Financial Planning

Market Outlook – November 2023

“The biggest asset in the world is your mindset”. – Gary Vaynerchuk (American businessman, author, speaker, and internet personality)

After achieving the milestone of 20k in Sep’23, the Nifty-50 consolidated in Oct’23. The index oscillated 1,012 points before closing 559 points (or 2.8% MoM) lower at 19,080, notably the steepest MoM decline in CY23.

The global and local markets were jolted by the Israel-Palestine conflict. FII outflows have been sharp in the last two months; however, they were matched by stronger DII inflows. In Oct’23, DIIs recorded the highest inflows in the last seven months at USD 3.4 billion. FIIs saw outflows for the second consecutive month at USD 2.7 billion.

Key events in October:

  • Israel-Hamas War sent global markets in turmoil, almost all global indices ending in deep red.
  • Gold price shoots 10.4%, bouncing from 13-month low of $1816/ounce to $2005/ounce high on safe haven buying.
  • US treasury yield, touched multi year high of 5.02%, on expectations of further rate hikes by the Fed.
  • FIIs sold 29,057 Cr in September, removed 76,369 Cr in the last 3 months.
  • Crude jumped back to 95$ per barrel range, on concerns of supply constraints due to war.
  • INR depreciated further and is trading at the lowest level vs the USD @ 83.28.

What to look forward in November?  – Expecting Bumper month ahead.

  • Fed kept rates unchanged at 5.25-5.50% in their November policy meet, signalling no further rate hikes in near future. – Positive
  • US 10 Year treasury yield cooled off after no further rate hike signal by Fed. – Positive
  • Q2 results have been in line with the performance of heavyweights such as BPCL, HDFC Bank, JSW Steel, Reliance Industries and ICICI Bank, driving the overall performance. – Positive
  • Oil prices cooled off from $95 to $76 per barrel after indication that Israel-Hamas war will not spread into a multi-state war. – Positive
  • Inclusion of India in JPM Bond Index may draw upto $40 billion flows to India, keeping Indian currency stable. – Positive
  • Stronger GDP growth, high tax collections, CPI under control, low current account deficit and high credit growth will drive the markets. Markets expects earnings to grow by 18% in FY 24 and 14% in FY 25. –  Positive

November Forecast: With major negative news of Fed hike and Israel War done & dusted, we expect markets to bounce back sharply in November, and even make new highs. Nifty is expected to trade in the range of 19,500 and 20,500. With oil & US treasury yield cooling off, FIIs are expected to return back with a bang, giving us a bumper Diwali!

Happy Diwali & Happy Investing!

– Photo Credit: Outlook Money

Market Outlook – October 2023

“Winning money is 80% behaviour and 20% Knowledge”.Dave Ramsey (American radio personality who offers financial advice, writer)

– Dave Ramsey (American radio personality who offers financial advice, writer)

The domestic market witnessed volatility in September as concerns over higher interest rates, foreign capital outflow and global economic slowdown weighed on sentiment. However, the Nifty 50 ended the month with a gain of 2 per cent while the Sensex rose 1.5 per cent.

Positives in September:

  • GST Collection hits ₹1.62 trillion in September, marking the fourth highest monthly collection since the inception of the indirect tax regime and a 10% annual growth from the year-ago period.
  • The inflation rate cooled off from 7.44% to 6.83% in August & further expected to drop till 5.3% in September.
  • J P Morgan includes India in the Global EM Bond Index.

Negatives in September:

  • 10-Year US Treasury Yields near the 15-Year high (4.704%) on fears of further rate hikes – the main reason for fall in worldwide markets.
  • Gold price fell to a 13-month low at $1816/ounce & US Dollar index spiked to an 11-month high at $107.
  • Crude Oil touched 95$ per barrel, the highest level in more than a year.
  • FIIs sold 26,692 Cr in September, removed 47,312 Cr’s in last 2 months.

