Except for China & Hong Kong, all other indices ended in the green
Globally, most countries soothed covid related restrictions as daily covid cases dropped. Except for China, all other countries that opened up economy-China continue to hold zero covid policy. With an upsurge in points, some cities have locked down, including Shanghai. And hence Chinese indices were the worst performer in Mar’22.
Bovespa has majorly benefited from the uptick in commodity prices. A Brazilian multinational corporation, one of the largest logistics operators in Brazil, Vale S.A contributed to the uptick in Bovespa. Adding to this, even Tesla Inc signed an unrevealed deal with Vale to supply nickel to the electric car maker.
European Indices fell as worries about advancing inflation and the economic impact of the ongoing war in Ukraine provoked the cautious temper and provoked investors to trim down positions.
Nifty logged its best month since Aug’21
In March 2022, the Indian stock market recouped the losses it suffered in the preceding two months. The Nifty 50 gained four percent in March 2022 after losing 3.2 percent during January-February 2022, and the S&P BSE Sensex gained 4.1 percent after losing 3.4 percent in the preceding two months.
The stock market buoyancy in March 2022 was felt across sectors, market capsizes, and ownership of companies. Valuations of the benchmark indices improved in March 2022. Price to earnings multiple of the Nifty 50 inched up to 22.9 times from 21.6 times in February 2022 and that of the S&P BSE Sensex rose to 25.8 times from 24.7 times.
Markets staged a good comeback as oil prices cooled & expectations of some solution to the Russia-Ukraine conflict. The stock market fared well in March 2022 purely on domestic buying interest as foreign portfolio investors (FPI) continued to exit the Indian market.
Except for auto, consumer durable & capital goods all other sector ended in green
Geopolitical tensions between Russia-Ukraine pushed the commodity prices up. And the same pricing uptrend is seen in the metal & mining sector. An increase in demand after the Covid crisis also contributed to the rally. We expect this trend to persist in the medium term.
As the global growth expectation moderated amid geopolitical tensions, we have started witnessing the profit booking in cyclical stocks & buying in defensive & sensitive buckets. But the trend may still favor cyclical as the cyclical pockets look cheaper than defensive pockets.
FPIs have the highest buying in Metals, FMCG, Chemicals & Oil gas sectors. They have bought Rs.4,386 Cr, Rs.4,060 Cr, Rs. 1,472 Cr & Rs.830 Cr in these four sectors. They were major net sellers in financial services, Automobiles, construction materials & capital goods.
All the market cap indices ended in green; Smallcaps led the rally
Despite multiple global & domestic headwinds, all the market cap indices ended the month in green.
Valuations of the benchmark indices improved in March 2022. Price to earnings multiple of the Nifty 50 inched up to 22.9 times from 21.6 times in February 2022, and that of the Nifty midcap 150 inched up to 27.1 times from 26.8. Nifty smallcap 250 moved down to 24.4 times from 26.1 times.
From the valuation perspective, the Mid Caps appear more attractive than Large Caps even as they trade at an 18% premium to the Large Caps. During the 2017 bull phase, Mid Caps traded at a 45% premium to Large Caps. Moreover, the recent spate of IPOs and their triumphs indicate the market’s appetite for Mid and Small Cap stocks. The stellar listing of Zomato, Nykaa IPO also signifies the investors’ euphoria and strong risk appetite for novel and next-generation business models.
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