'India coming of age': Sensex, Nifty soar to record highs in FY23-24. What's next

‘India coming of age’: Sensex, Nifty soar to record highs in FY23-24. What’s next

NEW DELHI: India’s benchmark equity indices, sensex and Nifty, concluded the 2023-24 fiscal year with impressive gains, reflecting a broader bullish trend in global equities. This upward momentum was propelled by widespread buying across various sectors, despite challenges such as a depreciating rupee affecting market sentiment. The positive close for the fiscal year is attributed to robust demand in power, auto, and metal stocks, aligning with the bullish wave seen in international markets.

Sensex and Nifty’s stellar performance

The 30-share index, sensex, saw a significant jump of 655.04 points, or 0.90 percent, to close at 73,651.35. At its peak during the day, it soared by 1,194 points or 1.63 percent, reaching 74,190.31. Similarly, the NSE Nifty climbed by 203.25 points or 0.92 percent, ending at 22,326.90. Over the week, the sensex and Nifty experienced gains of 819.41 points (1.12 percent) and 230.15 points (1.04 percent) respectively.

Looking at the fiscal year as a whole, the sensex surged by 14,659.83 points (24.85 percent), while the Nifty saw an increase of 4,967.15 points (28.61 percent).

Key takeaways

• Domestic mutual fund investors have consistently shown their confidence in equity-oriented schemes, maintaining a net buyer position for 36 consecutive months. The enthusiasm for investing is evident in the significant growth of systematic investment plans (SIPs), which have reached multiple record highs over the last 11 months.
• Turning the tide from the previous two financial years, Foreign portfolio investors (FPI) have become net buyers in Indian equities, investing a substantial amount of 2.04 trillion rupees ($24.46 billion) up until March 27, 2024. This substantial inflow marks the second-largest FPI investment into Indian stocks since the bounce-back from the Covid-19 market slump in fiscal 2021.
• The fiscal year 2024 saw remarkable progress across all major sectors of the Indian economy. Notably, the realty, state-owned banks, auto, and energy sectors led the way with impressive gains ranging from 70% to 135%, showcasing the broad-based strength of the market.
• Despite facing some valuation concerns in March, which led to underperformance, both small- and mid-cap stocks managed to outshine the benchmarks. Throughout the fiscal year 2024, small-caps surged by 70%, while mid-caps experienced a 60% increase, demonstrating their resilience and potential for growth.
• Among the Nifty 50 stocks, only three companies, UPL, HDFC Bank, and Hindustan Unilever, did not join the upward trend and recorded losses during the fiscal year 2024. This minor setback highlights the overall positive momentum seen across the majority of listed companies.

What they are saying

• Vinod Nair, head of research at Geojit Financial Services, remarked on the closing day’s performance and the fiscal year’s outlook, “Indian equities closed the day and fiscal year on an optimistic note, with volatility by the end of the session, as buying by retails, DIIs, and FIIs surged across categories. The mid-and small-cap stocks have emerged as frontrunners, rebounding from the initial sell-off earlier in the month.”
• “An upgrade in the domestic economy forecast hints at an encouraging outlook for the stock market in FY25. However, the emphasis is on large-cap due to the persisting premium valuations of mid-cap stocks, which could pose a concern on the broad market in the short to medium term,” Nair said.
• “Market extended gains and almost retested the record high, tracking favourable cues. After the initial uptick, Nifty moved from strength to strength for most of the session. However, a sharp dip in the final hour trimmed the gains,” said Ajit Mishra, SVP – technical research, Religare Broking Ltd.

What’s next

• As per a Reuters report, India’s burgeoning schedule of substantial block transactions and initial public offerings (IPOs), including Hyundai Motor’s unit’s $3 billion IPO, is poised to attract increased investment into a market that achieved a quarterly peak in its global equity capital market (ECM) deals share this year.
• The lack of similar transactions in other parts of Asia is expected to further channel capital towards India.
• Factors such as elevated worldwide interest rates, geopolitical unrest, alongside China’s economic deceleration and its decision to limit IPOs in favor of bolstering its secondary markets, have contributed to a downturn in equity deal activities across the Asian region.
• Contrastingly, India has risen to become the world’s second most active arena for ECM transactions, trailing only behind the United States.
• In the first quarter of 2024, Indian enterprises garnered $2.3 billion through IPOs, a significant increase from the $166.5 million raised during the equivalent timeframe the previous year, as per LSEG data.

‘India coming of age’

• According to a Bloomberg report, Blackstone Inc is setting its sights on expanding its Indian private equity holdings by an impressive $25 billion within the coming five years, showcasing India’s growing appeal to international investors.
• The company, headquartered in New York, plans to augment its Indian asset management division by recruiting 20 additional investment experts. Furthermore, it aims to double the size of its office premises at Nariman Point, located in the heart of Mumbai, as stated by Amit Dixit, the firm’s head of private equity for Asia.
• “India’s predictable regulatory and policy environment, steady economic growth, and buoyant capital market offers the right opportunity to speed up creating such a large portfolio,” Dixit said.
• “The pipeline and activity level has never been as big or as busy. We are seeing many more billion dollar-plus transactions, it’s unbelievable,” said Rahul Saraf, Citigroup’s India head of investment banking.
• “India is really coming of age in the size, scale and quality of issuers.”
• “If you look at global liquidity, where would a large family office or global fund like to put money in the current environment? It’s most likely between the US, India and Japan,” said Rahul Saraf, Citigroup’s India head of investment banking.

(With inputs from agencies)

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