Market Outlook
| Jun 30, 2024 | 1-Month |
1-Year |
|
| Rupees per Dollar | 83.39 | 83.47 | 82.04 |
| Oil (dollars per barrel) | 86.41 | 81.62 | 74.90 |
| Retail inflation (CPI) | 4.75% (May) | 4.83% | 4.31% |
- US Federal Reserve (Fed) kept its policy rate unchanged at 5.25%-5.50%. Fed’s dot plot indicated only one rate cut this year as against three in the earlier policy. Bank of England also maintained its policy rate at 5.25%
- European Central Bank (ECB) reduced its policy rate by 25 basis points to 3.75%
- RBI kept the repo rate unchanged at 6.50% while maintaining its stance of withdrawal of accommodation
- RBI announced borrowing calendar of ₹ 2.64 trillion for State Development Loans (SDLs) for Q2 FY2025, as against an expected range of ₹ 2.50 trillion - ₹ 2.75 trillion
- India became part of JP Morgan Emerging Market Bond Index starting June 28, acquiring a 1% weightage. This inclusion could likely bring down the yields in the long term and also attract FPI flows of about $ 25 billion through the course of the year
- We remain ‘neutral’ on the outlook for bond markets
- From the monetary policy perspective, we expect RBI to hold the policy rate at 6.50% at least until Q3 FY2025
- The next trigger for the markets would be the final budget for FY2025 expected in mid-July
- Impact of heatwaves and monsoons on domestic food inflation will be monitored
| Index | 1 month (%) | 1 year (%) | 3 years (%) |
|---|---|---|---|
| NIFTY50 | 6.6 | 25.0 | 15.1 |
| BSE100 | 6.8 | 29.7 | 16.6 |
| NIFTY500 | 6.9 | 37.2 | 18.7 |
| NIFTY Midcap100 | 7.8 | 55.7 | 25.9 |
At June 30, 2024
Nifty was up 6.57% for the month of June 2024
- Markets appreciated macro economic stability and policy continuity post elections results
- FIIs turned buyers during the month while DIIs remained buyers
- Cement/Fertilizers outperformed while Metals/EPC underperformed
Our outlook remains Neutral in the short term and Positive in the medium term
- Markets expect Union Budget in July to continue its progress on reforms and maintain the growth momentum
- Q1 FY2025 earnings season is likely to set the tone going ahead
- The broader India macro environment remains resilient
- We note that the Nifty P/E at 22x FY2025E is marginally higher as compared to 5 year mean with India continuing to trade at a premium to emerging markets
In the medium term, we expect certain important drivers for growth:
- India's long-term growth prospect remains robust
- Structural growth drivers for India remain in place in the form of demographic benefits, investment focus, policy reforms and digitisation
- Competitive populism and political/policy instability remain the key risks from a markets standpoint
Nifty earnings CAGR over FY2024-FY2026 is expected to be 14%
COMP/DOC/Jun/2024/126/6322
