Authored by : Pranav Kulkarni Updated Jul 9, 2024 18:27 IST Jefferies on Indian markets ahead of Budget 2024: Fear of correction in 'midcap space'Jefferies on India: Capital markets firm Jefferies has, in its latest report, noted India's 'surprising post-election resilience', but underlined that the risk of further corrections remains greatest in the mid-cap space.
Jefferies on Indian markets ahead of Budget 2024 : Fear of correction in ' midcap space'"The risk of further corrections remains greatest in the mid-cap space.
Stock Market ahead of Budget 2024: What Jefferies saysThe new coalition government is reportedly considering consumption-boosting measures worth more than Rs500bn (US$6bn) in the upcoming budget, including tax cuts for lower-income individuals," Jefferies said.
Foreign investors were net sellers of Indian stocks in the April-May-June quarter.
They sold a net US$1.2bn last quarter after buying a net US$1.36bn in 1Q24 and a net US$21.4 bn in 2023.
Authored by : Pranav Kulkarni Updated Jul 9, 2024 18:27 IST Jefferies on Indian markets ahead of Budget 2024: Fear of correction in 'midcap space'
Jefferies on India: Capital markets firm Jefferies has, in its latest report, noted India's 'surprising post-election resilience', but underlined that the risk of further corrections remains greatest in the mid-cap space. In its report published on July 3, Jefferies also highlighted that if there is a risk of renewed share price declines, there is one major positive from a flow of funds perspective as the FIIs, who were net sellers in the previous quarter may buoy the Indian markets on every dip.
Jefferies on Indian markets ahead of Budget 2024 : Fear of correction in ' midcap space'
"The risk of further corrections remains greatest in the mid-cap space. The Nifty MidCap 100 Index now trades at 32.2x one-year forward earnings, compared with 20.6x for the Nifty. Meanwhile, there will be a temptation for investors to tilt the portfolio more towards consumption plays, relative to investment plays, on the view that the incoming government will focus more on populist measures whereas a feature of the past ten years has been a fiscal deficit driven by spending on physical infrastructure rather than transfer payments," Jefferies said while adding that the government's actions will become clearer in Budget 2024, which will be announced on July 23, 2024.
Stock Market ahead of Budget 2024: What Jefferies says
The new coalition government is reportedly considering consumption-boosting measures worth more than Rs500bn (US$6bn) in the upcoming budget, including tax cuts for lower-income individuals," Jefferies said.
According to the report, foreign investors will view any significant correction in the market as an opportunity to add since a combination of India’s outperformance in recent quarters and high valuations, most particularly in the mid-cap space, has meant that most dedicated emerging market investors are no longer overweight the market.
Foreign investors were net sellers of Indian stocks in the April-May-June quarter. They sold a net US$1.2bn last quarter after buying a net US$1.36bn in 1Q24 and a net US$21.4 bn in 2023. They have bought a net of US$4.95 bn since 7 June - the report noted.
