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Dalal Street experienced significant gains in the week ending December 6, with the BSE Sensex rising 2.39% and the Nifty 50 up 2.27%, driven by a dovish RBI monetary policy, improved FII flows, and lower oil prices. Looking ahead, the market is expected to remain positive, focusing on upcoming US and Indian inflation data, the ECB interest rate decision, and several major IPOs, with experts predicting continued liquidity and favorable government policies to support growth.
The broader market experienced a significant rally on November 25, with the Nifty Smallcap 100 and Nifty Midcap 100 indices surging nearly 2%, driven by strong buying in PSU stocks. This surge follows the BJP-led Mahayuti alliance's decisive victory in Maharashtra, which analysts believe will lead to increased capital expenditure and a boost in infrastructure and manufacturing sectors. The win is expected to facilitate a more consolidated approach to state and central politics, further benefiting PSU companies and stalled development projects.
In October, mutual fund inflows via monthly systematic investment plans (SIPs) surpassed Rs 25,000 crore for the first time, with equity mutual funds attracting over Rs 41,500 crore as retail investors capitalized on market conditions. Fund managers adjusted allocations, increasing weights in sectors like banks, healthcare, technology, and cement, while reducing exposure to oil & gas, consumer durables, and automobiles.
At the CNBC-TV18 Global Leadership Summit, veteran investors emphasized the long-term potential of Indian equities, predicting significant growth over the next two decades. Manish Chokhani highlighted the risk of not investing in India, while Ramesh Damani noted a temporary market correction. Raamdeo Agrawal urged patience, anticipating improved earnings growth, and Ashishkumar Chauhan reflected on the evolution of Indian stock markets over the past 25 years.
Market veterans emphasize the importance of patience and the power of compounding for new investors. Ramesh Damani describes compounding as the "eighth wonder of the world," likening it to a snowball that grows over time, while Raamdeo Agrawal highlights the necessity of waiting for compounding to take effect, especially during market downturns.
Ramdeo Agarwal, chairman of Motilal Oswal Financial Services, stated that avoiding the stock market is the biggest investment mistake, highlighting that India's growth story could yield an additional 5% CAGR in the coming years. Reflecting on his own experience, he noted that not investing between 2003 and 2014 cost him a chance to double his net worth during a significant bull run. Agarwal urged investors to seek their own strategies rather than simply imitating others.
Tata Mutual Fund acquired a 0.06% stake in Motilal Oswal Financial Services by purchasing 375,000 shares at Rs 933.30 each, coinciding with the Motilal Oswal Foundation's sale of the same number of shares. Motilal Oswal shares closed at Rs 930.85, down 1.33%. In another transaction, North Star Opportunities Fund VCC-Bull Value Incorporated VCC Sub-Fund sold 92,000 shares of Manglam Infra & Engineering Ltd at Rs 47.12 each, with the company's shares ending the day at Rs 46.65, a decline of 4.31%.
Experts suggest that the Nifty 50 may rebound to the 24,300-24,400 zone during Muhurat trading, but sustainability is crucial amid negative sentiment due to upcoming US elections and the Fed's interest rate decision. Support is at 24,000, while the Bank Nifty faces resistance at 51,700, with support between 51,100-51,000. On October 31, the Nifty 50 closed at 24,205, down 136 points, and the Bank Nifty fell 332 points to 51,475, despite a favorable market breadth.
Goldman Sachs has downgraded Indian equities to 'neutral' from 'overweight', lowering the Nifty 12-month target to 27,000, citing a potential 'time correction' in the next three to six months. Despite strong domestic flows, high valuations and slowing economic growth are expected to limit upside potential. Analysts predict Q2 earnings growth for Nifty companies will drop to around 2%, marking the slowest growth in 17 quarters, following a period of robust double-digit increases.
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