“The Rich invest in time; the Poor invest in money.” – Warren Buffet
India’s equity markets extended their gains for the third month and ended at record highs. BSE Sensex and Nifty 50 rallied 0.76% and 1.14% on-month, respectively. Markets scaled all-time high multiple times, with the Sensex and Nifty breaching the 82,000-mark and 25,200-mark, respectively.
Strong signals of an imminent rate cut by US Fed in near future, coupled with positive US economic data, propelled the domestic equities to all-time high. Further gains in the market were capped because of sell-off in consumer and energy stocks and worries over Middle East tensions. Some losses were seen because of profit booking amid concerns over US economy, following weaker-than expected manufacturing data and rise in jobless claims.
DIIs bought Rs 482.78 billion worth Indian equities, compared with Rs 249.36 billion in Jul-24. FIIs bought Indian equities worth Rs 73.2 billion, compared with Rs 323.64 billion in Jul-24. India’s GDP growth slowed to 6.7% in Q1FY25 compared with 7.8% growth in Q4FY24. India’s GDP is estimated to grow at 6.8% in FY25.
Positives in August:
- GST collections grow 10 per cent to Rs 1.75 lakh crore in August.
- Monthly Mutual Fund SIP Flow crosses 23,000 Cr for first time ever.
- CPI inflation dipped to 3.54% on-year in July-24 from 5.08% in June-24.
- WPI Inflation eased to 2% in July’24 from a 16mth high of 3.3%.
- India forex reserves touch a record high of $675 bn.
- Manufacturing FDI rose 69% over the last 10Y to $165 bn in FY24.
- Cumulative rainfall till 1st Sept 24 seen 7.3% above normal.
September Key Events:
- Key US FED meet for a possible rate cut on Sept 17-18, 2024.
- Big IPOs continues to hit market. Bajaj Housing Finance to raise 7K Cr.
- War news from Israel-Iran & Russia-Ukraine. Iran’s response to Hamas leader killing is still awaited.
- SEBI new ruling on F&O restrictions are expected. This can have a negative impact on the markets.
- Valuations of indices are close to their 5-year averages. Domestic MFs are sitting on Rs 1.5 lakh crore or 5% of their AUM in cash, and this will further cushion any major fall.
The fundamental drivers of India’s multi-decade consumption and infrastructure growth are still firmly in place: favourable demographic dividend, rising per capita income, under-control inflation, digital transformation, strong corporate balance sheets and consolidation of Central fiscal deficit.
India’s macroeconomic situation remains strong and the budget cemented Government’s commitment to further its fiscal consolidation path. Although India’s macros look robust, valuations are not cheap. Valuations of large caps are reasonable compared to the mid and small caps.
Outlook ahead: markets are nearing an over-valued zone, corporate results have been subdued, FIIs are still selling, and DIIs are aggressive buying, all these reasons are keeping the markets afloat. We expect markets to be sideways in September and rising gradually at a slower pace than August. Disappointment in Fed September meeting can drag markets down.
Happy Investing!