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Indian market continued its momentum in June series and in last 3 months Nifty is up by 12%. In fact Indian market has outperformed most of the global markets, whereas the BSE Small Cap index is up by 22% in last 3 months, one of the highest return in any quarter in last 10 years. The equity market performance is supported by US equity market which has also reached 52 week high, good corporate performance in March quarter result wherein we saw margin improvement and also large participation by retail and HNI investors in India. Post this run up, valuation has reached near to pre Covid higher end of Nifty valuation of around 19x 1 year forward earning.

Most the central banks globally continue to show concern about higher inflation and also indicated that they will further increase the interest rate. FED is further likely to increase interest rate by 50 bps in current year. Up till now with the increase in interest rate by FED, it had limited impact on growth of US economy and the expectation of recession is getting postponed over there. In India the expectation of inflation is coming into targeted rage of RBI and the expectation of further increase in interest rate is also not there though decline in interest rate may be bit away.

Going forward June quarter result will be watched carefully and we expect the expansion of margin due to reduction in raw material cost, power and fuel cost and Freight cost can continue in quarter though the sales growth will be comparatively muted.

Overall we expect momentum to still continue in July series but the risk reward is getting unfavorable as we move up. As such one needs to be careful for incremental investment for long term. In the July series we expect NIFTY range to be 18700-19500.

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