India’s equity market reached new highs in Sep’23 and ended Samvat 2079 (24-Oct-22 to 6-Nov-23) on a healthy note. Nifty-50 breached the 20k level and gained 10% in this period, while Nifty Mid/Smallcap outperformed with gains of 30%/36%. Resilient economic conditions, healthy corporate earnings, FII inflows (Mar-Aug’23), all-time high SIP level, and retail participation drove the market. Further, a moderation in inflation and expectations that global interest rates may have peaked in the last few months supported equities.
Key events in Samvat 2080:
Several state-level elections that are scheduled in Nov-Dec’23, followed by the General Election in May 2024. Global factors such as economic growth, interest rates, bond yields, inflation, geopolitical issues, etc. Nifty earnings, which are expected to maintain their healthy growth at 18% CAGR over FY23-25.
Outlook:
Despite global uncertainties, India remains a shining star and is expected to maintain its outperformance. Nifty is trading at a 12-month forward P/E of 17.6x, which is at a 13% discount to its 10-year average, thus providing comfort. We believe that over the next couple of quarters, sector rotation could be an important driver along with the overall market uptrend. We also believe valuations will become an important factor in stock selection to drive outperformance in portfolios. Our last year’s Diwali picks have done well, with some of our ideas, such as L&T (+58%), IDFC First (+48%), Lemon Tree (+38%) generating superior returns compared to Nifty’s gain of 10%. We present below our key themes and ideas for Samvat 2080.
