Market cap of BSE-listed companies hits fresh record high of Rs 300 lakh crore

Market valuation of all listed firms on the BSE hit a lifetime high of Rs 300 lakh crore for the first time on July 5. Both in rupee and dollar terms, total market capitalization of all listed firms on BSE rose 18.5 percent from 28 March till date, Bloomberg data showed. So far this year, it gained nearly 6.6 percent, in both dollar and rupee terms. Both the benchmark Sensex and Nifty have risen nearly 13 percent each since March 28, while advancing over 6 percent each so far this year. BSE MidCap and SmallCap gained over 23 percent each since March 28 while climbing over 13 percent each year to date. The recent gain was after continued buying from foreign investors, who bought over $10 billion in the June quarter, its biggest quarterly buying since December 2020 quarter. The focus of market participants is firmly fixed on global central banks, particularly the US Federal Reserve, regarding their potential timing for pausing and adjusting their interest rate trajectory. Read market updates of July 5 here Going ahead, domestically, several significant factors will shape market trends in the second half of the current year 2023. These include closely monitoring the progress of the monsoon season and its potential impact on inflation, observing the outcomes of state elections, and analyzing corporate financial results. Meanwhile, brokerages such as Kotak Institutional Equities, Systematix Institutional Equities and CLSA have taken cautious views on the recent rally of Indian markets. In a recent note by Kotak Institutional Equities, they expressed their perplexity over the recent stock market rally observed in the past few months. The note highlights the genuine risks to consumption, particularly in rural markets, and emphasizes the possibility of further slowdown. Additionally, Kotak points out that the current market sentiment fails to incorporate the potential impact of global disruptions on India. In their strategy note, Kotak Institutional Equities also state that they are facing challenges in identifying new investment ideas within the consumption, investment, and outsourcing sectors. This difficulty arises due to the significant upward movement witnessed by several sectors and stocks that were previously favored by Kotak. They further mention that the banking, financial services, and insurance (BFSI) sector is the only sector that currently offers value, although even insurance stocks have experienced a rally in recent days. While the Indian market experiences what is perceived as a favorable "Goldilocks" moment, with strong growth expectations and significant inflows, analysts at Systematix Institutional Equities are raising concerns about the sustainability of this optimism. In a recent note, CLSA also expressed caution on the Indian markets due to multiple factors. They highlighted the excessively high valuations, the erosion of margins leading to a decrease in India's relative profitability, overly optimistic consensus earnings per share growth expectations, the likelihood of the Reserve Bank of India lagging behind other emerging market central banks in terms of policy easing, and their econometric model indicating that the market is currently overbought by 14 percent. BNP Paribas, in line with their market stance, is underweight on the FMCG sector and anticipates a potential correction. Although the first half of FY24 might witness a relief in terms of lower raw material prices, BNP Paribas expects a moderation in revenue growth during the second half of FY24. This is due to the fading of pricing benefits and a shift towards volume-driven growth. Furthermore, the potential risk of El Nino could pose a threat and potentially disrupt the ongoing rural recovery.