Nifty’s 1-year returns of 25% outshine major global indices with the next best performance coming from Wall Street’s S&P 500 at 22%. The Indian heartbeat index’s superior returns is being attributed to its shedding the tag of a follower by not over-relying on global cues and moving on its own strengths that includes robust domestic economy and growing breed of retail investors.
Wall Street’s Dow Jones and Nasdaq Composite have given returns of 18% and 21% while Germany’s Dax, China’s Shanghai Composite, Japan’s Nikkei 225 and UK’s FTSE100 have given returns between 17% and 10% in the same period. Among the laggards are South Korea’s Kospi and Hong Kong’s Hang Seng index with negative returns of 1% and 5%.
In the same period, Sensex’s returns stood at 22%.
Divam Sharma, Founder & Fund Manager at Green Portfolio PMS highlighted how his observation of the last two years shows Indian markets remaining more resilient than global peers.”For about two years now, we have been seeing a negligible reaction from Indian markets over global cues. Fed rate hikes, the Russia-Ukraine war, recession in the US and UK, Israel-Iran war, Japan rate hikes, and other global geopolitical and economic tensions barely shuddered the Indian equities,” he said.
The recovery by Indian markets after every setback has been swift, much to the surprise of the Street. “Our markets tend to overcome the negative impact within a few hours/days and then depend on the local developments and flows for direction,” Deepak Jasani, Head of Retail Research, HDFC Securities highlighted. .
The retail investors have been bailing out domestic markets on not just global setbacks but also domestic ones like in June and July after general elections and Union Budget when markets saw freefall.
Should you remain bullish?
Sharma’s advice to investors is to remain patient, focus on fundamentals and make staggered entries via SIPs on market corrections. He also urged them to keep their expectations as the mighty bull run would not last forever. He remains bullish on broader market stocks calling midcaps and smallcaps as Green Portfolio’s playing ground. Though he conceded that the valuations in most stocks have gone ahead of the fundamentals. He finds opportunities in sectors like telecom, pharmaceuticals, auto and defence.
Jasani recommends asset allocation review at periodic intervals and booking profits in case the allocation to equity has gone above a certain threshold on account of buoyant equity markets. The investors should look at a gradual switch to largecaps from small and midcaps.
Likewise for MFs, SIP investment should ideally continue even at high index levels and need to be liquidated only for financial goals set in advance, the HDFC Securities expert said.
Fed Factor
Jasani thinks the US Fed may not halt at one rate cut of 25 bps and could soon follow it up with a series of cuts unless the job and inflation situation dictate otherwise. “Markets may not continue rising even if the Fed keeps cutting rates. This is due to the buy on expectation sell on news phenomenon and also on worries of economic slowdown,” he opined.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)