Most market analysts are expecting the momentum to shift towards 'quality' and 'growth' stocks in 2024 after the outperformance of 'value' stocks over the past three years. 'Value' stocks are generally well-established companies with steady profits that are trading at a discount to what they are intrinsically worth. Companies in sectors such as commodities, industrials, commercial vehicles and public sector units (PSUs) fall in this bracket.
India's first $1 trillion company by market capitalisation (mcap) is achievable by 2032 and HDFC Bank and Reliance Industries (RIL) are seen as lead contenders, ICICI Securities said in a note on Monday. To achieve this, the shares of both the firms will have to appreciate at least 20 per cent annually for the next decade. ICICI Securities believes this is possible if India's gross domestic product (GDP) growth accelerates to 9 per cent per annum and corporate profitability cycle peaks. "Our calculations suggest that India's first $1 trillion mcap stock could emerge by 2032.
After the latest rout, the American depositary receipt (ADR) premium of HDFC Bank to its local shares has shrunk to nearly zero. Shares of HDFC Bank on Thursday fell 3.1 per cent to Rs 1,490, extending its two-day decline to 11 per cent. Meanwhile, the ADR has slumped over 15 per cent in the past two trading sessions.
Mutual funds (MFs) added systematic investment plan (SIP) accounts at a record pace in 2023 with the net additions in the calendar year surpassing 15 million - 24 per cent higher than the 2022 tally of 12.2 million, according to data from the Association of Mutual Funds in India (Amfi).
The mutual fund (MF) industry added a record Rs 10 trillion to its total assets under management (AUM) in 2023, taking the cumulative tally past the Rs 50 trillion mark for the first time, in December. This 20 per cent growth in AUM last year was fuelled by a robust rally in the equity markets and a record Rs 1.62 trillion net inflows into active equity schemes. In another first, the AUM linked to systematic investment plans, too, hit Rs 10 trillion by the end of 2023.
The top 10 fund houses are slowly losing ground to their smaller peers, even as they continue to hold the lion's share in the total assets under management (AUM) of the mutual fund (MF) industry, according to an analysis of the quarterly AUM for the past six years. These fund houses had an average AUM of Rs 38.8 trillion in the third quarter (Q3) of 2023-24, which is 79 per cent of the total industry AUM of Rs 49.2 trillion. The share has come down steadily since Q3 of 2019-2020, when the share stood at 84 per cent.
The rally in the equity markets in the second half of 2023 has led to a sharp surge in the cutoff for stocks to qualify as largecaps and midcaps. On the latest list put out by the Association of Mutual Funds in India (Amfi), the smallest largecap stock now has a market capitalisation (m-cap) of Rs 67,000 crore, 35 per cent higher than in July 2023. In the case of midcaps, the cutoff has surged 26 per cent to Rs 22,000 crore.
Hospital chain Aster DM Healthcare's plans to sell its Gulf business may run into rough weather with voting advisory firm Institutional Investor Advisory Services (IiAS) raising concerns over the transaction. Recommending an 'against' vote on the resolution, IiAS has said there is no clarity on how Aster DM will utilise the proceeds that it will obtain by selling the unit, which contributes to bulk of its revenues. In November, Aster DM had announced its plans to sell its wholly-owned subsidiary Affinity Holdings, which conducts business in the Gulf Cooperation Council (GCC) region, to Alpha GCC for $1 billion.
'What will matter in 2024 from the market standpoint is the direction of interest rates globally, as well as in India.' 'The results of the general elections will also be keenly watched.'
Mutual funds' equity buying remained elevated for the fifth consecutive month in December, taking the net equity purchase past Rs 1.7 trillion in 2023. The aggressive buying in December indicates that flows into equity funds are likely to have remained unaffected by the sharp run-up in the market last month. Mutual funds (MFs) bought equities worth Rs 23,000 crore last month (until December 28) compared to Rs 18,000 crore in November, shows data from the Securities and Exchange Board of India (Sebi).
Only the top 5 per cent profit makers account for 75 per cent of profits.
Active largecap funds, which have the toughest job in terms of outperforming the benchmark, did better in 2023 as their bets in the mid and smallcap stocks paid off.
The upper market capitalisation (mcap) threshold for midcap and smallcap stocks in the mutual fund (MF) industry's revised list of stocks, to be announced this month, is set to see the second-highest yearly rise in the past five years. The list was first announced in 2018, and it has been revised every six months since then. According to estimates released by Nuvama Alternative & Quantitative Research, the upper threshold for the midcap and smallcap universes could come in at Rs 66,700 crore and Rs 21,900 crore in the next list.
Hybrid mutual fund (MF) offers, expected to drive higher investor interest after the change in debt fund taxation, are set to end 2023 with the slowest account growth in the past three years. Investment accounts in hybrid funds are up 5.7 per cent so far in 2023 compared with 7.6 per cent in 2022 and 20 per cent in 2021, shows the data from the Association of Mutual Funds in India (Amfi). In 2020, the count had dipped 2.4 per cent.
Actively managed debt funds with the flexibility to go long on duration made a strong comeback on the returns chart in 2023, thanks to softening bond yields. The average one-year returns of floater, long-duration, gilt, and dynamic bond funds, which ranged between 2.3 per cent and 4.5 per cent at the end of 2022, now stand at over 7.2 per cent, with some schemes delivering over 8.5 per cent, according to data from Value Research. Debt fund returns are inversely related to yields of underlying investments, meaning a decline in yields is positive for funds.
Post the change in debt fund taxation in March, a lesser-known hybrid fund has emerged as one of the alternatives for fixed-income investors. Equity savings schemes, the smallest hybrid fund category in terms of assets, have raked in around Rs 6,000 crore this financial year (FY24) so far compared to Rs 1,100-crore outflow in FY23. The inflows along with a strong performance led to a 50 per cent surge in assets under management (AUM) to Rs 24,100 crore during April-November, shows data from the Association of Mutual Funds in India (Amfi).
Going 'long' is becoming an overcrowded trade on Dalal Street, and any negative trigger could lead to a sharp correction, warn experts. However, given the strong momentum, particularly in IT stocks, the downside could be protected in the immediate term. "With the Nifty50 surging to new life-time highs, the bulls remain in control. Further upsides are likely once the immediate resistance of 21,492 is taken out.
The gap between market capitalisation of Hong Kong and India has dwindled significantly. At present, India's market cap stands at approximately $4.3 trillion, while Hong Kong's is around $4.7 trillion. In the depths of the Covid-19 crisis in March 2020, Hong Kong's market cap, at $4.6 trillion, was 3.44 times larger than India's.
'The deal pipeline across products is robust for 2024.'
Following the sharp run in markets, valuations across the board have become elevated. The National Stock Exchange Nifty50 Index now trades at a 12-month trailing price-to-earnings (P/E) multiple of 24.3 times, 18 per cent higher than this year's low of 20.5 times. The valuation expansion in the broader markets has been sharper.
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