The Month that was: March 2024

Most global markets ended positively during the month of March with Taiwan, Germany, and the UK as major gainers.On the back of positive global cues, Nifty50 Index gained 1.6% during the month amidst volatility seen in midcap and smallcap indices. Nifty50, Midcap and Smallcap indices ended FY24 with strong gains of 29%, 60% and 70% respectively making Indian equity market one of the best performing markets globally. Within sectors, capital goods, automobiles and metals were up during the month whereas IT, realty, and FMCG declined.

Among global developments, US Federal Reserve, in its latest meeting in March, projected reduction in key interest rates three times during 2024. On the domestic economy front, CPI inflation in February came in at 5.1% while industrial production in January moderated to 3.8%. Current account deficit in 3QFY24 moderated to USD 10.5 bn vs USD 11.4 bn in the previous quarter. Dates of Lok Sabha elections were announced which is scheduled from April 19 to June 1 in seven phases. FIIs bought USD 3 bn of Indian equities, while DIIs bought USD 6.8 bn during the month of March.

Market Outlook 

The outlook for Indian markets remains positive, driven by strong domestic macro economic parameters, expectation of stable political outcome in upcoming General Election (counting of votes to be done on 4th June) and supportive global liquidity going ahead as interest rate hike cycle reverses during second half of 2024. While we have witnessed some volatility in midcap and smallcap segments of the market last month owing to rich valuations, expectation of strong earnings growth should provide support to quality stocks. 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 Capital Goods, Banks, Consumer Durables, Real Estate and Energy are expected to do well going ahead. With the expectation of incumbent government coming back to power, markets could witness the tailwind of favourable policy announcements over next few quarters. Investors are suggested to consider taking advantage of any intermediate correction in equity market to increase allocation in stocks with strong growth prospects over medium to long term.

Happy Investing!