Undeclared Emergency in India By Pm Narendra Modi

Sensex and Nifty Surge by 10% Since Last Independence Day: What Lies Ahead?

Aug 15, 2023

Resilient Indian Equity Market Overcomes Inflation and Global Concerns: Sensex and Nifty Up 10%, Nifty Midcap 100 Surges 23%, Nifty Smallcap 100 Rises 24% Since Last Independence Day

In the face of challenges including persistent inflation, ongoing rate hikes, and a turbulent global economic landscape, the Indian equity market has demonstrated remarkable resilience. Both the Sensex and Nifty indices have shown a substantial 10% increase over the past year, with the Nifty Midcap 100 and Nifty Smallcap 100 indices performing even better, surging by 23% and 24% respectively.

Despite the backdrop of sticky inflation, continuous monetary policy tightening worldwide, and a deteriorating global macroeconomic environment, India’s strong macro indicators have been a driving force behind the market’s impressive performance. However, it’s worth noting that the domestic equity market’s return of 9% since the last Independence Day falls slightly short of the long-term average annual return of approximately 15%.

G. Chokkalingam, Founder & Head of Research at Equinomics Research, points out that the high inflation and stringent monetary policies both globally and in India, leading to a slowdown in the country’s economic growth, have contributed to the market’s underperformance.

The past year has seen notable gains in key indices. Alongside the 10% surge in the Sensex and Nifty, the Nifty Midcap 100 index has risen by almost 23%, and the Nifty Smallcap 100 index has jumped by an impressive 24%. Among sectoral indices, Nifty PSU Bank has stood out as the top gainer, with a 57% increase, followed closely by the Nifty FMCG index, which has risen by nearly 22%.

Sensex and Nifty Surge by 10%

While various sectors have performed well, Nifty Energy and Nifty Oil & Gas indices have struggled, declining by 2.90% and 2.13% respectively. Within the Nifty50 index, 24 stocks have enjoyed growth exceeding 20%. Notable performers include ITC (up 46%), Larsen & Toubro (up 44%), Dr. Reddy’s Labs (up 37%), and NTPC (up 34%).

Conversely, UPL (down 25%), Adani Enterprises (down 14%), and Infosys (down 13%) have been the top losers during this period.

The Future Outlook

Despite challenges, India’s rapidly growing economy offers promising prospects for the market until the next Independence Day. However, the impending General Elections will play a pivotal role in shaping the market’s trajectory.

G. Chokkalingam anticipates continued challenges, attributing potential volatility and downward pressure on the market to factors like rising oil prices, emerging deflationary trends globally, uncertainty stemming from upcoming elections, and stretched valuations of certain stocks. He suggests that if the Lok Sabha elections bring about stability, returns by the subsequent Independence Day could significantly improve to around 12%, compared to the past year.

Shrey Jain, Founder and CEO of SAS Online, emphasizes cautious optimism, noting stable interest rates, decreasing inflation, and robust demand. He also highlights the need for vigilance during an election year.

Manish Chowdhury, Head of Research at StoxBox, expects a moderate market correction but encourages investors to view dips as buying opportunities from a long-term perspective. He highlights the potential of domestic sectors and suggests that banking stocks, particularly PSBs, hold untapped valuation potential.

V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, projects a moderately optimistic outlook, forecasting around 15% returns in the coming year, with a significant portion of these gains expected in early 2024. He identifies capital goods, automobiles, auto components, pharmaceuticals, and construction-related segments as areas of potential growth.

Deepak Jasani, Head of Retail Research at HDFC Securities, anticipates a volatile period due to upcoming state and central elections. He underscores the importance of positive global risk sentiment for continued fund inflow into India’s markets.

Disclaimer: The views and recommendations provided are those of individual analysts and broking companies and not representative of Daily India Post. It’s advisable for investors to consult certified experts before making investment decisions.

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