Mutual funds (MFs) are lining up distinguished new fund offerings (NFOs) for the next financial year to win over investors after a lukewarm response to product launches in the 2022-23 financial year (FY23). NFOs drew a lukewarm response in FY23 as launches were mostly in the passive debt space, which has a comparatively lower popularity among retail investors. The limited launches in equity space also failed to rake in huge sums due to subdued investor sentiments in a volatile market.
'India is an equity market with a breadth and depth of companies to invest in.'
The sharp correction in the Indian markets from their peak levels has made valuations attractive, say analysts, who advise buying selectively, but only from a long-term perspective. Fifty-six of the Nifty 100 stocks, according to Mahesh Nandurkar, managing director at Jefferies, now trade below the 10-year historical averages, including stocks in financial, select auto, and pharma sectors. "Valuation (one-year forward consensus price-to-earnings, PE) has declined 25 per cent from October 2021 peak, almost matching the 33 per cent price-earnings contraction during the 2011 tightening cycle when repo rates went up by 375 basis points (bps) versus 250 bps this cycle.
Foreign portfolio investors (FPIs) turned net buyers in October after being net sellers in the previous month. In October, FPIs bought shares worth nearly Rs 8,430 crore ($1 billion) against net selling of Rs 13,405 crore ($1.6 billion) in September. Positive flows during three of the previous four months have pushed the domestic markets towards fresh all-time highs. At present, the Sensex and Nifty are less than 2 per cent shy of breaching record highs logged in October 2021. A rally in equity markets in the US and Europe is in hopes that the Federal Reserve may go soft on rate hikes after its November meeting.
'Yet the market didn't do all that badly because it was cushioned by domestic inflows.'
Portfolio churn by foreign institutional investors suggests their confidence in industrial revival.
According to global equity research firm CLSA, the Indian market is still trading with a 'premium', although it has come down considerably.
This flight of capital began in early August due to risk-aversion created first by rising geopolitical tensions due to North Korean aggression and second by the US Fed's decision to shrink its balance sheet
Citing the impact of the second wave of the pandemic over the economy and consumer sentiment, Swiss brokerage Credit Suisse has lowered its nominal GDP growth forecast by 150-300 bps to 13-14 per cent, but expects a stronger recovery in the second half as it sees the lockdowns having limited impact on tax collections. Last month, Neelkanth Mishra, the co-head of equity strategy for Credit Suisse Asia Pacific, and India equity strategist, had told PTI that he expected the real GDP to fall to 8.5-9 per cent in FY22 due to the more severe pandemic attack. The virus case load has crossed the 25-million mark, death toll from the same is nearing 2.9 lakh mark, which is one of the highest in the world as the test positivity rate has been around 15 per cent for long.
Asia's falling stocks have triggered an exodus of funds from the region.
The trade-war between the US and China is prompting investors to flee from risky assets, such as equities, to safe-haven bets, such as gold and treasuries
Materials and utilities were the worst-performing sectors in March.
Most sought-after market of the past few years doesn't feature among top bets in Asia, emerging markets
Tata Motors (down 1.7%) was the top loser on Sensex and Nifty, while Lupin (1.6%) gained the most.
The incidence of shareholder activism in India is more than that in other Asian countries, according to a BNP Paribas Asia Strategy report.
The Sensex and the Nifty had touched a low of 27,921 and 8,349 respectively.
Markets and blue chip stocks may see a downward correction in short-to-medium term.
With inflation down, the government's twin deficits are largely under control.
Since its peak, the S&P BSE Sensex has dropped nearly 3,000 points.
'The pressure on relative performance and the feeling of being left out among many investors may also account for the belief among many that this has to be a technology stock bubble.' 'The feeling of a bubble is also reinforced by the extreme performance gap between growth and value investing.' 'While at first glance, one can only stand back awestruck by the wealth creation delivered by technology stocks globally. It does not seem at all like the internet bubble of 1999-2000, says Akash Prakash.
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