<p>Domestic markets celebrated the BJP’s victory in state elections along with sharp fall in crude oil price. Nifty kissed the 21k mark as sentiments got a big boost following positive developments both on the global and domestic front. This week, the markets are likely to take breather and consolidate as major central banks globally, including United States, China, Europe and Britain would be announcing their monetary policy decision.</p>.<p>While the banks are expected to maintain status quo, commentaries will hold importance with regards to interest rate cycle and economic outlook. Apart from interest rate decision, retail inflation data from US and India will also be watched.</p>.<p>Last week, the party continued on the Dalal Street with Nifty witnessing the biggest weekly gain of 702 points, last seen in July 2022. The index finally ended the week just short of 21k at 20,969. The broader market too gained with Nifty Midcap100 and Nifty Smallcap100 up 2.3% and1.2% respectively.</p>.<p>Majority of the sectors witnessed strong rally except fast moving consumer goods and pharma. Energy stocks surged ~8% on the back of rise in the power consumption along with big push on renewable energy from the government. Banking and financial sector too gained upto 5-7%, as activities are expected to get big boost following strong push from the government on the capex front.</p>.No plans to loosen rates, no complacency on inflation fight: RBI Governor.<p>The state election outcome along with strong macroeconomic data and easing global interest rate expectations boosted the market momentum. Nifty rallied by more than 11% from its low of 18,837 in October 2023. It crossed the 21K-mark on last trading session of the week after the Reserve Bank of India hiked its India GDP growth forecast to 7% and left inflation projection unchanged at 5.4% for FY24.</p>.<p>The central bank maintained its status quo and kept repo rate unchanged for the fifth time in a row. Further, a 6% fall in Brent crude price to $74/barrel cheered investors as lower price would be a boon for many industries and boost corporate profitability.</p>.<p>On the global front too, markets made a smart comeback as investors remained convinced that rate-hike cycle has ended. This coupled with strong institution flows and economic data added to the positivity. FIIs turned buyer since the month of November and have bought more than Rs10k crore in December so far.</p>.<p>Despite this sharp up-move, Nifty is trading at a 12-month forward price-earnings ratio of 18.4x, which is at a 9% discount to its 10-year average. We expect market sentiment to strengthen further as the ongoing pre-election rally is quite strong now. Given the government’s focus approach towards long-term capex across key areas, we expect Banking, Industrials, Real Estate, Auto and Consumer Discretionary to do well going forward.</p>.<p><em>(The author is Head – Retail Research, Motilal Oswal Financial Services Limited)</em></p>
<p>Domestic markets celebrated the BJP’s victory in state elections along with sharp fall in crude oil price. Nifty kissed the 21k mark as sentiments got a big boost following positive developments both on the global and domestic front. This week, the markets are likely to take breather and consolidate as major central banks globally, including United States, China, Europe and Britain would be announcing their monetary policy decision.</p>.<p>While the banks are expected to maintain status quo, commentaries will hold importance with regards to interest rate cycle and economic outlook. Apart from interest rate decision, retail inflation data from US and India will also be watched.</p>.<p>Last week, the party continued on the Dalal Street with Nifty witnessing the biggest weekly gain of 702 points, last seen in July 2022. The index finally ended the week just short of 21k at 20,969. The broader market too gained with Nifty Midcap100 and Nifty Smallcap100 up 2.3% and1.2% respectively.</p>.<p>Majority of the sectors witnessed strong rally except fast moving consumer goods and pharma. Energy stocks surged ~8% on the back of rise in the power consumption along with big push on renewable energy from the government. Banking and financial sector too gained upto 5-7%, as activities are expected to get big boost following strong push from the government on the capex front.</p>.No plans to loosen rates, no complacency on inflation fight: RBI Governor.<p>The state election outcome along with strong macroeconomic data and easing global interest rate expectations boosted the market momentum. Nifty rallied by more than 11% from its low of 18,837 in October 2023. It crossed the 21K-mark on last trading session of the week after the Reserve Bank of India hiked its India GDP growth forecast to 7% and left inflation projection unchanged at 5.4% for FY24.</p>.<p>The central bank maintained its status quo and kept repo rate unchanged for the fifth time in a row. Further, a 6% fall in Brent crude price to $74/barrel cheered investors as lower price would be a boon for many industries and boost corporate profitability.</p>.<p>On the global front too, markets made a smart comeback as investors remained convinced that rate-hike cycle has ended. This coupled with strong institution flows and economic data added to the positivity. FIIs turned buyer since the month of November and have bought more than Rs10k crore in December so far.</p>.<p>Despite this sharp up-move, Nifty is trading at a 12-month forward price-earnings ratio of 18.4x, which is at a 9% discount to its 10-year average. We expect market sentiment to strengthen further as the ongoing pre-election rally is quite strong now. Given the government’s focus approach towards long-term capex across key areas, we expect Banking, Industrials, Real Estate, Auto and Consumer Discretionary to do well going forward.</p>.<p><em>(The author is Head – Retail Research, Motilal Oswal Financial Services Limited)</em></p>