What to look forward in October?  –  another volatile month…

  • RBI Policy meeting is due on October 6, 2023. The markets are expecting interest rates to stay intact. – Positive for markets.
  • Q2 results to start coming. Traditionally it is a good quarter for markets. – Positive for markets.
  • Oil prices expected to cool off in October – rising crude supplies and pressure on demand from high-interest rates started to impact oil prices. – Positive for markets.
  • Rising US treasury yields as US inflation is expected to be sticky which means higher interest rates in the US for longer – a Big Negative for markets.
  • Cricket World Cup, Durga Puja, Dussehra – Airlines, Hotels, Consumption will see a big positive uptick. – Positive for markets.

US Treasury Bond Yield: What It Is and Why It Matters?

Treasury bonds (T-bonds) are government debt securities issued by the U.S. Federal government that have maturities of 20 or 30 years. T-bonds earn periodic interest until maturity, at which point the owner is also paid a par amount equal to the principal.

Treasury bonds are part of the larger category of U.S. sovereign debt known collectively as Treasuries, which are typically regarded as virtually risk-free since they are backed by the U.S. government’s ability to tax its citizens.

This bond also tends to signal investor confidence. The U.S Treasury sells bonds via auction and yields are set through a bidding process. Prices for the 10-year bond drop when confidence is high, which causes yields to rise. This is because investors feel they can find higher-returning investments elsewhere and do not feel they need to play it safe.

But when confidence is low, bond prices rise and yields fall, as there is more demand for this safe investment. Put simply, falling yields indicate caution in the markets. This confidence factor is also felt outside of the U.S. as it points to the future of the global economy. The geopolitical situations of other countries can affect U.S. government bond prices, as the U.S. is seen as a safe haven for capital. This can push up prices of U.S. government bonds as demand increases, thus lowering yields. 

This is exactly happening in markets right now. Fed’s continuous rate hikes to tame inflation had a very little impact, which remained elevated. US markets are resilient, and all economic indicators are showing positive nos. This will not allow the Fed to change its mind on rate cuts. More hikes or higher rates for longer will impact the economy negatively in turn keeping bond prices higher.

A 5% bond rate for 10 Years in dollar terms is good enough attraction for funds to flow from across markets back to US treasury markets – big reason why we have seen a heavier FIIs outflow in last couple of months.

Though domestic investors are buying it, but they will be not able to match the volume of FIIs and hence more corrections in markets is not ruled out.

October Forecast: We expect markets to be choppy. Nifty will take strong support at 19,200 and 20,000 will have resistance on the upside. One can look at allocating 10% of fresh funds each in Gold & Silver, as prices have seen a sharp correction and are at attractive rates to buy.

Happy Investing!!!

Market Outlook – September 2023

“Stock markets are always right. Never time the market.”

– Rakesh Jhunjunwala (Indian Billionaire, Business Magnate, Stock Trader, and Investor)

The market is rallying consistently over March to July 2023, with Indian equities taking a breather in August 2023. Nifty index fell 2.5% in August due to global slowdown concerns and a sticky & persisting inflation, which remained above most of the Central Bank’s target.

Key reasons for negative fall in August:

  • US Treasury Yields touched an all time high on fears of further rate hikes – main reason for fall in worldwide markets.
  • Driest monsoon in India since 1901 in Aug, due to the influence of El Nino.
  • Crude Oil crossed 90$ per barrel as Saudi made more voluntary production cuts.
  • FIIs sold 20,620 Cr after 6 months of heavy buying.

Key reasons for market rally in September:

  • RBI chose to keep rates unchanged in its policy review in August. Growth Focus continues in policy direction.
  • Q1 result season: A tad better than expected. Nifty earnings grew 32% in 1QFY24, a beat vs. expectations of 25%.
  • RBI discontinued the Incremental Cash Reserve Ratio (I-CRR), which was put in place to absorb surplus liquidity following the withdrawal of Rs 2,000 currency notes, in a phased manner. Banks stocks rallied because of this decision.
  • India remained the fastest growing economy with Q1 GDP at one year high of 7.8%.

Successful G20 Delhi Declaration and India’s diplomatic triumph triggered the continuation of the positive market mood and momentum.

What to look forward in September? Dark clouds are gathering.

