The domestic equity market wound up the month of March on a lacklustre note as the banking crisis in the US and Europe kept investors nervous even as concerns over sticky inflation, rate hikes and global economic slowdown persisted.
Equity benchmarks the Sensex and the Nifty ended flat while the BSE Midcap and Smallcap indices ended in the red.
In the 30-share pack Sensex, as many as 20 stocks ended in the green while one - Tata Motors - ended flat. Shares of Titan Company, Nestle India and UltraTech Cement ended as the top gainers, rising up to 6 percent while those of Mahindra and Mahindra, Bajaj Finance and Wipro ended as the top losers, falling up to 9 percent.
On the other hand, as many as 296 stocks ended in the red in the BSE 500 index. Shares of Brightcom Group, Sobha and Tanla Platforms ended as the top losers in the BSE 500 index, falling up to 36 percent while shares of Adani Green ended as the top gainers in the index, surging by up to 82 percent.
Foreign portfolio investors (FPIs) turned net buyers in March. As per NSDL data, FPIs invested ₹7,936 crore in Indian equities in March while on a net basis (including debt and hybrid), they invested ₹5,899 crore in the Indian financial market.
The banking crisis in the US and Europe after the collapse of Silicon Valley Bank (SVB) remained the top trigger for the market in March.
In April, the GDP data, inflation prints and decisions of central banks will influence the mood of the market. The fourth quarter earnings of Indian companies will also be a major trigger for the market.
"We believe the macro and the upcoming earnings season will drive the market direction moving forward; hence, Q4FY23 earnings remain critical at this juncture," said brokerage firm Axis Securities in a report.
"Corporate commentaries on the FY24 demand outlook and the margin recovery will be keenly watched by the Street. While the overall demand outlook for the banking and the domestic cyclical sector remain robust during the quarter, the discretionary demand remained subdued after the festival season. Hence, corporate commentaries remain critical," the brokerage firm added.
Analysts believe it is a ‘buy on the dips’ market and one should focus on accumulating quality stocks as at this juncture, the valuation has come down.
"It is a buy-on-dips market in our view. Valuations at 10-year averages and earnings growth are expected to be in the mid-teens over the next couple of years – this is a combination we have rarely seen in the last 10-15 years," said Alok Agarwal, Portfolio Manager, Alchemy Capital, in an interview with MintGenie.
"This comes at a time when the corporate balance sheet is significantly stronger than a decade ago. While no one can time the exact bottom, the current banking turmoil in the developed world along with peaking-out signs in inflation shows that quantitative tightening may not last for too long or at least is unlikely to get stronger. These are times to accumulate good quality companies with a strong balance sheet, proven management and growth visibility," said Agarwal.
On the technical front, brokerage firm ICICI Direct expects Nifty to gain further towards the higher band of channel placed around 17,600, sustainability above which will accelerate Nifty towards 18,100 in the coming quarter.
However, the brokerage firm said this recovery may not be non-linear and bouts of volatility cannot be ruled out.
Deepak Jasani, Head of Retail Research at HDFC Securities, said a close above 17,574 is necessary for the Nifty to scale greater heights.
"Once this is accomplished, a move towards 18,135 and later 18,476 is possible. This close above 17,574 can happen if we do not get any more negative news on the domestic or international front," said Jasani.
Disclaimer: The views and recommendations given in this article are those of individual analysts and broking firms. These do not represent the views of MintGenie.