After delivering a superior performance in March, the Indian equity markets started off the new FY 2014-15 on a positive note but could not hold on to their gains; as a result, domestic equity indices ended flat in April. The CNX Nifty fell 0.12% while the BSE Sensex rose 0.14%. The S&P BSE Sectoral indices ended mixed in April.
IIP (India’s Index of Industrial Production) contracted 1.9% in February, the lowest in nine months, mainly due to contraction of the capital goods sector; it had logged an upwardly revised 0.8% in January and 0.6% a year ago. Core sector growth slowed to 2.5% in March from 7% in the same month a year ago, and 4.5% last month, as output of crude oil, natural gas and fertilizer declined. India’s trade deficit stood at $10.51 bn in March, the highest since October 2013, and up from $8.13 bn in February. Data from the RBI showed that total foreign direct investment inflows into India in February rose 1% on year to $3.022 bn from $2.991 bn a year ago.
The S&P BSE Healthcare index was the top performer, rising 6.68% followed by S&P BSE Capital Goods and S&P BSE BANKEX indices posted moderate gains of 0.89% and 0.92%, respectively, due to long rollovers to the May futures and options contracts in the sectors shares. The S&P BSE Realty was among the worst hit, down 4.88%, following profit taking in realty shares.
The International Monetary Fund (IMF) said that India’s growth could recover to 5.4% in the current fiscal year and to 6.4% in the next year to March 2016 due to stronger global growth, an improvement in export competitiveness and implementation of the recently-approved investment projects. At home, the National Council of Applied Economic Research (NCAER) projected a 5.1-5.5% economic growth in 2014-15 for India.
After easing for three consecutive months, domestic inflation increased slightly in March, led up by an increase in food prices. Retail inflation measured by the consumer price index (CPI) rose to 8.31% in March from 8.03% in February, while wholesale price index (WPI) inflation rose to a three-month high of 5.70%.
The markets in May are expected to be guided by FII investments, domestic macro-economic data and the outcome of the general elections. Short-term volatility is highly likely on the poll results.
The current equity market scenario is largely driven by hopes of a favorable outcome to the ongoing elections and FII inflows. Both these sentiments are likely to drive markets inflows until the election results are announced in May. It is important to note that the market trend might reverse if the election outcome is not in sync with Investor sentiments. Besides, probability of the US Fed increasing the interest rates and the state of the Chinese economy will also influence future market trends. Hence, investors are advised to weigh all these factors plus their own personal profile (risk profile and returns expectations) before investing. Ideally, use the systematic investment plan (SIP) to invest in equity mutual funds.
With iSIP, you can start a SIP from the convenience of your home. Just log onto our website and start an SIP online. It’s economical and doesn’t involve any paperwork. Our Flexi-STP plan allows you to take advantage of movements in the market by investing more when the markets are low and less when markets are on a higher side, so you get more benefits. We will continue to invest in a mix of technology that will help you invest and manage your investments effortlessly.
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