Indian Stock Market: India is the best performing market so far in May with the Nifty gaining 2.8 per cent as against negative returns in European markets and just one per cent return in the S&P 500. The performance of other emerging markets is also weak. Chief Investment Strategist, Geojit Financial Services V.K. Vijayakumar says that there are two major factors for this boom – first, FPI investing money in the market and second, the improvement in the Indian economy.
FPIs became strong buyers in May
FPIs, who were consistent sellers in India in the first three months of this year, became strong buyers in May. FPI has invested Rs 29,668 crore through stock markets till 25 May. He said that he has invested an additional Rs 5,136 crore through the primary market. This investment by FPIs is a reflection of their confidence in the Indian economy and the performance of companies in FY 2023-24.
banking system has improved
Latest macro data suggests that the ‘twin problems’ of banking sector stress and corporate sector risk aversion that have plagued the Indian economy for a long time are a thing of the past. Banking system has improved with record profits and low NPAs. Corporate sector is debt free and hence corporates can now borrow and invest and banks have enough money to lend. The capex revival in the economy is still nascent, but is gathering pace.
India one of the fastest growing major economies in this financial year
Central government schemes like AMRUT and summits like G20 have encouraged developers to move people to the hinterland where the growth rate is now on the upswing. Inflation is within the upper limit of RBI’s target. The central bank has paused interest rate hikes and the performance of Indian companies in the fourth quarter has been in line with stock market expectations. India is one of the fastest growing large economies in this financial year amidst a decline in the global growth rate. So it comes as no surprise that FIIs have so far invested Rs 44,000 crore in Indian equities during this financial year.
what do experts say
LKP Securities Of Research head S. ranganathan Said that the clouds of recession and the risk of default have engulfed many developed economies. India as one of the largest democracies with the largest population is witnessing an urban revolution on the back of highway and infrastructure development. As Howard Marks said, investors make money when they do things that other people are not willing to do. He said that at a time when the consumption phase of the economy is a bit slow, the focus is on the investment phase driven by the capex-driven budget.
PGIM India Portfolio Management Services Of Portfolio Manager Surjit Singh Arora clearly stated that we see India as an outlier in the global economy. Focus on sustained wealth creation, benign policy environment, prudent fiscal management and improved global positioning augurs well for the country’s economic growth. Besides, low leverage by Indian companies and better balance sheet of the financial system provide fodder for growth as the level of demand in the economy moves along with the level of income, Arora said. Arora said that although global events can be a challenge, we believe that India is not only well prepared to face these challenges, but can also benefit from it in the long term. India will grow led by consumption and manufacturing due to high per capita income and penetration with exports.
DSP Asset Managers has said in a report that the Indian economy and corporate earnings remain strong. Many large cap companies have outperformed the market estimates due to which the market sentiment remains strong. It has been a really good performance for the Indian stock market in the last few weeks of this season of financial results.
Many believe that the market has become too complacent, but the data points to the other side. India Volatility Index (VIX) has recorded the lowest reading recently. It has been said in the report that such a very low VIX is generally a good indicator of a booming market in the coming times.
read this also
