q2FY24
|FIIs were Net-buyers of Indian equities to the tune of Rs.9,001 Cr in Nov, 2023
|DIIs poured Rs.226.28 Cr worth of Indian equities in Nov, 2023.
|Yield slightly decreased to 7.27% from 7.35% in Nov, 2023 end.
|Global - Inflation
|US inflation has slightly cooled off at 3.2% in Oct 2023 from 3.7% in Sep 2023
|It stood at 21.52 times in Nov-2023, -30.91% below Oct, 2021 peak.
|It stood at 3.53 times in Nov-2023, -31.17% below Oct, 2021 peak.
|Valuations - Market cap to GDP ratio
|Current market cap to GDP ratio is at 115%, above its long-term average of 80%.
High Risk Moderate Risk Low Risk
|RISK FOR EQUITIES
|LEVEL OF RISK
|Rising Oil prices & Commodity inflation
|FII's being a Net-Seller
|US FED - Tightening
|US FED - Interest rate hike
|RBI-Sucking out liquidity
EVENTS, NATURE OF IMPACT & ANALYSIS
The latest GDP growth numbers are significantly higher than what RBI or independent experts thought they would be.
India’s economy grew at 7.6% in the July-September quarter as against 7.8% in the April-June quarter. In the meantime, the RBI had estimated a growth rate of 6.5% for the July-Sep quarter. So, the actual GDP growth of 7.6% is way above what RBI had estimated.
The higher growth was majorly driven by high Govt. spending and strong urban consumption. Manufacturing activity steals the show with the highest share of 13.9% GVA whereas agricultural activity growth lags due to uneven rains.
Overall, GDP growth remained robust, led by higher domestic demand. On the expenditure side, the government consumption and investments provided a cushion to real GDP growth. However, weaker private consumption growth is surprising and worrisome. On the production side, the industrial sector remained robust, while the farm sector deteriorated.
With sustained momentum of strong GDP growth, India continues to be the fastest-growing major economy in the world.
Currently, Nifty and Sensex are all up by a record high.
With the 4 state election results and the release of the latest GDP growth numbers, markets have hit an all-time high now. The rally in Sensex and Nifty is expected to reach 72,000 and 22,000 respectively in the coming months.
Declining 10-year US treasury yields (from 5% to 4.2%), Potential collective upside (6%-8%) in heavyweight index stocks can propel the Sensex towards 72000.
Our Valuation Analysis goes like this:
The Potential risks for the same would be Geopolitical uncertainties, FII outflows due to US Economic uncertainties and negative surprises in corporate earnings.
However, the Current phase is a significant milestone for the Indian market as it is in a growing phase.
Central Banks have emerged as significant buyers of gold in recent years.
Gold has long been viewed as the “safe-haven asset” - one that can protect investors against periods of economic downturns. Thus, in a country like India, Gold has not just monetary value, but also sentimental value attached to it.
But alongside, in recent years Central banks across the world have also started to accumulate gold way more than they used to a few years back.
Primarily because Gold is a limited resource and acts as a hedge against inflation, volatility etc. In addition to that, as an international commodity, Gold is priced in US dollars so therefore, so any depreciation in the rupee is expected to result in a rise in its price.
Central Banks have been net buyers of gold for quite a long time now, they are holding on to it firmly, thereby providing some support price for Gold. Thus, as long as central banks are maintaining this trend, gold prices are likely to keep rising.
Robust Corporate Earnings for Q2FY 24, largely surpassing the estimates.
Earnings for Nifty 50 posted a solid growth of 28% as against the expectation of 21%. The corporate earnings for 2QFY24 have been above the consensus expectations, with the BFSIs and Autos being the key drivers.
On an aggregate level,
Overall, the 2QFY24 corporate earnings ended positively with widespread outperformance across aggregates driven by margin tailwinds.
FIIs bought Indian Stocks worth about $1 Billion last month.
According a data released by NSDL, FIIs bought Indian stocks worth about $1 billion last month in which Nifty ended 5.6% higher. The buying by FIIs, DIIs as well and ever-bullish retail investors has led to an increase in the total market capitalization of all BSE-listed stocks to $4 trillion and catapulted the index to all-time high levels.
After being on the selling side in the previous two months FIIs have turned net buyers of Indian stocks in November. The total FII inflow in calendar year 2023 now stands at $12 billion.
Attractive valuations of the Indian equity market, the robust performance of the Indian economy, and the political stability after the BJP’s win in 3 big states can be attributed to the FIIs inflows.
Hence, India continues to prove that it's truly an oasis in the desert.
What you should do. And should not.
Please remember investing is mostly backing quality businesses run by quality managements that offer a runway for strong cash flow growth, earnings potential, and long-term prospects. Buying them at a “reasonable” price with an eye on the returns is important. Stay invested, stay disciplined and secure your returns. We have prepared a sound long term holistic financial plan for you based on your risk profile, defined your financial goals along with you… did an asset allocation (with contingency plans built in) with you. We believe we are in the best objective position to help navigate the vagaries of the market.
Standard Warning & Disclaimer: