India’s market cap is now at a record high figure of more than Rs 300 lakh crore. Way back in September 2003, it was just Rs 10 lakh crore.
Headline index Sensex, which is now perched at uncharted territory above the 65,500-mark, was then hovering around the 4,400-mark.
In the rally which looks one-way on the larger time frame, the market cap crossed the Rs 50 lakh crore mark in 2007, Rs 100 lakh crore milestone in 2014, and the Rs 200 lakh crore-mark in February 2021.
The surge in market capitalisation is a result of not only an increase in stock prices but also takes into account new listings on the stock exchange.
The ongoing phase of the bull run from March 2023 lows is being primarily led by FII flows worth around $14.5 billion so far in FY24.
In the June quarter, India outperformed other emerging markets and Asia Ex-Japan indices.Global brokerage firm CLSA has warned that valuations may soon get overextended as its proprietary India Bull-Bear Investor Sentiment Index is now at a 20-month high 96% bullish reading.
“Investor sentiment as measured by our proprietary India Bull-Bear Index has swung from an extreme-bearish reading of 8.2% in mid-March 2023 (Contra BUY time) to an extreme-bullish 95.9% reading, after a 14.5% rally in the Nifty in about three months,” said CLSA’s Vikash Kumar Jain.
His India-focus portfolio is overweight in banks, insurance, energy, and real estate while IT, staples, and discretionary ex-autos are our top underweights. “Our portfolio favours value companies given the ongoing tactical rally,” he said.
Other than the outcome of the US Fed meeting on July 26, the biggest domestic trigger for Nifty’s trajectory would be the June quarter earnings season which begins next week.
Kotak Institutional Equities expects Q1 net profits of Sensex to increase 18% YoY (decline 8% QoQ) and for Nifty50 to increase 25% YoY (decline 8% QoQ).
“Other than OMCs, we expect a strong YoY increase in the net income of (1) automobiles (led by Tata Motors), (2) banks (strong loan growth, decline in credit costs), (3) commodity chemicals (margin expansion) and (4) telecommunication (ARPU increase) sectors. We see the metals & mining sector to report a sharp decline (weak realizations) in net income on a QoQ as well as YoY basis,” said Kotak’s Sanjeev Prasad.
Market data shows that Indian equities had the most foreign inflows of Asia emerging markets ex-China in June.
“Markets are increasingly factoring in a hyper goldilocks’ scenario which assumes that high inflation in the US and AE will glide back to normal without triggering a recession,” said Dhananjay Sinha of Systematix Institutional Research.
The analyst has warned that these extrapolative assumptions can run out of fuel as the latest data suggests that the overheated conditions in the US and AEs have not ebbed and central banks have voiced renewed hawkishness.
“A combination of realistic EPS (Rs 790, 15% cut in consensus) and an optimistic multiple (23x), the fair value for Nifty50 is flat,” he said.
(Data inputs from Ritesh Presswala)
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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