Stock Market Recap - November 2023

Market Analysis - Nov'23: FPI resurgence fuels Indian market, Nifty & Sensex best in 2023.

Stock Market Recap - November 2023

Monthly Market Snapshot

While November brought positive momentum with FPIs resuming buying, The market participants remain watchful of various influencing factors, including election outcomes and global economic indicators, the overall sentiment is cautiously optimistic. Investors are advised to stay informed and exercise prudence as the market navigates through potential shifts in the coming months.

Key Market Movements‌‌

  • Benchmark Indices: The Sensex surged by 4.9%, while the Nifty 50 recorded an impressive 5.5% jump, marking the Nifty's best month since July 2022 and the Sensex's best since October 2022.
  • Global Factors Impacting Markets: The favorable market conditions were attributed to a decline in US treasury bond yields from their peak in October. Optimism was further fueled by expectations of a plateau in US interest rates and robust economic growth in India.
  • Foreign Portfolio Investors Reversal: After three consecutive months of selling, Foreign Portfolio Investors (FPIs) rebounded as net buyers in the Indian stock market during November. The shift was marked by a net inflow of ₹9,001 crore in Indian equities, contrasting sharply with the combined selling of over ₹39,000 crore in September and October, as reported by the National Securities Depository Ltd (NSDL).

Leaders And Laggards

All models except 'Nightcrawler' ,'Back Up' and 'Quick Short' outperformed the index.

Sector Superstars and Alpha Allywere two of the best-performing models, with 14.03% and 13.75%, respectively. Sector Superstars is a monthly model that generates wealth by buying stocks in the most trending sectors. On the other hand, Alpha Ally is also a monthly model that picks stocks likely to beat the index.

Coming to stocks, GICRE, or General Insurance Corporation of India, provided a monthly return of 37.25% as part of 'Alpha Ally' model, followed by ELECTCAST, or Electrosteel Castings Ltd, which returned 34.35% as part of 'Sector Superstars' model.

On the contrary, INDIANB, or Indian Bank, was the underperformer with negative 7.35% returns as part of the 'Alpha Ally', followed by ZEEL, or Zee Entertainment Enterprises Limited with negative 3.09% returns as part of the 'Buy High Sell Higher' model

Expert Insights And Market Outlook‌‌

  • Siddarth Bhamre, EVP and Head of Research at Religare Broking, suggests a potential global realignment in asset allocation, with bond yields attracting more fund allocation based on the risk-reward ratio between debt and equity.
  • Viraj Gandhi, CEO of SAMCO MF, points out the influence of US FED rate hikes and the interest rate difference between India and the USA. He anticipates continued cautiousness until clarity emerges on when the rate hikes will pause.
  • V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, highlighted the reversal in FPIs' selling strategy, attributing it to the decline in US bond yields and the resilience of the Indian market. Despite the positive trend, caution persists, and FPI response will be closely tied to market trends and state election results.
  • Arvinder Singh Nanda, Senior Vice President of Master Capital Services Ltd, emphasized the role of market valuations in FPI decisions. While a favorable state election outcome could trigger a rally, high market valuations may lead to FPI selling at elevated level

Factors Affecting Indian Markets

  • Debt Market Dynamics: ‌‌Alongside equity investments, FPIs showed a heightened interest in India's debt market, injecting ₹14,860 crore during the review period. The total FPI investment in the debt market for 2023 now stands at ₹50,361 crore, marking a significant increase from ₹6,382 crore in October and ₹938 crore in September. Notably, this is the highest FPI investment in the debt segment since October 2017.
  • US Economy and Yields‌‌: Analysts remain cautious despite the positive November trend. Decline in US treasury yields and a softer dollar contributed to positive market sentiment, along with rising speculation that the US Federal Reserve concluded its key interest rate hike cycle.

Disclaimer: The opinions expressed in this blog are personal views and should not be considered financial advice. Please do your own research and consult with a professional before making any investment decisions.

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