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

The Nifty50 index remained volatile in May 2024 on the back of speculation regarding the Union Elections’ outcome, increasing geopolitical tensions, and significant FPI selling. During May, the Nifty50 index generated a return of -0.3%, while the NSE Mid Cap 100 and the NSE Small Cap 100 generated a return of +1.6% and -1.9%, respectively. Amongst the sectoral indices, Capital Goods, Power and Metals outperformed the broader market while indices for Healthcare and Information Technology underperformed.

Key macroeconomic developments for the month were, CPI inflation in April remaining unchanged at 4.83% versus March 2024, India reporting a Q4-FY24 real GDP growth of 7.8% and FY24 real GDP growth of 8.2% (both of which were ahead of market expectations), and RBI approving a record transfer of INR 2.1 tn as surplus to the central government for FY24 which is higher than the market expectations of around INR 1.0-1.2 tn. GST revenue for the month of May stood at INR 1.73 tn, which represents a 10% YoY growth, driven by a strong increase in domestic transactions. In FY24, real investment growth outpaced real consumption growth at the highest pace in post-GFC period. Also, during the month, S&P Global Ratings raised India's sovereign rating outlook to 'Positive' from 'Stable', after a period of 10 years, while retaining the rating at 'BBB-'. The rating agency also notified that India’s credit rating upgrade is possible in the next 24 months.

During May, Foreign Portfolio Investors were net sellers to the tune of USD 3 bn while Domestic Institutional Investors remained net buyers to the tune of USD 6.8 bn.

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