  • Rising Oil Prices: Oil prices have risen 20% in last 3 months, expected to cross 100-dollar mark again – a big negative for markets.
  • Below par monsoon will impact rural consumption and will fuel food inflation.
  • Special Parliament Session is called – Announcement of early elections will lead uncertainty in markets.
  • US Fed meet is on 20th September, another rate hike will put more pressure on markets – expectations are of no change but with bullish commentary.
  • FIIs after a consisting buying of 5 months have again become net sellers. Remember our earlier articles – Higher Crude Price – FIIs exit.

September Forecast: though markets continued making all-time highs each day, global indicators cannot be ignored. Being cautious at such times will be more sensible than waving the bull ride. We recommend to park money in Debt funds at present and wait for more clarity in Domestic as well as Global front in coming weeks/ months.

Happy Investing!

Market Outlook – August 2023

Equity Market

“Don’t follow the crowd blindly in investing. Sometimes the best opportunities are found in the place’s others overlook.” – Warren Buffet (American business magnate, investor, and philanthropist)

Nifty index kick started the July month on a positive note above 19200 zone and bulls continued its strength from the previous three months, to touch a new lifetime high of 19991. Any minor declines were converted into buying opportunity and bulls were seen active throughout the series. It took a fortnight for the fastest 1000-point rally in the index, and it finally closed with gains of 3% in July.

Rise was driven by positive investor sentiment due to optimism about domestic economic growth, sustained foreign fund investment and impressive corporate earnings updates. Almost all the key S&P BSE sectoral indices ended higher during the month.

On the sectoral front we have witnessed buying interest in Media, Energy, Pharma, Realty, PSU Banks, Auto and Metal sector while some profit booking was seen in FMCG and IT sector.

INFLATION: after easing to a 25-month low of 4.25% in May-23, Consumer Price Index (CPI)-based inflation surged to 4.81% in June-23 due to a steeper-than-expected spike in prices of vegetables. Wholesale Price Index softened to 4.1% in June-23.

India’s GDP growth rose to 6.1% in Q4FY23 from 4.4% in Q3FY23. The economy is in the middle of the business cycle, wherein growth remains strong. Slowing global growth had impacted India’s GDP last fiscal as exports and industrial activity were sluggish. Impact may be deeper this fiscal as global economic activity decelerates further. Domestic demand was supportive for growth last fiscal. While domestic indicators remain steady and structural positives are getting built up, managing global front may be a key challenge for Indian GDP.


  • Decent Q1FY24 earnings indicates domestic cyclical demand momentum continues.
  • GST collections were up 11.7% YoY, in line with the 3-month trends to Rs,1.6Trn.
  • FIIs pumped in 13,922 Cr in Indian markets, 5th consecutive month of net buying.
  • Monsoon continued its good spell and wiped-out June deficit in July.
  • Morgan Stanley upgrades India to Overweight.
  • Record 6.77cr ITRs for AY 2023-24 filed till July 31; 53.67L first-time filers.


  • The Fed hiked interest rate by 25 bps to 5.25-5.50% range. Accompanying policy statement left the door open to another increase.
  • Fitch ratings downgrades US Credit from AAA to AA+.
  • Consumer Price Index (CPI)-based inflation surged to 4.81% in June-23 due to a steeper-than-expected spike in prices of vegetables.
  • Crude oil surged up from 75$ per barrel in June to 85$ per barrel in July.

AUGUST Forecast: Though markets briefly touched the all-time peak in July, but it corrected sharply in the first week of August, triggered by downgrading of US credit ratings by Fitch and prospects of further rate hikes by US Fed.

This correction should be seen as an opportunity, as though markets have peaked but valuations have not. Nifty is still trading at a PE of 22.8, as compared to 5-year average of 26.38. Hence another 10-15% rally from here cannot be ruled out by December 2023.

Good time to park any lumpsum investments below Nifty 19500 levels and SIPs should continue as defined based on cashflow.

Happy Investing!!!

