The Month that was : June 2024

In June, the Nifty Index surged 7%, marked by volatility around the Lok Sabha results. The index saw its steepest single-day drop on June 4 due to BJP's shortfall in securing a majority, but recovered as the BJP-led NDA government formation boosted investor confidence. Mid-cap and small-cap indices rose 8% and 10% respectively.  Construction Material, Oil and Banks were the leading sectors. Whereas, capital goods, retailing and Chemicals were the trailing ones. Global markets closed mixed with France (-6.4%), Mexico (-5%), and Shanghai (-3.9%) declining, while Taiwan (+8.8%), South Korea (+6.1%), and US SPX (+3.5%) posted gains. Key developments included BJP-led NDA's narrow victory in the elections, the Federal Reserve maintaining rates, RBI MPC's repo rate hold at 6.5%, Fitch's upward GDP forecast for India, MSP hike for kharif crops, and telecom tariff hikes by major players. FPIs bought US$2.7 bn of Indian equities, and DIIs US$3.4 bn. Economic indicators showed May CPI at 4.75%, WPI at 2.6%, and April IIP growth at 5%.

Market Outlook 

The Indian stock market reached an all-time high on June 22, 2024, with the BSE Sensex touching 65,500 points and the NSE Nifty 50 crossing 19,600 points. This milestone was driven by strong inflows from foreign institutional investors (FIIs), robust corporate earnings, and positive economic data. The outlook for Indian markets remains positive, driven by strong domestic macro economic parameters, robust earnings growth expectations and supportive global liquidity going ahead as interest rate hike cycle likely to reverse during second half of 2024. Moody’s has kept India’s 2024 economic growth forecast unchanged at 6.8% Upcoming Union Budget on 23rd July will underscore some of the Government's reform agenda which will be the key monitorable for the markets.

On going capex cycle and revival of domestic consumption will be key to Nifty50 companies posting earnings CAGR of nearly 15% over next 2 years. Sectors like IT, Pharma, Capital Goods, Banks and Energy are expected to do well going ahead. Investors are suggested to maintain or slightly increase allocation in stocks with strong growth prospects over medium to long term.

Happy Investing!