The month that was: June 2023

During the month of June most global markets ended positive led by the United States. US Fed paused interest rate hike in June which lifted sentiments of global markets. S&P500 index posted a gain of 6.5% while Brazil and Japan were the leading markets with 9.4% and 7.5% gains respectively. Nifty50 Index showed a gain of 3.5% in June with Mid-cap and small-cap indices outperforming with returns of 5.9% and 6.6% respectively. Almost all the sectors except Consumer staples, Banks and IT Services outperformed Nifty 50. Capital Goods and chemicals were the best performers posting a gain of 5% each. India's May CPI inflation moderated to 4.25% from 4.7% in April, primarily due to favourable base effects and continued softening in commodity prices. April IIP growth was 4.2% vs 1.7% in March.
FIIs bought net USD 5.1 bn worth of Indian equities, while DIIs bought USD 540 mn during the month. 

Market Outlook 

As the rate hike cycle in USA seems to have peaked, the near term outlook for global markets and especially for emerging markets remains positive. India has witnessed constant inflow from FIIs over last few months, dominated by ETF Flows on improving macro fundamentals. India continues to have a robust growth outlook for FY24 with estimate of nearly 6% growth which is likely to be the best among major economies. Domestic demand scenario looks good  as seen from high frequency data points like growth in personal loan, credit card spending, automobile sales and passenger data for aviation sector etc. Consumption is likely to get a further boost as rural economy is expected to pick up during second half of the year. A strong impact of El-Nino on later part of monsoon remains a key risk for markets in near term. We remain positive on Indian equities over medium term owing to structural levers of Indian economy and like sectors such as Financials, Consumption, Cement and Capital Goods which should benefit from consumption growth and capex recovery.

Happy Investing!!