Nifty bulls may raise a toast in June quarter, 10-year performance history suggests

FIIs have on an average poured in about Rs 1,000 crore daily, and this has turned the tables in favour of the bulls.

Historical data shows that the first quarter of the financial year has by and large been positive for Dalal Street. The positive start to the quarter this time has, therefore, brightened prospects for the history to repeat itself.

An analysis by ETMarkets of the performance of markets in the April-June quarter showed that 8 out of 10 times, the Nifty 50 closed positive in the quarter in the last 10 years.

In the June quarter of 2013 and 2020, the benchmark index gave high double-digit returns.

In the June quarter of 2020, the 50-stock index gained a whopping 20% as investors rejoiced the re-opening of the economy from the Covid-19 pandemic-induced lockdown. The June quarter of 2020 was the second best in terms of returns for the market in the last 15 years.

Some stability in the global markets and a surprise move by the Reserve Bank of India to pause interest rate hikes earlier this month brought a relief rally in the market, with the Nifty 50 gaining a little over 5% in the last 10 odd sessions.

But are we out of the woods and should investors go on a shopping spree?

Sumit Chanda, founder and CEO of JARVIS Invest doesn’t think so.

“The markets might be inching up but it is time to be cautious. There is still more pain to come and this is not the time to be aggressive with equity allocation,” Chanda said.

According to Chanda, the risks to inflation still persists and, therefore, one cannot draw a conclusion that the RBI would go on a long pause.

However, Chanda acknowledged that India is better placed economically despite the headwinds and continues to be a better investment destination than other emerging markets.

From a valuation standpoint, the market is trading below its 1-year forward average P/E multiples after the correction from the all-time highs.

“We have undergone a reasonable time correction of a year and a half. This will likely cushion the market from a deep correction in FY24,” believes Kaizad Hozdar – investment advisor, TrustPlutus Wealth.

However, there hasn’t been significant earnings upgrades given that key export sectors such as IT are facing growth challenges and discretionary consumption in the domestic market remains muted.

According to Hozdar, the best strategy in such a scenario would be systematic or regular allocation to equities which will help investors navigate the fleeting bouts of optimism and doubt.

(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)