Amidst the dawn of the new day, Indian equity indices embarked on an upward trajectory, lingering near unprecedented peaks, sustaining the momentum carried forth from preceding sessions. This surge can be primarily attributed to a moderation in inflation observed in May, both within the Indian subcontinent and across the shores of the United States.
As this document is penned, the Sensex and Nifty indices are traversing slightly above their respective closures from the previous trading day. A divergence is noted in the performance of Nifty sectoral indices on this particular day. Statistical revelations unveiled by governmental authorities on Wednesday indicated a dip in India’s annual retail inflation, marking a 12-month nadir at 4.75 percent in May, down from 4.83 percent in April.
Although the prevailing retail inflation in India lies within the RBI’s comfort range of 2-6 percent, it still surpasses the optimal scenario of 4 percent. Inflationary concerns have plagued numerous nations, particularly advanced economies, yet India has adeptly navigated its inflationary course.
“In the immediate future, the market is poised to meander within a defined range, bereft of any significant catalysts until the budgetary announcements. Given the lofty valuations, particularly prevalent in the broader market segment, a substantial upward movement is likely to invite divestment from Foreign Institutional Investors (FIIs),” remarked V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
“In the event of a market downturn, Domestic Institutional Investors (DIIs) and retail participants are anticipated to adopt a buy-on-dips strategy, a tactic that has proven efficacious within this market milieu. The consistent influx into mutual funds, notably through the Systematic Investment Plan (SIP) avenue, coupled with the retail investor’s eagerness to capitalize on any downturn, is anticipated to fortify market resilience. It behooves investors to adopt a medium to long-term perspective and retain their positions, focusing on equities exhibiting fair valuations within the large-cap segment.”
“We reiterate our counsel to concentrate on stock-specific trading endeavors, particularly in sectors such as agribusiness, sugarcane cultivation, chemical enterprises, and cherry-picked defense equities for protracted holdings,” advised Ajit Mishra – Senior Vice President of Research at Religare Broking Ltd. Moving forward, market participants will remain vigilant regarding the policy pronouncements of the nascent government administration.
The stewardship of Nirmala Sitharaman, entrusted once more with the finance ministry portfolio, and her forthcoming policy directives will be under intense scrutiny. In the imminent future, she will present the comprehensive Budget for the fiscal year 2024-25. Indian equities have staged a commendable rebound subsequent to the tumultuous trading session following the announcement of Lok Sabha election results, wherein the incumbent BJP exhibited subpar performance, seemingly falling short of both exit poll prognostications and the requisite majority mark.
Albeit the National Democratic Alliance (NDA) ultimately secured a comfortable majority, apprehensions lingered initially. Numerous investors opted to capitalize on profits amassed following the surge triggered by exit poll projections indicating a decisive victory for the BJP. However, all losses incurred on June 4th have since been recouped over subsequent trading sessions, propelling the indices once again to their zeniths. A seamless transition in government formation evidently bolstered market sentiment.
