Shillong, July 3: Vinod Nair, Head of Research at Geojit Financial Services, highlights that investor sentiments are strengthened by encouraging domestic data and optimistic global cues. The global market benefited from resilient economic data, avoiding the possibility of a recession. India’s stock market witnessed broad-based trends, with notable performance in the energy, financial, metal, and FMCG sectors.
Economic activities are gaining momentum, as indicated by the PMI level reaching 57.8, signifying sustained demand for products and fostering confidence in the manufacturing sector.
The domestic equities market continued its positive sentiment from the previous week, with a healthy 12% growth in GST collection, totaling Rs 1.61 lakh crore for June. Nifty, driven by buying in heavyweight index stocks, sustained its upward momentum and closed the session with a gain of 133 points (+0.7%) at 19,323 levels, according to Siddhartha Khemka, Head of Retail Research at Motilal Oswal Financial Services.
Sector-wise, there was a mixed performance, with a rally observed in PSU banks (+3%) and oil & gas (+2%). Metal stocks gained attention due to marginally better-than-expected China manufacturing PMI data. Market movements will be influenced by upcoming macro data, including manufacturing PMI from the US, India’s manufacturing and service PMI, and the release of FOMC meeting minutes.
The overall market structure remains positive, with Nifty achieving new highs at a steady pace. Expectations of healthy Q1FY24 numbers keep PSU banks in focus, while reduced monsoon deficiency of 10% brings attention to agri-related stocks.
However, analysts caution that the stock market carries high risks due to rich valuations, and unforeseen negative developments could trigger a sharp correction. V. K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, notes that the ongoing rally has led to expensive valuations, with Nifty trading above 20 times estimated FY 24 earnings, surpassing the historical average.
“While momentum can drive the market higher, the high valuations pose risks. Unforeseen negative developments could trigger a sharp correction. Therefore, investors must remain cautious even while staying invested in the market,” Vijayakumar advised.