With the 2024 general elections underway and expectations for a third term for incumbent Prime Minister Narendra Modi, Indian markets are likely to continue rising, with May marking the fourth consecutive month of positive growth. may result in a return. Additionally, improving macro data, continued inflow of foreign investors, strong March quarter earnings, and overall positive global trends will also support investor sentiment this month.
“Over the past five months, the market has been gradually rising and we feel that this trend will not reverse until the Nifty decisively breaches the 21,900 level.However, on the other hand, stock prices are mainly a reaction to earnings announcements. Therefore, we recommend maintaining a stock-specific approach and prioritizing sectors/themes that have shown consistency in their long trading trends. At the same time, we see no harm in holding some shorts as a hedge. Mixed signals from the global front,” suggested Ajit Mishra, Senior Vice President, Research, Religare Broking.
India’s benchmark Nifty ended April with a 1.24% gain after gaining 1.57% and 1.18% in March and February 2024, respectively. However, in January of this year, it was in the red, although it remained flat.
Read this: General Election 2024: As polls are underway, does the adage ‘sell in May and leave’ still apply this year? Experts answer
Structural component
Although the Indian market ended April on a strong note, it is important to note that not all stocks contributed to the rally. Moreover, 28 of the 50 stocks in the Nifty50 index had negative returns in April, while the remaining 22 of his stocks were profitable.
Eicher Motors was the biggest gainer, rising 17.6%. Hindalco, Axis Bank and Diviz Labs followed with gains of over 10% each. Apart from this, Airtel, M&M, Power Grid, SBI, ICCI Bank and NTPC each rose over 5 per cent in April.
Among the losers, HCL Tech was the top and only dragger with a double-digit negative return in April, dropping 10.5%. On the other hand, Kotak Mahindra Bank, Sun Pharma, HDFC Life, Apollo Hospitals, Adani Enterprises, Cipla, Adani Ports and L&T each fell over 5 per cent last month.
Read also: Nifty 50 surges 1.2% in April led by banks and auto stocks, IT sector lags
Outlook
While most experts expect the positive momentum to continue in May on expectations of Indian stock exchanges hitting new highs, some experts believe the elections will cause some volatility in the market. As this is likely, we believe there will be an adjustment in the short term. Experts also recommend strategies to use this month.
Neeraj Chadawar, Head of Fundamentals and Quantitative Research, Axis Securities.
Elections always cause market fluctuations. However, due to the sudden rise in sales in FY2014, the earnings forecast for FY2015 has diverged significantly. Good policy continuation after the general election results is a big positive, but the market has been pricing in this since December 23, given the success of the Bharatiya Janata Party in the parliamentary elections in three of the four major states. I’m here. In that respect, it seems unlikely that a rally will be held after the election.
Furthermore, given the strong catch-up of mid-cap and small-cap stocks in recent months, we still believe that the margin of safety for valuations in these segments at current levels is shrinking relative to large-cap stocks. Given this, the overall market is likely to see some degree of time correction in certain markets, with flows likely to shift towards large-cap stocks. Based on this, we believe the Nifty 50 has the potential to hit new highs in the near term.
Read here: 2024 general election: Opinion polls won’t have much impact on stock market, says Fidelfolio
VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services
We are in a bull market. Nifty has tripled since its March 2020 low. The number of demat accounts has increased explosively from approximately 4 billion yen in March 2020 to over 150 billion yen currently, indicating the arrival of individual investors. Indian retail investors, HNIs and DIIs are in the driver’s seat in this bull market, with FIIs always losing the tug of war that is being played in the market. This rise is essentially supported by impressive GDP growth and decent corporate profits.
Markets are already discounting NDA/BJP in the elections. Therefore, it is unlikely that the election results will have any more than a certain impact on the market. However, markets are likely to react to the Budget, which the Chancellor has already signaled is “transformative”.
Akhil Jain, MD, KKJ Financial Services
Since 2000, the benchmark Nifty index has had negative May returns 12 times. However, May was also one of the highest returning months in 2009 with an increase of 28.07%. The general consensus in the market right now is that it will rally until the election results and then correct. However, we believe the market will continue to reward companies with revenue growth and name recognition. The India Vix is currently showing signs of stabilization, but volatility could spike as the election results approach.
Read here: Lok Sabha elections 2024: What should investors do amid market volatility?
The market is expected to be firm with a positive bias, focusing on Fed interest rate decisions, corporate earnings, monthly auto sales, and manufacturing PMI data. FII trends will continue to be the focus of attention this week, but the outflow of funds from FIIs has been more than compensated for by consistent strong buying by domestic institutional investors in the stock market last week and this month. Technically, the Nifty 50 is expected to face resistance at his 22,441 points, followed by his 22,620 points and 22,710 points. On the downside, the index may soon find support at the 22,386 level, followed by 22,330 and 22,240.
Arvinder Singh Nanda, Senior Vice President, Master Capital Services
The current scenario and dynamics present broader challenges, with geopolitical tensions, to name a few, potentially impacting market effectiveness. Elections create uncertainty in markets and have the power and potential to change market patterns and introduce new market behavior. Therefore, investors should remain flexible and make decisions after thorough research. The ultimate decision to stick with or distance yourself from this market scenario depends on a careful and comprehensive evaluation of prevailing market dynamics and an investor’s individual investment objectives.
Read here: General Election 2024: Comparison of macroeconomic factors such as stock prices, FPI, and inflation this year with 2019 polls
Anil Rego, Founder and Fund Manager, Right Horizons
Structural tailwinds in the economy drive markets at their core, as policies focus on strengthening infrastructure, prioritizing domestic manufacturing, and focusing on reforms to improve private investment to boost consumption. There is.
In the past four general elections, the stock market has gradually priced in the expected election outcome over the six months leading up to Election Day. We are constructive on domestic macro, as emerging market investors prefer stable governments with strong development and reform agendas, and we believe capex-led expansion is likely to sustain the growth cycle. I think it’s expensive.
Read here: General elections 2024: Upswing more likely than correction ahead of polls, says Shauryam Gupta of Rupeezy
India has experienced political stability since 2014 under the majority rule of the BJP. Despite facing political setbacks, especially at the local level, the next national election is an expected outcome of political continuity. We expect the market to perform well over the long term with healthy revenue growth and are not concerned about short-term temporary effects.
Disclaimer: The views and recommendations above are those of individual analysts or brokerages and not of Mint. We recommend checking with a certified professional before making any investment decisions.
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