Recap of Equity markets in November

Recap of Equity markets in November

The US presidential elections culminated in Donald Trump nailing a comfortable victory against the Democratic nominee making a comeback as the President of the United States. US equities, particularly the Dow Jones, have risen around 7% post this win. One of the key impacts could be tariffs by the Trump government that could have repercussions on countries such as China and Mexico. Any trade tariffs on China indirectly benefits India through China +1 strategy as was the case in 2016.

Back in India, equities regained some ground after a volatile October and half of November. From the 11% declines seen from record highs, markets have recovered approx. 3%. Nonetheless, foreign institutional investors have maintained their position as net sellers for the second month in a row, with November mirroring October’s trend although the intensity of the outflows declined considerably. FPIs withdrew another 2.5 bn USD after 11 bn usd in October. This comes after consistent net buying from June to September. The outflows are indicative of high valuations in equities, disappointing results and evolving geopolitical landscape. In contrast DIIs saw inflows of 2.5 bn USD.

The results season was muted and disappointing in many aspects as both topline and bottomline earnings growth was visibly under pressure. This quarter saw a slowdown across all three major economic pillars - consumption, capex and exports – leading to a broad-based impact on the overall earnings.

Q2FY25 GDP numbers
On the macro front, India’s GDP grew by 5.4% in Q2FY25, the slowest since Q3FY23. The slowdown was evident in both capex and private consumption. Consumption growth despite decelerating from 1QFY25 was relatively strong at 6% vs 7.4% in first quarter of FY25 while investment growth decelerated from to 5.4% vs 7.5% in the same period. GVA slowed to 5.6%YoY in 3Q24 from 6.8% in 2Q24, with net indirect taxes continuing to decline in the current quarter. By sector, industry remained weak at 3.9%Y with manufacturing & electricity being a drag. Services sector remained steady at 7.1%.

Markets ahead
Despite the consolidation and fall from record highs, I believe markets may still witness some more volatility. From an investor’s perspective, these declines are good opportunities to add into your existing holdings.

As we head into the last month of 2024, most of the triggers have passed, be it the US elections the Maharashtra state elections. Markets would closely monitor the outcome of RBIs monetary policy.

Investment opportunities for investors

Overall, we continue with our themes of being overweight consumption, investments and underweight exports. We have rotated positions across sectors and market caps. Valuations remain relatively high for mid and small caps while they are reasonable in large caps. We retain an overweight in financials, we have increased exposure to pharma and trimmed positions in industrials.

Disclaimer
Data as on 30th Nov, 2024

Source: Axis MF Research, Bloomberg
Sector(s) / Stock(s) / Issuer(s) mentioned above are for the purpose of disclosure of the portfolio of the Scheme(s) and should not be construed as recommendation.
Past performance may or may not be sustained in the future.

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