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Below Quote by Shibani Sircar Kurian, Senior EVP & Head- Equity Research, Kotak Mahindra Asset Management Company

“The Indian equity markets remained volatile though with an upward bias for the week ended 19th May 2023. On key trend emerging is that Foreign institutional investors have turned net buyers of Indian equity. So far in FY24, net FII inflows stood ~USD3bn vs outflows of USD17bn and USD6bn in FY22/23 respectively.

The US Federal Reserve hiked the target range for the Federal Funds rate by 25 bps to 5-5.25% during its May 2023 meeting. The decision took into account the modest pace of economic activity in 1QCY23, robust job gains in recent months, a low unemployment rate, and persistence of elevated inflation. However, globally and in India, inflation has started to ease. April CPI inflation in India moderated to 4.7% vs 5.6% in March 2023.

The domestic Q4FY23 corporate earnings season is underway and so far results have been largely in line with estimates driven by sectors such as banking, automobiles and cement. Margins have started to improve sequentially with the correction in commodity costs. FY24 nifty earnings estimates have been stable with the consensus baking in mid to high teen earnings growth. Earnings growth continues to be led by domestic facing sectors.

With markets trading close to long term average valuations, earnings delivery is likely to be crucial for the markets going forward. Further, rural wage growth appears to have bottomed out and has hovered around 6% YoY levels for the past 6 month. One key monitorable for rural demand would be trajectory and dispersion of monsoons especially given the fear of El-Nino.”
 

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