ELECTION 2024 OPPORTUNITY FOR NIFTY & INVESTORS-GO WITH FLOW NOT WITH PREDICTION

The New Year 2023 brings lots of hope for the Indian markets and Global too. The list of wishes is endless for the year 2023 and it begins 1^st with the expectation of war between Ukraine and Russia coming to end followed by the U.S. fed rate coming to a halt. Well we are not tarot card readers hence can’t comment on the fulfillment of these wishes but all we can say is that the world has learned a hard way what you mean by Independency from global supply chain risk.

 The fear of covid is not yet over and it haunts still as we enter the 2^nd year of celebration of the Virus Breakout. Indian markets have made investors jealous and frankly speaking, global investors don’t like Indian markets to be growing and getting independency from the clinch of FII’s money and getting soaked with DII’s money. The number of Demat accounts crossed the 110 million mark.

Lots of numbers prediction has been done for 2023 Nifty but the truth is that the real predicator is the investors who are parking money into the market. If we look at conservative estimates suggest that provident funds, pension funds, insurance funds, and SIPs could contribute at least $20 billion (Rs 1.65 lakh crore) to Indian equities in 2023. This outlook holds some merit as according to Association of Mutual Funds in India (AMFI) data, the SIP inflow for November was Rs 13,306 crore, a record high, with the total SIP AUM at Rs 6.83 lakh crore. Hence stop listening to these predictions and follow your financial advisor for investing.

The Indian economy has and will remain at every eye-catching point for global investors and we know from history that a cruel global political system will try to bring down this through various strategies creating political problems and instability. But we have a corruption-free government in place with strong reform measures followed by strong foreign policy management which gets India into a strong position. The biggest question of the investors for Indian markets is whether Indian markets will sustain the new highs or we will find a fall? Shall one invest in this market or one shall remain outside the purview of investments as of now?

Well, Indian markets will correct and will also reach new highs and they will remain volatile but will be creating new opportunities for creating wealth. This mind sounds diplomatic but the truth is that the Indian market is very important for the upcoming 2024 election. If the market remains robust and makes investors happy we know how it impacts our decision making at the same time the market will also correct since funding for 2024 will be done from this market only.  In the last 3 years, the only asset class where every inflow from political and no political segment came into the capital market. You will not find a robust correction but a volatile ride where one segment will pull out and the other segment will keep investing. This quarter we will find only an inflow of funds coming to us due to the end of the financial year, tax savings, etc will play a big role.

On the other side the end of the financial year profit booking cannot be ignored neither capital nor necessary business-related stock adjustment; advance tax payment will impact the market too due to redemptions. Hence investment opportunities as well as redemption both will run on the same track and on the same side.   At the same time, we will find sector readjustment of investment strategies keeping FY -24 in mind. The upcoming budget is going to be the last budget for this current government.  Next year before the election they will be coming up with only a provisional budget.

In FY-24 one will find significant opportunities for investing but only for those who don’t dream of market timing.  We all know in this year those who did market timing lost 25% return from the lows of 15200 levels of NIFTY. If we look at the market and more into the stocks we find that midcaps and small caps are significantly down and quality stocks are way too down compared to the Index. That means broader opportunity for investing is awaited and investing gradually at every fall will be a wise decision. The current market rally is riding on few horses and hence broader market rally is still awaited.  

Global inflation has started coming down and it’s expected that the FED rate halt will begin soon which will bring good news for the market and rally for the broader segment of the stocks. Further, any capital market-related good news in the budget will bring a complete swing for the market where you will find NIFTY inching into new highs. Well, new highs will also witness redemption and significant purchase by DIIs. Don’t predict the market direction since that prediction compass is very old now. Going and investing with the market flow is the new compass.

Once any of the global wishes come true we will find a completely new direction for the market. Now let’s come to predict what might get wrong for the Indian markets. Well, who has the money on the table decides the fate of the Indian markets and I can bet FIIs are no longer on the table. In fact, we don’t bother much about FII’s since the way DII’s book size is growing up. FIIs sold Indian stocks worth Rs 2.78 lakh crore in 2022. Meanwhile, DIIs remained net buyers last year, purchasing equities worth Rs 2.76 lakh crore. This number will grow as more employment gets into the country through PLI and Startup culture.