Tata Mutual Fund

Market Commentary

  • Request a callback
    Please fill the details below & we will get in touch with you
    Fields with * marks are mandatory
    Name *

    Mobile No *

    Landline No -

    City *

    Thank You!

    We will get back to you soon.

Equity Market

Equity Commentary –  March 2019

Indian equity markets were sharply up for the month of March 2019 with the Sensex up by 7.8%, and the Nifty by 7.7%. The broader market; the BSE Midcap & the BSE 200 were also up with a performance of 8.1% and 7.6% respectively. In terms of sectors; Banks, Consumer Durables, Capital Goods, Power, Oil & Gas, Realty were the major outperformers whilst all other sectors underperformed the BSE Sensex. FIIs were net buyers in March, with net inflows to the tune of ~USD 4.8 bn. Net equity selling in March by domestic MFs in the market were ~(USD 1 bn).

Index Name As on As on As on Return in %
28-Mar-19 28-Feb-19
28-Mar-18  1 Month 1 Year

Nifty 50 Index

11624 

10793 

10114 

7.7 

14.9 

S&P BSE Sensex

38673

35867 

32969 

7.8 

17.3 

S&P BSE MID CAP

15480 

14318 

15963 

8.1 

-3.0 

S&P BSE SMALL CAP

15027 

13690 

16994 

9.8 

-11.6

S&P BSE 200

4908 

4563 

4433 

7.6 

10.7 

S&P BSE AUTO

18825 

18806 

24057 

0.1

-21.7 

S&P BSE Bankex

34142 

30027 

27198 

13.7 

25.5 

S&P BSE Consumer Durable

23857

21410 

22262 

11.4 

7.2 

S&P BSE Capital Good

18472 

17088 

18477 

8.1 

0.0 

S&P BSE FMCG

11742 

11354 

10290 

3.4 

14.1 

S&P BSE Health Care

14408 

13761 

13158 

4.7 

9.5 

S&P BSE IT

15280 

15254 

12101 

0.2 

26.3 

S&P BSE METAL

11355 

10767 

13322 

5.5

-14.8 

S&P BSE Oil & Gas

15270 

13802 

14614 

10.6 

4.5 

S&P BSE Power Index

2034 

1829 

2126 

11.3 

-4.3 

S&P BSE Realty

2077 

1796 

2230 

15.7 

-6.9 



Index Name As on As on As on Return in %
28-Mar-19 28-Feb-19
28-Mar-18   1 Month 1 Year

Nifty 200

6080 

5643

5499 

7.8 

10.6 

Nifty 50

11624 

10793 

10114 

7.7 

14.9 

Nifty Auto

8335 

8355 

10821 

-0.2 

-23.0 

Nifty Bank

30427 

26790 

24263 

13.6 

25.4 

Nifty Commodities

3626 

3306 

3681 

9.7 

-1.5 

Nifty Energy

16484 

14819 

13214 

11.2 

24.7 

Nifty Financial Services

12544 

11227 

10208 

11.7 

22.9 

Nifty FMCG

30321 

29263 

26127 

3.6 

16.1 

Nifty India Consumption

4855

4708 

4740 

3.1 

2.4 

Nifty Infrastructure

3208 

2918 

3329 

9.9 

-3.6 

Nifty IT

15628 

15732 

12512 

-0.7 

24.9 

Nifty Metal

3044 

2872 

3513 

6.0 

-13.3 

Nifty Midcap 100

18259 

16721 

18757 

9.2 

-2.7 

Nifty Pharma

9347 

8885 

8358 

5.2 

11.8 

Nifty Realty

269 

230 

294 

16.9 

-8.5 

Nifty Smallcap 100

6673 

5934 

7792 

12.4

-14.4 


The Macro Picture

  March 2019 February 2019
WPI 2.93% (February 2019) 2.76% (January 2019)
CPI 2.57% (February 2019) 2.05% (January 2019)
Index of Industrial Production 1.66% (January 2019) 2.37% (December 2018)
Repo rate 6.25% (as on March 31, 2019)  6.25% (as on February 28, 2019)  
Marginal Standing Facility Rate 6.50% (as on March 31, 2019)   6.50% (as on February 28, 2019)  
Source: RBI, MOSPI

Inflation

India’s Wholesale Price Inflation (WPI) Index came in at 2.93% YoY in February 2019 as compared to 2.76% for January 2019 on account of moderation in food inflation.
The Consumer Price Inflation (CPI) index came at 2.57% YoY in February as compared to 2.09% in the previous month on benign food prices.

Growth

India’s Real Gross Domestic Product (GDP) grew at 6.6% YoY in Q3 FY19 reducing from the pace of 7.1% in Q2FY19. Private consumption grew 8.4% YoY for the quarter. The gross fixed capital formation continued to grow in double digits (~10.6% YoY).

Other macro developments (fiscal deficit and household savings)

India’s fiscal deficit as per revised estimates for FY19 is likely to be 3.4% against the earlier budgeted 3.3%, a marginal increase – a decent performance by the government given the headwinds it faced on lower GST tax collections. The budgeted number for FY20 also stands at 3.4% including the new income supplement scheme for marginal farmers to the tune of approximately US$70bn.

Market Outlook

The change in stance among the central banks across the globe specially US with them being more dovish opens doors for the so called carry trade to restart. US $ is unlikely to appreciate in the near term which is prompting the RBI to infuse liquidity in the market by using new instruments like to $5 bn swap trade completed on 26th March 2019. Over the past few months we have been highlighting tight liquidity in the domestic market as a key concern area – this concern in a few months may go away if the current trend continues which augurs very well for lending rates in India and hence equity markets.

Micro story for India, in terms of better corporate earnings growth going forward remains positive, making us optimistic on the long term potential for returns from the Indian Equity as an asset class.

Farm loan waivers/handouts are increasingly becoming popular instruments among all political parties constraining future government capital expenditure and crowding out potential private investments. FY20 budget has more of the same with the government promising Rs 6000 per annum income support scheme for marginal farmers totaling to approximately US$10 bn annual spend. The key opposition party, Congress, has announced that they intend to start a minimum income guarantee scheme of Rs 72,000 per annum for the 20% of least poor population ie approximate cost on an annual basis of Rs 3,60,000 cr (US$ 50 bn), if they win the elections. We will watch out for risks if any on our portfolio companies going forward.

Near term strong 15%+ CAGR earnings growth by Nifty/Sensex companies along with reasonable valuations make us optimistic of our performance going forward.

In terms of our portfolio positioning, we remain focused on companies with faster earnings growth visibility. We continue to remain overweight on private sector banks on account of their ability to gain market share and maintain relatively higher growth rates.

Long-term structural drivers like demographic advantage, low household debt, limited penetration across different consumer categories, increased potential for financial savings and urbanization makes India a compelling equity story from medium to long term perspective.

We believe investors would be well advised to invest with medium to long term perspective and systematically increase exposure to Indian equity markets.


Designed & Developed by Idealake

Email a friendX

Fields with* marks are mandatory

Name* Email*

Name Email

Name Email

Name Email

Name Email

Sender Name*

Sender Email*

Message