The Month that was : July 2024

In July, Nifty50 reached new highs with a 4% gain despite volatility ahead of the Union Budget. Mid-cap and small-cap indices rose 5.8% and 4.5% respectively. The IT, oil & gas, and FMCG sectors led gains, while banks, metals, and real estate sectors saw minor losses. The FY2025 Union Budget balanced capital expenditure, fiscal prudence, and welfare, with minor tax adjustments and rationalized capital gains taxes. Globally, Indian markets performed well alongside the US Dow Jones and Australia. Key developments included the UP government's tax waiver on hybrid electric vehicles, SEBI's proposed stricter derivatives regulations, the US Fed's unchanged rates with a potential cut in September, and mixed results from Nifty-50 companies. FPIs and DIIs bought US$3.7 bn and US$2.8 bn of Indian equities respectively. Economic indicators showed CPI inflation at 5.1%, WPI inflation at 3.4%, and IIP growth at 5.9%.

Market Outlook : 

The outlook remains favorable due to continued economic strength, positive earnings growth expectations, and supportive global liquidity conditions. The Indian economy is projected to grow at 6.8% in 2024, as per Moody’s forecast. However, Ongoing geopolitical issues and global economic uncertainties, including potential interest rate changes by major central banks and Economic performance in key regions like the US, China, and Japan will be critical in shaping investor sentiment and global market trends. Key focus areas include the ongoing capex cycle and the revival of domestic consumption, which are crucial for sustaining strong earnings growth by Nifty 50 companies.

Domestic focused sectors such as Consumer Discretionary, FMCG, Capital Goods and Bank/NBFCs are expected to perform well  in near term. Investors should take advantage of corrections in Indian market due to global market volatility to buy into quality stocks in the above sectors given the positive macroeconomic environment in India.

Happy Investing !!