What lies ahead for the Indian markets?
The Indian Benchmark Indices have been one of the outperformers in the current year in comparison with their global peers, where major emerging markets are struggling to hold their gains in the equity markets. Even developed markets like the US and Europe are reeling under the dark lights of wars and inflation on a daily basis.
In the last 20 years, Indian markets have seen many ups and downs with the 2008 Lehman crisis, followed by the 2012 bear market, followed by a bull run during the Modi Era, demonetization, the corona period, followed by a dream run in the equity markets post the corona period, and now the ongoing interest rate hike cycle.
Nifty has generated around 1300% return in the current 21st century, which is almost in the last 22 years, which is an extraordinary performance by any asset class available for investment for a retail individual. Even after numerous whipsaws in the journey and surpassing many hiccups along the way, the index has claimed such kinds of rewards for the investors.
As India celebrates its 75th year of independence, we expect the Indian markets will also mark its financial independence in the global and domestic context and will continue to outperform in the next 20-to-25 years as well. The Indian equity markets have surpassed the major tests of the corona and also inflation pressures very comfortably and are currently looking forward to leading the emerging markets from the front.
If anyone wants to analyze any equity markets, one has to consider a few points given below:
1. Macro & Micro factors of the economy
2. Government policies
3. Fund flows in the markets
4. Investment Sentiments on the Street
In the above-listed points, we can clearly see that the Indian economy passed all the required criteria to become the best investment destination for global as well as domestic investors. The macro and the micro factors are continuously improving with inflation in control of the RBI and GDP growth on track. On the other hand, the government policies are turning pro-market with various new initiatives from government like PLI Schemes, Defence policies, textile and auto industry policies, etc which are boosting employment and also consumption in the country.
If we go by the recent trend in the equity markets, the FIIs have turned net buyers in the last month after the brutal selloff throughout the last couple of quarters in the Indian equities. This indicates that the worst part of the sell-off is at the end in the Indian equities and the future seems to be bright for long-term investors.
On the other hand, if we look at the SIP flows, we have been hitting a monthly inflow of about Rs 12,000 crores, and assuming that there is no cancellation, we would be looking at roughly Rs 1,50,000 crores coming from the SIP flows. So, in the bad market conditions also, the retail money is flowing into the markets by the mutual fund and the SIP route which is clearly visible from the DIIs figures in the markets in the last couple of quarters where they have been net buyers in each and every month. Lastly, the investor sentiment has also been robust as the activity on both the major bourses has increased both in the equity and the derivative markets.
Overall, the Indian markets are poised to make new highs in the coming months and the participation from all front of investors is expected to increase in the upcoming days. Now the million-dollar question is, where the money has to be invested, which sectors are expected to outperform, and the timing of the investment. Below are the sectors which are expected to remain in the flavor in the coming quarters and years:
3. Auto Ancilliary
4. Information technology
5. Consumer Discretionary
6. Cement & Paints
We expect markets to face short-term challenges in the coming months from the global as well as the domestic front but the long-term picture seems to be on the brighter side from the long-term investment point of view. Investing is a matter of thought for the long run and is not for a day or two. It is not easy to multiply wealth easily and needs a lot of effort and discipline. Whether you’re having a good day or a bad month, it’s important to stay level-headed. If you get fumbled you’re likely to make mistakes and if you get too down on yourself you might start questioning yourself and your plan. It’s easy to let psychology take a hold of you, so remember what you’re doing and why you’re doing it.