Monthly Market Snapshot
In September, the Indian stock market witnessed heightened volatility, influenced by multiple domestic and global factors.
The market volatility stemmed from various elements, including a strong US Dollar Index, higher US bond yields, rising oil prices, foreign portfolio investment outflows, and India's expanding trade deficit.
Despite these challenges, market sentiment remains optimistic about Indian markets, powered by strong economic fundamentals and India's inclusion in JPMorgan’s bond index.
This inclusion is expected to attract substantial investments, assisting in financing India's current account and fiscal deficits.
Leaders and Laggards
Despite a volatile month, mean reversion models at Investmint gave impressive returns.
‘Quick Short’ and ‘High Five’ were two of the best-performing models, with 23.98% and 8.90%, respectively. Quick Short is an Intraday model that works on the mean reversion strategy. On the other hand, High Five is a weekly model that picks stocks likely to go up by the end of the week.
Now talking about stocks, UNIONBANK, or Union Bank of India, provided a monthly return of 22.61%, followed by HUDCO, or Housing and Urban Development Corporation Limited, which returned 19.48%. Both stocks are part of the ‘Alpha Ally’ Model.
On the contrary, ELECON, or Elecon Engineering, and TEXRAIL, or Texmaco Rail & Engineering Ltd, both part of 'Sector Superstar' model, were among the underperformers with a negative return of 18.59% and 15.96%, respectively.
Monthly Wrap Up
Regarding performance, flagship indices Sensex and Nifty showed gains of 1.5% and 2%, respectively, in September. Since April, both Sensex and Nifty have seen notable increases, demonstrating the market's resilience over the months.
However, caution prevails regarding the immediate short-term prospects, especially for mid and small-cap stocks, as a need to consolidate recent gains is observed. Market breadth is expected to narrow in the near term.
Foreign Institutional Investors (FIIs) and High Net Worth Individuals (HNIs) increased selling pressure due to global equity performance.
The global market is consolidating due to a sluggish economy, high inflation, and sustained high-interest rates. This affects corporate and household spending and elevates bond yields, creating challenges for equities. Despite this, the belief that the domestic Indian economy can decouple from global trends keeps FIIs' selling activity relatively moderate.
In summary, the Indian stock market is navigating a volatile period, influenced by both domestic and global factors. While short-term caution is warranted, the long-term outlook remains positive, anchored by strong economic fundamentals and key policy decisions.
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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