Is it time to recall the 4 most dangerous words in investing – “This Time it’s Different?”

Dear Investors,

India won the Men’s T20 World Cup and brought back joy after a wait of 13 years!!!

But what’s also hitting boundaries are our indices – market capitalisation of BSE-listed firms have been hitting record highs since the last week and the total has already crossed ~$5.5 trillion with Sensex crossing 80K on 3^rd July 2024.

The Indian stock market, like any other, is volatile BUT brimming with opportunities for investors. With the rally continuing, the fear of correction is keeping some investors worried, esp. those who recall the 4 most dangerous words in investing –“This Time it’s Different?”

Given the upcoming Economic Budget’24, will we see Nifty50 hitting a Silver Jubilee at 25K soon?

India’s stock market could see stellar gains this year, driven by government spending and sustained corporate earnings growth. The Nifty 500 (TRI) has already delivered ~12% returns this year – 6M as of June 2024, reaching a record high.

Strategists and investors surveyed by Bloomberg believe the upcoming budget will likely boost consumer spending and infrastructure development, benefiting businesses. More than half of the respondents estimated that the NSE Nifty 50 Index might rise to 26,000 points by the end of 2024.

Investors are now focusing on the Annual Budget, due this month, which will outline Prime Minister Modi’s policy priorities under the new coalition government.

Anticipation surrounding the budget is immense, particularly for domestic infrastructure, production, and growth. These factors are driving India’s booming bull market. Additionally, crude oil prices stabilizing around $80 per barrel and the strong performance of the monsoon in the last week are positive signs. An early monsoon has also improved the outlook for companies dealing with crops like rice, corn, and soybeans.

Foreign institutional investors appear to have turned aggressively bullish on the financial services segment and have bought shares worth over Rs 8,100 crore in the second half of June 2024.

SECTORWISE FII FLOWS
FII Inflows	Jun 16-30	Jun 1-15	May-24
Financial services	8,162.00	1,008.00	(8,583.00)
Telecommunication	6,208.00	1,736.00	1,106.00
Consumer services	3,097.00	1,607.00	2,759.00
Capital Goods	2,929.00	(137.00)	6,024.00
Healthcare	2,886.00	413.00	161.00
Automobile and Auto Components	2,054.00	(315.00)	(4,029.00)
Information Technology	1,578.00	(2,559.00)	(5,802.00)
Construction Materials	1,475.00	302.00	(1,258.00)
Oil, Gas & Consumable Fuels	1,048.00	(3,683.00)	(5,554.00)
Consumer Durables	1,038.00	(953.00)	(761.00)
Chemicals	1,037.00	923.00	472.00
Realty	918.00	1,815.00	1,347.00
Power	(2,439.00)	(59.00)	(3,042.00)
Metals & Mining	(1,128.00)	(1,861.00)	(953.00)
Fast Moving consumer Goods	(677.00)	(245.00)	(4,173.00)

MARKET OUTLOOK

The markets have shown considerable resilience post-pandemic, with improving fundamentals. The Nifty is trading at 17.3 to 17.4 times PE on an FY26 basis, only 5-6% above the 10-year average, and far from a euphoric 30-times PE. On a trailing basis, the Nifty is at around 23 times, indicating that current valuations are similar to 2020 levels and that gains in the Nifty have mirrored profit increases.

While smaller companies and theme-based stocks have surged, overall valuations remain reasonable. The fact that every dip is being bought into is a positive sign, provided investments are made wisely rather than on speculative terms.

We always strive to make investors optimistic, as this is the starting point of wealth creation through equity investments.

We also declutter investors’ concerns through objective evaluation of markets and assure you of the best investment services, backed by in-depth knowledge, driven by content, and analytics.

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