India's aggregate market capitalisation dropped by 1.6 percent in dollar terms, marking the steepest fall since October 2023. The Indian equity market, however, maintained its fifth position globally with a market capitalisation of $4.5 trillion
Moneycontrol News
March 28, 2024 / 10:40 AM IST
A depreciation in rupee against dollar weighed on the market sentiment in March.
Indian equities have been one of the biggest losers among the top 10 global markets in March, hit by a decline in sentiment towards small and mid-cap stocks.
Returns in dollar terms have also been lower because of a depreciation in the rupee. So far in March, India's aggregate market capitalisation dropped by 1.6percent in dollar terms, marking the steepest fall since October 2023. The Indian equity market, however, maintained its fifth position globally with a market capitalisation of $4.5 trillion.
The UK recorded the largest gains of 3.8 percent, followed by Canada and Japan with gains of 3.75percent and 3.43 percent. The market value for the US and France expanded 2.66 percent and 1.84 percent, while Hong Kong saw a growth of 0.84 percent. Saudi Arabia suffered the sharpest decline of 2.13 percent, followed by India's 1.6 percent and China's 1.4 percent.
The domestic markets went into a correction in March after investors turned nervous about parking their money in midcaps and smallcaps, and liquidity challenges were hardened by operator activity. The recent ED raid on Hari Shankar Tibrewal and others involved in stock manipulation also thickened the air of caution in the broader market. Sebi's advisory to mutual funds regarding froth accumulation in smallcap and midcap schemes further impacted these stocks. On the currency front, the Indian National Rupee weakened around 0.6 percent against the US dollar in March.
Related stories
- BMC collects Rs 2,200 crore property tax
- Group of lawyers write to CJI against 'vested interest group' trying to 'pressure' judiciary
- India open to joining trade blocs with China if its economy is WTO compliant, trade minister says
The markets, however, rebounded last week following a more dovish stance than expected from the US Federal Reserve, driving global indices to record highs and benefiting stocks.
US Feddecided to maintain the interest rates aligned with market expectations. The decision was unanimous, reflecting the consensus among participants who see no immediate need for rate hikes. Highlights from the US central bank included a dovish outlook for the coming year, with the Fed retaining the projected three rate cuts for the year despite a strong labour market. Fed chair Jerome Powell noted a considerable easing of inflation but emphasised the need for a more sustainable slowdown in prices.
After the recent spate of corrections, analysts foresee a base forming in indices. Many quality companies have hit key support levels. Investors should prioritise accumulating quality stocks for the long term. The ongoing consolidation is expected to pave the way for the next upward movement, with largecaps likely to outperform the broader market, analysts said.
Emkay Research in its latest report said March correction offers a 6-12-month entry opportunity, driven by stretched valuations and small and midcap liquidity concerns.
Despite the wobble, the economic fundamentals remained strong for India, with earnings growth continuing in FY25. Emkay Research expects a rebound in 3-6 months as smallcaps and midcaps outperform and largecap trade unwinds. Valuations remain mixed, with Nifty P/E moderate at 20x butsmall and midcap indices elevated at 29x and 25x. Small and midcaps rally persists due to economic shift towards manufacturing, offering volatile yet rewarding opportunities, said the brokerage.
Emkay had in its January report said the Nifty would hit 24,000 by the end of December 2024. In its latest report it preferred smallcaps and midcaps and overweighting consumer discretionary, materials, and industrials. The brokerage bases its three-six-month projection on factors like anticipated BJP victory in the general elections next month, a reform-oriented budget in July, and monetary easing by the Reserve Bank of India.
Foreign brokerage Jefferies said it sees the recent decline in midcaps and smallcaps as just a correction, and not a meltdown like 2018. Despite potential further corrections due to increased volumes and mutual fund flows, it views this as healthy. It remains bullish on sectors like property development, industrial and power, and select PSUs. Unlike 2018, this correction isn't worsened by a crisis,and macroeconomic fundamentals remain strong.Inflows tosmallcaps and midcaps have moderated, though volumes remained high, signalling potential for further correction, it said.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Moneycontrol News
Tags: #equity markets #India #markets News #stock markets
first published: Mar 28, 2024 10:38 am
${res.must_watch_article[0].headline}
`); } if (res.stay_updated) { $(".stay-updated-ajax").html(res.stay_updated); } } catch (error) { console.log('Error in video', error); } } }) }, 8000); })
