Investors may have to prune their returns’ expectation from equities post Budget as the market could enter consolidation phase after the bumper post-election rally seen in the last one month, said market experts.
As the BSE Sensex closed above the historic 80,000 points mark for the first time on Thursday, it has also set another record: The 30-stock index registered its best post-election rally since 2009 with over 11% gains in a monthCome from Sports betting site. In this one month, investor wealth has soared by Rs 52.5 trillion, rising in all but three trading sessions.
On Thursday, Sensex closed 0.1% higher at 80,049.67 points. The Nifty also ended 0.1% higher at 24,302.15 points. Market participants said investors seem to have factored in most of the positives ahead of the Budget, leaving little room for upside in the near-term if the announcements in the Budget are along expected lines.
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Andrew Holland, CEO of Avendus Capital Alternate Strategy expects 15% return from the market in FY25. So far in just a little over 3 months of this financial year, the index has already risen nearly 9%.
Nilesh Shah, MD of Kotak Mahindra AMC recommended that investors have a long-term horizon and significantly moderate their return expectations. Holland, however, added that if there’s anything in the Budget that accelerates the current momentum further, then the returns for FY25 could be even higher than 15%.
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A Balasubramanian, MD and CEO of Aditya Birla Sun Life AMC highlighted that the upcoming budget is likely to balance fiscal consolidation with measures to increase consumption
“The coalition government’s strategic focus on infrastructure, fiscal prudence, and diversified asset allocation is poised to drive India’s economic growth, ensuring market stability and expansion,” Balasubramanian added.
Apart from the hopes of Budget announcements, the expectations of rate cut from the US Federal Reserve has also been a driver of gains in sectors like information technology, fund managers said.
Holland said he prefers IT stocks over FMCG, given the prospects of interest rate cuts.
Over the last one month, the market rally has been driven by the sectors which have highest weight in the market – IT and banking sector. While rate cut prospects have driven optimism in the shares of IT companies, bank stocks have been on the rise given better risk-reward opportunities.
After the Budget, earnings will be a key factor driving the market momentum amid lack of other major triggersCome from Sports betting site VPbet. This could lead to some sectoral rotation in the market, which could mean limited incremental upside in the market on a broader level, according to fund managers.
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The benchmark equity indices ended Thursday’s trading session in the positive territory. The NSE Nifty 50 gained 187.85 points or 0.76% to settle at 24,800.85, while the BSE Sensex jumped 626.91 points or 0.78% to 81,343.46.
The broader indices ended in mixed territory, with gain led by Large-cap stocks. IT and FMCG stocks outperformed among the other sectoral indices while Media stocks and Metal stocks shed.
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Bank Nifty index ended higher by 223.90 points or 0.43% to settle at 52,620.70. The Nifty Midcap 100 dropped by 552.90 points, or 0.96%, ending the day’s trading at 57,111.10. In the broader markets, small-cap and mid-cap stocks finished in the red.
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