Despite the raging second wave of COVID-19, the Indian market put up an impressive show in May and featured among the top-performing markets globally.
After ending lower in April, the market bounced back strongly with benchmark indices - Sensex and Nifty - rising almost 7 percent each in May.
During the last month, the domestic market fared better than top global markets such as DAX (Germany), Hang Seng (Hong Kong), KOSPI (Korea), Dow Jones (US), S&P 500 (US) and Nasdaq (US), according to data from Investing.com.
However, year-to-date (YTD), some benchmark indices such as Taiwan Weighted, Euro Stoxx 50, DAX, Dow Jones and KOSPI have performed better than the Nifty and the Sensex.
Foreign portfolio investors (FPIs) took out Rs 1,958 crore from the Indian financial market in May. However, YTD they have invested Rs 49,468 crore in the Indian market, data from NSDL showed.
Nifty PSU Bank and media indices rose 18 and 14 percent, respectively, in May, outpacing other sectoral peers. Nifty Auto and realty rose 9 percent each.
On May 21, the market-capitalisation (m-cap) of BSE-listed firms hit the $3 trillion mark, making it the eighth biggest market in the world. In rupee terms, the m-cap of BSE-listed firms is at Rs 223 lakh crore as of May
31.
Sustained fall in COVID-19 cases, stimulus talks, mostly in-line March quarter earnings and assurance from major central banks that rates will remain low and the market will have adequate liquidity kept the market
up.
What lies ahead?
Even as the market is at record high levels, some analysts believe the market may rise even further in days to come.
"Markets are at an all-time high and there is more room for upside as 1) FY21 has seen roughly 15 percent EPS growth on the Nifty stocks in spite of it being a pandemic year; 2) FY22 is going to be even better in terms of EPS growth compared to FY21 even after seeing a second wave and it’s going to be more broad-based corporate recovery this time around; 3) plenty of liquidity around; and 4) low cost of capital will keep valuations elevated," said Manish Sonthalia, Head Equities - PMS, Motilal Oswal Asset Management Company.
Manish Jain, Fund Manager, Ambit Asset Management believes due to the limited impact of COVID-19 on the overall economy and growth, the rally in quality stocks is here to stay.
"The overall shift will happen from medium and small enterprises to market leaders and hence even more of a reason to invest in quality names and market leaders. We do believe that financials, consumer discretionary names and chemicals are some of the sectors that should do well in the short to medium term," said Jain.
Read more: Market at record high despite obvious risks, can it sustain gains?
Even though most analysts are positive on the market, the risks of inflation, geopolitical tensions and further waves of the pandemic still loom.
Some analysts are of the view that the market may see a correction but its magnitude and timing is not certain at this moment.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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