Market outlook – July 2023

“Don’t always trust what you see. In a bull market, even a duck looks like a swan”.
– Vijay Kedia (Indian Investor, entrepreneur, philanthropist, founder of Kedia Securities)

The month of June presented a blockbuster rally in the Indian stock market, that led both the NIFTY-50 and BSE-Sensex to climb to their all-time highs, not once, but thrice. The NIFTY-50 traded near the 19,300 mark and Sensex surpassed 65,000, as the month ended on the back of strong inflows from foreign institutional investors (FIIs), robust corporate balance sheets, moderating inflation and growth picking up coupled with expectations of a normal monsoon season, all of which bolstered the sentiment of market participants.

Positives in June:

  • US Fed pauses rates after more than a year of consecutive rate increases.
  • Oil Prices drops below 70$ per barrel, despite Saudi cutting oil production.
  • Retail inflation eases to 4.25% in May; April IIP rises sharply to 4.2%.
  • GST Collection Rises 12% to INR 1.61 Lakh Crore in June 2023
  • FIIs pumped in 27,250 Cr in Indian markets, 4th consecutive month of net buying.
  • Monsoon covered entire India and has been expected to remain normal in July.
  • HDFC-HDFC Bank Merger makes it world’s 4th largest bank based on market capitalisation.

Threats ahead:

  • Fed further hiking rates in July meeting.
  • Progress of the monsoon in the country considering any delay or below than expected monsoons can impact the rural recovery.
  • Rise in inflation due to subpar rainfall. (Tomato Prices already above 150)
  • Poor Q1 Qtly results, making stocks expensive.

Difference between Markets touching New High & Being Overvalued:

Though markets have touched new highs, valuations are still lower than the previous time the index traded at the same level (in Nov’22), on account of compounding of earnings in the interim.

Due to better-than-expected company results, Earning Per Share of companies have improved across the board, resulting in cheaper valuations despite markets breaking previous high.

Hence one should not panic, and press the sell button or profit booking, just because a new high is made. We expect revenues to improve in Q1FY23-24 and further improve valuations. Crude oil sticking to lower levels despite oil production cuts from Saudi, due to expectations of weaker demand will further fuel the growth of Indian stock markets.

Asset allocation strategy is always the key to generating alpha (or higher returns) over traditional method of investing. It usually offers following benefits:

  • Control & command over your portfolio.
  • Better tracking of valuations, hence decision for switching for profit booking or value investing becomes easier.
  • Curtailing of number of schemes in your portfolio, from many, to few, making tracking easier.

Therefore, we suggest, one should revisit their respective portfolios and discuss same with their RM’s or advisors to know more on aligning the portfolios with the best asset allocation strategy available.

Happy Investing!

Market Outlook – June 2023

“Speed is the currency that you want to maximize on today. Most people just go too slow. They think too long, and they never take any action.”

Grant Cardone (Entrepreneur, author, speaker, investor, and coach)

Nifty gained 2.6% to 18,534 in May’23, closing higher for the third consecutive month. The benchmark is now just a few points away from its all-time high of 18,887 recorded in Dec’22. Broader market witnessed higher action with Nifty Midcap 100 up +6.3%, while Nifty Small cap 100 rose +5.6%, sharply outperforming Nifty.

If you had bought the top 5-6 blue-chip stocks, then you’re already down by -40%, while index is trading at a life high.

Positives in May:

  • RBI kept the repo rate unchanged at 6.50% on expected lines.
  • India’s Q4FY23 GDP rises to 6.1% in Q4, FY23 clocks growth rate of 7.2%.
  • Retail inflation eases to 4.7% in April; March IIP falls sharply to 1.1%.
  • GST collection grew 12% to Rs.1.57 lakh crore in May’23, crossing the Rs.1.5 lakh crore for the 5th time since introduced.
  • Q4 corporate earnings have been impressive, with Profitability in line with our expectations. Nifty’s earnings grew 16% YoY (vs. est. of +14% YoY) in 4QFY23.
  • India’s trade deficit in April, falls to lowest in 21 months.

Threats ahead:

  • Fed further hiking rates in June meeting.
  • Weaker monsoon due to El-Nino effect.
  • Rise in inflation due to subpar rainfall.

