Monthly market update & outlook – November’22

Indian macro dataflow remained strong:

• Manufacturing PMI: Manufacturing PMI rose MoM in November’22, reaching 55.7, and remained in expansion zone (>50 points) for the 17th straight month, with a marked rise in business optimism, new orders, including exports orders;
• GST Collection: Collections of INR 1.46 Tn (+11% YoY) in November’22 concluded the ninth consecutive month of collections over 1.4Tn mark. Improving tax compliance, commodity price pressure and robust consumer demand sustainably driving the GST collections;
• Credit growth: Credit growth accelerated to 17% YoY as of 4th November 2022 against YoY growth of 6.1% as observed on 5th November 2021;
• Inflation: Nov’22 CPI inflation fell to 5.88% – below the monetary policy committee (MPC) target of 6%;
• Trade Deficit: Indian goods exports declined by 16.7% MoM to $29.78 Bn in October’22, while imports declined by 6% to $56.69 Bn. India’s trade deficit widened to $26.9 Bn;
• Forex: India’s forex reserves increased to $550B;
• FDI: Robust FDI inflows of $22.7B during April-October period supported INR against $.

Equities:

• A synchronous rally in all asset classes in November had a ‘common denominator’ – expectations for a pause in Fed rate hikes;
• Indian markets rose for second straight month in November to a record high, but at a slower pace than global peers. Sensex rose by 3.9% in November, midcap and smallcap indices underperformed largecaps;
• FPIs bought $3.6B of Indian equities in November

Outlook:

Near term headwinds as well as challenges loom globally but both from cyclical and structural perspective India is better placed than the rest of the world. India is the most expensive market in the world but market factors in the future and it is a given fact that India is bound to grow by leaps and bounds in the medium-long term.