The Indian market rose 3 per cent in May 2023, according to a Motilal Oswal Financial Services monthly report, and all key global markets declined except India and Japan.
Nifty continued its winning streak for the third month and gained 2.6 per cent month-on-month (m-o-m) in May 2023, closing at 18,534.
Moreover, in calendar year 2023, the Nifty has surged by 2.4 per cent. At present, it stands merely 1.9 per cent away from its all-time high of 18,888, achieved in December 2022.
Automobiles, real estate, consumer goods, technology, and telecom emerged as the top gainers. Automobiles and real estate increased by 8 per cent each, while consumer goods, technology and telecom increased 7, 6 and 4 per cent, respectively. The only laggard among the major sectors was public sector banks, which experienced a decline of 3 per cent.
Why India Remains The Best Investment Destination
The global market cap witnessed a decline of 2.9 per cent (equivalent to $3 trillion) over the past 12 months, while India’s market cap rose by 2.7 per cent. Remarkably, apart from India and Japan, all other key global markets experienced a decrease in market cap during the same period.
Among the major global markets, Japan, Taiwan, Brazil, Korea, India, Russia, and the US ended higher in May 2023. In contrast, the UK, Indonesia, China, and MSCI EM concluded the month with lower performance in local currency terms.
The MSCI India index, which tracks the performance of large- and mid-cap segments of the Indian stock market, has shown outstanding growth up 7 per cent over the past 12 months. The index has outperformed the MSCI EM index (down 11 per cent), which measures the equity market performance of global emerging markets. In the 10-year tenure, the MSCI India index has surpassed the MSCI EM index by an impressive margin of 173 per cent.
Foreign institutional investors (FIIs) continue to exhibit strong interest in India's investment landscape. In May 2023, FIIs remained net buyers for the third consecutive month, investing a substantial amount of $5 billion. This represents the highest investment since September 2022, signifying the confidence of international investors in India’s growth potential.
According to the report, healthy macros, lower crude oil price, robust balance sheet and moderating inflation bodes well for the economy.
“The Nifty ended FY23 with 11 per cent earning per share (EPS) growth on a high base of 34 per cent growth in FY22. Nevertheless, earnings remained lopsided, with BFSI driving almost entire incremental earnings in FY23. With healthy macros, range-bound oil prices, a robust fiscal balance sheet and moderating inflation, the outlook for the market looks optimistic” the report said.
In contrast to the market consensus of 5 per cent growth and the forecast of 5.3 per cent growth, India’s real GDP growth surprised with a 6.1 per cent in Q4 FY23. As a result, FY23 growth came in at 7.2 per cent, beating the consensus of 7 per cent. Given this robust fundamentals the financial services firm is overweight on financials, capex, autos and consumption.
The report sees an opportunity in ICICI Bank, ITC, L&T, M&M, HCL Tech, Ultratech and ONGC in the large-cap space. In the mid-cap and small-cap space, it is bullish on Ashok Leyland, Vedant Fashion, Metro Brands, MMFS, APL Apollo, Godrej Properties, and Lemon Tree.