How to predict Indian Markets with Oil prices? India is heavily dependent on imports for its oil requirement. India’s reliance on imported crude oil is at record high of 87.3% in FY23. India’s domestic consumption of petroleum products in 2022-23 rose over 10 per cent year-on-year to a record 222.3 million tonnes, making us world’s third-largest consumer of crude oil and also one of its top importers.

Who impacts Indian market? Indian-listed firms are majorly owned by private promoters and foreign investors (FIIs). Private promoters owned around 45.13% of Indian listed companies, followed by foreign investors (FIIs) whose ownership is around 20.15% currently.

This makes FIIs the largest non-promoter shareholders in the Indian market. On the other hand, mutual funds owned around 7.75%. Retail investors, meanwhile, hold around 7.42% of the domestic market.

Since promoters of company do not indulge in trading and just hold onto their stakes, it is the FIIs which determine the path of Indian markets. FIIs strategy is to invest in India when crude oil prices are down and withdraw when it is rising (a historic trend).

Oil is a major input for several industries. When crude oil prices rise, naturally, input costs and overall production costs also rise. This causes profit margins to fall which in turn reduces the stock price of that company. Conversely, a fall in oil prices produces the opposite effect. For every US $10 increase in the cost of oil, the current account deficit increases by 0.55% and the Consumer Price Index (CPI) increases by 0.3%.

Crude oil prices are expected to trade in the range of 65-75$ per barrel for the next 6 months. Reason being, recessionary pressure in US & European markets, rising interest rates has led to global economic slowdown. Start of summers in European countries means lesser fuel burn for heating purpose, till next winter.

Hence India will be a bigger beneficiary of lower crude prices in coming months. With valuations in fair zone, decent corporate earnings, good monsoons, festive seasons and robust consumption, will clearly lead markets touching new highs. We expect Nifty crossing 20K levels by Diwali.

Happy Investing!!!

Market Outlook – May 2023

“Investing is a journey of self-discovery. It reveals your relationship with money, your tolerance for risk, and your ability to stay disciplined in the face of uncertainty.” – Jeremiah Say

Indian equities rebounded sharply in April, on the back of strong domestic macros, healthy corporate earnings, and consistent intuitional buying (FII & DII) & mainly due to RBI’s surprising decision to pause at the April meeting amidst a gloomy outlook that prevailed in March.

For April’23, Nifty bounced 4.1% to close above 18k after 4 months of weak performance. Broader market witnessed higher action with Nifty Midcap 100 gaining +5.9% while the Nifty Small Cap 100 rose +7.3%, outperforming the Nifty.

Positives in April:

  • India’s manufacturing PMI at a 4-month high.
  • GST collection zoomed 12% to a record high of Rs1.87 lakh crore.
  • Q4 Corporate earnings is in line so far with a Profits of 26 Nifty companies, that had declared results till 4th May’23, have risen by 10% YoY (v/our est. +7%).
  • RBI pausing rate hikes, the impact of rate hike might be seen on earnings for next 1-2 quarters.
  • Sharp fall in Crude Oil Prices.
  • WPI Inflation eases to 29-month low 0f 1.34%.

Global Markets: Global cues were mixed. While both US Fed and ECB raised interest rates by 25bps with a likely pause ahead, slower economic growth expectation, led to sharp fall in crude oil prices. That apart banking crisis continues in US adding to the concerns. Washington is also staring down a June 1 deadline to raise the debt limit to allow continued borrowing to cover already accrued bills or risk the nation’s first modern-day default, which would rock the U.S. economy and send out global shock waves as well.

Threats ahead: Even after raising interest rates to multi-year highs and at one of the fastest paces, most countries are struggling to bring inflation back within their target bands. This is in the context of nearly six months of disinflationary trends from peak inflation rates and of consistent rate hikes globally.

Slow pace of inflation fall will lead to higher for longer policy rates policy, which will create recessionary scenario in Developed countries. Though chances of recession in India is nil, but recession in developed markets will slow down growth in India as well.

