Equity Outlook – November 2022
The
S&P BSE SENSEX advanced by 5.8% on a total return basis in the month of Oct
2022 while S&P BSE Midcap Index & S&P BSE Small cap Index advanced
by 2.0% and 1.3% respectively. Most of the sectoral indices gained during the
month. Banks, Capital goods, and Tech indices recorded relatively higher
growth. Advance in Banks was fuelled by stable asset quality trends and the persistence
of high credit growth along with improving interest margins. IT companies
reported reasonable growth with stable order books despite global uncertainties.
Capital goods companies have reported healthy order inflows supported by a pickup
in public Capex and are seeing signs of private Capex revival. Healthcare,
Consumer Durables, and FMCG indices were laggards during the month. Consumer
Durables and FMCG companies' results have been mixed with few companies
reporting lower than expected growth.
Though
US inflation remains high, US GDP is estimated to be back in the expansion zone
in Q3 after two-quarters of contraction. A relief rally was seen in S & P
500 (+8.1%) and Dow Jones Industrial Average Index (+14.1%) during the month. The
challenging environment in the majority of emerging markets was reflected in
the persistent declining trend in the MSCI EM index (-3.1%).
Amidst
rising interest rates in the US, FPIs continued to be sellers in Indian markets
to the tune of USD $0.5 bn. Domestic institutional investors were buyers with
purchases worth USD 1.2 bn. Since the start of the calendar year 2022, FPIs
have recorded a net outflow of USD 22.3 bn while DIIs recorded a net inflow of
USD 33.7 bn.
Quantum Long Term Equity Value
Fund (QLTEVF) saw an increase of 4.2% in its NAV in the month of October 2022.
This compares to an increase of 4.1% in its Tier I benchmark S&P BSE 500
and a 4.5% increase in its Tier II Benchmark S&P BSE 200. IT, Banks, and
PSUs were major contributors to the marginal outperformance. Cash in the scheme
stood at approximately 6.4% at the end of the month. The portfolio is valued at
12.2x FY24E consensus earnings vs. the S&P BSE Sensex valuations of 17.0x
based on FY24E consensus earnings.
India’s Relative Outperformance
is supported by robust earnings growth:
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