Samvat 2080 was a remarkable year for the Indian markets with Nifty 50 touching all time high of 26,277 and SENSEX reaching 85,978 on 27 September 2024 led by continued optimism about the economy, healthy earnings growth by India Inc., FII equity in-flows, general election and events like cricket world cup tournament, etc. boosted the overall sentiments.
Over last 12 months Nifty/Nifty Midcap 100/Nifty Smallcap 100 indices have rallied 27%/45%/42% respectively. Though emergence of external factors,especially geopolitical tensions across the globe, had a bearing on market’s performance, strong DII flows and retail investor participation kept the market buoyant.
Total demat count has surpassed 171mn mark in Aug’24 resulting in SIP inflows touching all-time high trajectory. DII flows of $40.8bn over 9MCY24 have surpassed CY23 flows worth $22.3bn.
Although an eventful Samvat 2080 is behind, an equally exciting Samvat 2081 is awaiting with plenty of key events to watch out for such as US General Elections to be held in November 2024. While FED has announced its rate cut decision with anticipation of 2 more cuts in CY24, all eyes are on RBI rate cut announcement, which can bring some relief to Banking and NBFC sector’s tight liquidity situation.
Additionally, BJP’s third straight win in Haryana’s state assembly elections have heightened expectations from the party in upcoming elections in Maharashtra, Jharkhand and Delhi.
Key indices posted flattish performance in the month of October primarily on account of FII outflows from Indian bourses and divergence to Chinese markets, given the attractive valuations and strong stimulus announcements. However, investors are taking this healthy correction as an opportunity to build diverse portfolio at better valuations to play on India’s long term structural growth story.
During FY24 and FY25, several themes that emerged in Indian economy, such as Power Infrastructure Expansion, Waste Water Management, Strong Defence order book, Railway infra expansion, Telecom 5G rollout, Semi-conductor PLI scheme, Solar & Wind power generation, etc.
To tap on these opportunities, investors increased their exposure to several players associated with these themes largely falling under Mid Cap and Small Cap indices thus leading to significant run-up in their valuations. As a result, relative underperformance of key indices (like NIFTY 50 / SENSEX) offer good entry opportunity in some of large-cap companies providing multiple growth levers and a healthy revenue visibility at current valuations.