Market Outlook – May: The recent bounce in markets is capped on the higher side. Earnings have improved but not that high which will lead to new highs for indexes. We expect Nifty to be in the range of 17800-18500 for this month.

A considerable fall in inflation in US and a clear pause from US Fed will trigger next rally. Though monsoons are predicted to be normal this year, but any negative surprise will also have a big impact on Indian markets.

Market Outlook – April 2023

“You get recessions, you have stock market declines. If you don’t understand that’s going to happen, then you’re not ready, you won’t do well in the markets.” — Peter Lynch

When hit with recessions or declines in the stock market, one must stay the course. Economies are usually cyclical, and historically, the markets have shown that they will recover, sooner or later. Make sure you are a part of those stock market recoveries.

Some Good News: The Monetary Policy Committee of RBI unanimously decided to keep the policy Repo Rate unchanged at 6.50% thus bringing a temporary pause to the ongoing rate hikes. The RBI’s decision to keep the rates unchanged came in as surprise to majority of the market participants as against their expectation of rate hike.

The stance was tweaked somewhat with focus now on “progressively aligning inflation to target” along with “withdrawal of accommodation”. This is clearly an attempt to deliver hawkish pause.

We believe that we may have reached at the peak of the rate hike cycle and expect to stay there for the rest of this financial year, and do not foresee conditions for a rate cut materializing soon, given sticky core inflation, steady growth and 1 year ahead inflation staying well above RBI’s target of 4%. Overall Impact – Positive for Markets

Threats in April:

More defaults from West: Jamie Dimon of JP Morgan says the banking crisis is not over and will cause ‘repercussions for years to come’. Hence there is more room for correction if the global turmoil continues given the fact that the Indian stock market is not cheap.

Higher US Inflation: High U.S. inflation has been a key concern through the whole of calendar year (CY) 22. Market consensus estimates factor in a reduction in inflation for the U.S. from 8% in CY22 to 3.9% in CY23. However, inflation may prove stickier than expected on the back of persistent supply side issues and China reopening. This may prompt Fed to raise rates for another 2 quarter – a big negative for markets.

Rise of COVID: COVID cases have started to rise again. Daily infections shooted past 6K figure. Though this is in early stage, Govt is prepared in advance to tackle it. Booster doses are also available this time for general public.

Karnataka Assembly Elections: Dates for Karnataka Assembly elections have been announced. Polling on 10th May & Counting on 13th May. This is a crucial state from BJPs point of view. Losing this key state will be a big set back and can affect markets negatively – temporarily.

What Should Investors do in New Financial Year:

Continue their SIPs: Markets have been underperforming for around last 1.5 years from the start of Russia-Ukraine War. Healthy corrections is a basic characteristic of sound market and cannot be ignored. Markets will bounce back aggressively in future, but only those clients who have continued their investments and averaged their investments at low, will tend to benefit with higher returns.

Stopping SIPs by fearing current scenario and coming back for investing when market had already recovered will do no good for your portfolio.

Changing Schemes based on Returns %: Market constituents are very dynamic and should not be judged only based on returns generated. In Moneyfrog, using our Dynamix model we tend to track each and every sector and scheme on a day to day basis. If particular scheme has not performed in a particular period, it does mean that it will not perform in future as well.

For eg: US markets have corrected the most in last 1 year (around 36%). US Stocks are leader in market share and are disruptors. Indian peers are no way compared to growth, revenue & market share. Hence a correction in US based schemes should be seen as an opportunity, rather than exiting now. One will get the highest returns in 1 year time if they stick to the scheme and continue investing.

Shifting to Debt/FDs: FDs returns have risen in last 6 months due to continuous rate hikes by RBI. Investing in FDs/ Debt Funds are recommended to those clients who have retired or in need of a fixed monthly income to take care of their day-to-day needs or by those clients who will need it before a years-time.

Most of the clients are young, still long way to retire, no shortage of funds to meet months end portfolio build up has just started. They should always use any dip in markets to add more funds rather than shifting to Debt.

Once again repeating, “Portfolio has always given higher returns, whenever investments are continued, mainly during market falls.”

