The outcome of the recent state elections has injected a significant boost into the markets, amplifying the existing upward momentum. In the three days following the results, the BSESENSEX surged by 2,172.54 points (3.22%), closing at 69,653.73 points, while the NIFTY rallied by 669.80 points (3.30%), concluding at 20,267.90 points. Although this five-day surge might see a conclusion soon, the pivotal question remains whether this is a substantial move or merely a short-term rally.
Indications suggest a more substantial shift, expected to persist until at least the mid-April to May 24, coinciding with the ongoing elections. The prevailing market sentiment reflects optimism, aligning with the current government's favorable disposition and increasing the likelihood of their consecutive third term. However, this does not imply a unidirectional rally; corrections are anticipated, some potentially sharp, with various stocks experiencing fluctuations at different times and directions.
The fact that Foreign Portfolio Investors (FPIs) were negative on the Indian stock markets in recent months, acting as sellers, adds a positive aspect. Notably, their net purchases on a recent Tuesday in the cash market amounted to Rs 5,222 crore, despite domestic institutions selling shares worth Rs 1,400 crore. In the first three days of December 23 alone, FPIs' net purchases reached Rs 8,900 crore, surpassing the entire net purchases of Rs 5,800 crore for the entire month of November.
Economic indicators further support the notion that India has navigated through challenges and is poised for growth. Favorable GDP numbers, consistent month-on-month GST collections, controlled inflation, and signs of interest rates plateauing indicate the country's resilience.
Anticipated market trends over the next six months are expected to revolve around India's domestic factors—manufacturing, the 'Make in India' initiative, consumption patterns, infrastructure development, and fortifying the nation to tackle growth and supply challenges in the global arena.
While market valuations may not be outrightly inexpensive, discernment in stock selection becomes crucial. The momentum phase has concluded, and the upcoming period involves diligent efforts. Distinct stocks will move at different intervals, demanding patience for wealth creation.
In forecasting, albeit cautiously, an anticipated return of 8-12% over the next six months appears plausible.
In summary, ride the ongoing rally, as it is poised to guide India towards several milestones in economic growth and prosperity.
(With Agency Inputs)
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