Market Outlook – November 2023

Market Outlook – November 2023

“Investors make money, traders make money. Investors who behave like traders & traders who behave like investors get killed.”

The global and domestic markets made a smart come back in the month of November’23 amid cheerful festive season and positive global cues. Investor sentiments turned buoyant as concerns have eased post dovish Fed commentary and strong economic data indicating that US Fed may not go with further rate hike.

Broad-based rally was seen in the month of November with Nifty gaining +5.5% for the month to close at 20,133 levels, while Nifty Midcap 100 / Nifty Small cap 100 indices, outperformed with gains of 10.4%/12%.

DIIs recorded inflows of Rs.12,762 crore, their fourth consecutive month of strong inflows. While FIIs turned net buyers to the tune of Rs.5,795 crore after witnessing selling for three consecutive months.

IPO market was too in spotlight, with 10 main board IPOs worth Rs.14106cr open for subscription during the month. Tata group led Tata Tech saw a record 7.34 million applications and listed at premium of 140%.

BJP’s sweeping victory in three of four states has also instilled confidence in the market as far as political stability is concerned. We expect the market sentiment to get further boost, and thus strengthen the prospect of a pre-election rally.

On sectoral fronts, all the indices gained tracking positive global cues with Realty sector stealing the show. Real estate Sector performed well following a huge surge in sales & property registrations. FMCG and Banks & Financials witnessed modest gains relatively.

Positives in November

  • Israel-Hamas War tensions reduced a bit after a temporary ceasefire.
  • Crude Oil scaled down from 84$ per barrel to 70$ per barrel – highly positive for Indian markets.
  • BJP won 3 key states of MP, Rajasthan & Chhattisgarh, raising hope of a Modi re-election in 2024 Lok Sabha elections – highly positive for Indian markets.
  • US 10-year treasury yield corrected from 5% to 4.25% on dovish statements from Fed Governors and continuity of pause in rate hikes in December meet as well.
  • RBI kept Repo rate unchanged at 6.5% continued with “Withdrawal of Accommodative Stance”.
  • Real GDP growth projection for FY24 revised to 7% from 6.5%
  • GST collection of Rs1.68 lakh crores in Nov 2023 were also buoyant.

What to look forward in December

  • Fed to kept rates unchanged at 5.25-5.50% in their December policy meet, also providing clues for future rate cuts. – Positive for markets.
  • Though valuations nearing high zone, higher flows from FIIs and pre-election rally will keep markets in uptrend. – Nifty target 21500.

December Forecast: Sentiments post BJPs victory in 3 key state elections are pretty high now. Equity markets were justifiably anxious about the outcome of state polls and what it portends for the 2024 general elections. With the outcome overwhelmingly in favor of the incumbent BJP, the confidence of the market in the current dispensation and political continuity post 2024 Loksabha elections got a boost. This augurs well for macro and policy momentum for India, which, at the moment, is seeing the highest growth among major economies (both GDP as well as corporate earnings).

We expect market sentiment to strengthen further and the prospect of a preelection rally is quite strong now, in our view. We also note that Nifty has given positive returns (8%-30%) six months into the announcement of general election results (Nov to May) on five previous such occasions (1999-2019).

Happy Investing!

Mushtaq Kazi
Mushtaq is the co-founder of Mushtaq has had corporate stints with Kotak Securities & IIFL group. He holds an MBA degree from Pune University.
His interests include cooking & gardening. When he is not cooking or gardening, he is writing.