The Indian equity markets kicked off FY24 on a strong footing after a flat finish to FY23. In April, both benchmark indices, the Nifty 50 and Sensex, exhibited remarkable gains, rising by 4.06% and 3.60%, respectively.
This positive momentum extended into May, with the Nifty 50 and Sensex recording further gains of 2.60% and 2.47%, respectively. This impressive performance in May placed the Indian markets among the top-performing markets.
Among some key major Asian indices, Nikkei 225 rallied 7% in May, Topix soared 3.56%, South Korea's Kospi added 3%, and the Kosdaq climbed 1.67% during the same period.
The US major index, the Dow Jones Industrial Average, slumped by 3.50%, while the S&P 500 finished May with a marginal gain of 0.25%, and the tech-heavy Nasdaq rallied by 5.80% last month.
Meanwhile, Nifty's closing price on Monday put it just 1.5% away from its record high of 18,887, which was set in December 2022. The Sensex is also just 1.25% away from its record high of 63,583.
Among sectoral indices, the Nifty Realty stood at the top with a rally of 29% in FY24 so far, followed by Nifty Auto with a gain of 20%. The Nifty FMCG and Nifty PSU Bank also soared by 11% and 8.63%, respectively.
The strong stability in the Indian markets can be attributed to a combination of factors.
Firstly, foreign portfolio investors (FPIs) continued to be bullish on the Indian markets, pumping in a significant ₹43,838 crore in May, marking the highest level of investment in nine months.
This buying trend has continued into June, with FPIs investing ₹6,490 crore in just two trading sessions of the month, as per media reports. During April and March, FPIs infused ₹11,630 crore and 7,936 crore in equities.
Furthermore, India Inc.’s profitability remained healthy in the March quarter (Q4FY23). 36 companies in the Nifty 50 index reported positive net profit growth. Among these, 15 companies have reported more than a 40% jump in their net profit, Trendlyne data showed.
Besides, the Reserve Bank of India's decision to pause rate hikes in April also positively impacted the markets. Moreover, the decline in crude oil prices and easing inflationary pressures added to the overall positive sentiment in the market.
In addition, the Indian economy demonstrated strong performance in FY23, even in the face of global economic challenges. As per the March quarter (Q4FY23) data, India achieved a GDP growth rate of 6.1%.
Moreover, the overall growth rate for FY23 stood at 7.2%, surpassing market expectations, which had projected a growth rate of 7%.
With healthy macros, range-bound oil prices, a robust fiscal balance sheet, and moderating inflation, the outlook for the market looks optimistic, said domestic brokerage firm Motilal Oswal.
The brokerage maintained an ‘overweight’ stance on the financials, automobiles, and consumer goods sectors and a ‘neutral’ view on IT and healthcare. While it has an ‘underweight’ stance on metals, energy, and utilities sectors.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.