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Below the Quote on Equity Outlook by Vinay Paharia,CIO,PGIM India Mutual Fund

We are more comfortable with valuations for Large Caps versus Mid and Small Caps

After high volatility in the first week of June, the equity market saw a sharp rally with the Nifty50 index ending the month with 6.6%  return, and the NSE MidCap 100 and NSE Small Cap 100 indices generating returns of 7.8% and 9.7% for the month, respectively.  Market witnessed a sharp correction on the day of the declaration of Union Election results, which saw incumbent the BJP-led NDA  government coming back to power for the third consecutive term with a lower majority versus previous term, and also versus the exit poll  predictions. However, the index rebounded in subsequent sessions with the market getting more confident about the stable government policy continuity.  

During the month, indices for Realty, Auto and Information Technology sectors outperformed the broader market, while indices for  Energy, FMCG and Pharma sectors underperformed. The month saw the RBI and US FED maintaining status-quo on policy rates, Indian telecom companies announcing the much-anticipated tariff hikes, news-flow of consolidation in the cement sector in India, and Fitch  Ratings raising India’s GDP growth forecast for FY25 to 7.2% from 7% earlier. On the macroeconomic front, the CPI inflation print for  May came at 4.75% compared to 4.83% for April, and IIP growth print for April came at 5%, compared to 5.4% for March. During  June, Foreign Portfolio Investors were net buyers to the tune of USD 2.7 bn, while Domestic Institutional Investors remained net buyers  to the tune of USD 3.4 bn.

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