Last two consecutive months we are recommending 100% allocation to Equity funds due to steep market corrections. This month as well, one may continue the same, expecting a side-ways market.

Happy Investing!

Market Outlook – February 2023

“Courage taught me no matter how bad a crisis gets … any sound investment will eventually pay off.” — Carlos Slim Helu (Mexican business magnate, investor, and philanthropist)

Markets continued its January Jinx and ended lower for 2nd consecutive month in a row. The Nifty ended 2.4% lower, while Sensex fell 2.12%. All major sectors close lower in Jan’23. India’s outperformance in CY22 has faded in Jan’23. Barring India (down 2% MoM) and Indonesia (flat MoM), Jan’23 saw key global markets such as Korea (+8%), Taiwan (+8%), MSCI EM (+8%), the US (+6%), China (+5%), Japan (+5%), the UK (+4%), Russia (+4%), and Brazil (+3%) close higher in local currency terms.

Key Reasons, for this under performance:

  • Higher Valuations compared to peers in Emerging MarketsIndia was trading at 22 PE compared to 11.5 PE for Emerging markets. India hugely benefited from crisis in these countries (China Lock down and Russia-Ukraine War). Now since things are settling there, FIIs are realigning their portfolios and booking profits in India.
  • China opening-up after strict lockdown – During the past year, India had seen strong FPI outflows at the beginning of the year but as Russia-Ukraine conflict grew and China cracked down on its tech companies, the investors shunned these markets. India benefitted at the margin. Now, as China opens-up and its markets perform better, investors are realigning their portfolios and in the middle of another commodity up-move, India is seeing some FPI outflows.
  • Pre-Budget Selling – Traditionally markets go lighter before Budget. There were many rumours of hike in capital gain loss tenure, Govt opting for a populist budget before 2024 elections. Hence profit booking was done before that.

Key Events, that has set the tone for February:

  • Union Budget 2023-24: Furthering the efforts to boost the economic resilience considering the global growth moderation, the Union Budget 2023-24 attempts calibrated steps in the right direction. Focus on boost to infrastructure and capital spending along with fiscal prudence is a big positive. The budget rightly avoids populist measures in the pre-election year and prioritizes long term growth.
  • Major Announcements – Tax & Financial Sector:
    • Rebate limit of INR 5 lakh is proposed to be revised to INR 7 lakh.
    • The number of tax slabs have been reduced to 5 from 6. NIL tax rate is proposed for income up to INR 3 lakh vs INR 2.5 lakh.
    • Income from non ULIP life insurance policies having premium above INR 5 lakh per annum is proposed to be taxed, applicable for new policies after 1 April 2023.
    • Maximum deposit limit for Senior Citizen Savings Scheme to be enhanced from INR 15 lakh to INR 30 lakh.

Overall Verdict– Positive for Markets 👍

  • RBI Policy Meet: RBI in its Feb policy meet increased the repo rate by 25 bps to 6.5% from 6.25%. Sixth hike in a row, despite inflation cooling off. Surprisingly RBI was hawkish and remain focused on “withdrawal of accommodation” stance while supporting growth. RBI is expecting inflation to remain above the 4% target. RBI projects retail Inflation lower from 6.7% to 6.5% in FY23. Retail inflation projected at 5.3% for the next fiscal.
  • FY23 Real GDP growth projection increased to 7% from 6.8% & 6.4% in FY24.

Overall Verdict– Positive for Markets 👍 – Max another 25-bps hike in next policy meet and a pause after that.

  • Adani stocks meltdown: US based short seller Hindenburg Research, released its research report on Adani just a day before the company’s FPO was about to go live raising 20K Cr from the market.
  • Hindenburg Research allege that Gautam Adani, founder and chairman of the group, has added over $100 billion to his net worth over the last three years, largely through stock price appreciation in the group’s seven key listed companies, which have spiked about 819% in the same period.
  • The impact of this report led to heavy selling in Adani group stocks. Company somehow managed to subscribe its FPO but cancelled it a day later as it felt going ahead with the issue will be morally incorrect and not beneficial for investors.
  • The Adani group stocks (including Ambuja, ACC and NDTV) have lost around Rs 9.5 lakh crores or about 49 per cent of their combined market cap in the last nine trading sessions (from January 24 to February 6 2023).
  • Though it was a well-known news that Adani Stocks were overpriced, that’s the reason Mutual Funds stayed away from this group and did not have much exposure to the group apart from Index funds as Adani is part of Index, hence compulsory inclusion.
  • Adani group companies have little analyst coverage. Analyst reports play an important role in helping investors make informed decisions and a low or nil coverage reflects poorly on the quality of the company. It is often looked upon as a sign of lack of genuine investor interest, which makes brokerages and analysts give the company a miss in terms of tracking it.
  • In conclusion, the Hindenburg report on Adani Group raises serious concerns about the company’s financial and operational practices, as well as its environmental impact. While Adani Group has strongly denied the allegations, it is important for investors and regulators to take these concerns seriously and to undertake a thorough investigation of the claims made in the report. The report’s release is a reminder of the need for increased transparency and accountability in the business world and the importance of ensuring that companies operate ethically and sustainably.

Overall Verdict– Negative for Markets 👎 We recommend not to take any exposure in these stocks and wait till the dust settles down. One can witness huge volatility in these stocks in next one month period, but there are enough good stocks available with low valuations and clean corporate governance, which one can always bet on.

Overall Impact of above 3 events:

  • Last few months FIIs were net sellers but market was ably supported by local DII funds, which helped markets-maintained level, even when global peers were falling.
  • It’s now 1.5 years of market under performance and budget was seen as a positive catalyst which would have turned the next leg of growth in markets. Though the budget delivered on its expectations, but it was nullified by Adani news, denting the confidence of even domestic investors.
  • Hence, we expect markets to remain sideways for few months and one can start a move only after next quarter’s results announcement.
  • Since markets touched fair valuations post this fall, shifting from Debt to Equity is recommended. There are no further major events this month, hence we are expecting markets to remain sideways.
  • One can allocate 100% in Equity segment this month on the Asset Allocation Modelling.

Happy Investing!

Market Outlook – January 2023

“The secret to investing is to figure out the value of something – and then pay a lot less.”
Joel Greenblatt — American academic, hedge fund manager, investor, and writer.
After touching an all-time high, both Nifty & Sensex started a gradual downfall mainly due
to recession fears, re-emergence of COVID, higher valuations, pre-budget rumours and
expectations of a tepid Q3 result season.
History clearly tells us that, if you are a long-term investor, you should buy when P/E
reaches 15-16, and stop buying when P/E goes above 22. Current PE is below 5 Year
average, and another 500 points fall in Nifty, will make it an attractive buy.
January jinx! Will Nifty repeat history in January 2023? … Past records of the last 20 years
show that the headline equity index has ended 13 times in the red during the month of
January. While the worst January was in 2008, when the index lost 16.3% of its value amid
the global financial crisis, monthly returns have been negative, in all the last four years as
well. The average monthly return from Nifty in the last 20 years has been a negative 0.9%.
FII’s have restarted their selling. They sold in December and already sold 7,813 Cr in the
first week of January 2023. USDINR is steady in the range of 82.50 – 83. Crude Oil has
further eased to 78$ per barrel.
Events that will decide 2023 outlook:

  • China relaxed its zero covid policy, and cases shot up considerably. Markets are
    waiting to see whether it spreads to other countries as well, or not – Negative for
  • Better than expected employment data in US, and a persistent high inflation has
    made the chances of FED continuing interest rates in 2024 – Negative for Markets.
  • Q3 Earnings and Budget presentation on Feb 1st will be eagerly watched, Q3
    Earnings is expected to be tepid, with exception of few stocks, any hike in capital
    gain rate as rumoured will also be negative for the markets – Can go both sides.
    We believe that value buying is the theme of 2023, with a focus on domestically oriented
    sectors and buying on dips. Fair valuation, steady earnings, and a robust demand scenario
    will be the cutting parameters. Nifty below 17,500 levels is a good buy and will trigger our
    shift from Debt to Equity.
    Happy Budget!!!