Motilal Oswal says 'growth narrative intact' as markets post second month of gains in April

Motilal Oswal bets on banks, IT, pharma as markets register second monthly gains in April

As foreign investors chipped in with a second month of net inflows in April, the market momentum seemed to be on the rise with Nifty gaining 3.5 percent for the month, prompting Motilal Oswal to reiterate an Overweight on Banks and Financials, IT, Industrials, Healthcare and Telecom, a note said on May 5.

Nifty registered its second monthly gain in April to clock its second-best month-on-month return in nine months.

In its report, Motilal Oswal said that it sees the medium to longer term growth narrative intact. “While near-term challenges such as global macros, trade wars, and a weak 4QFY25 will keep the market volatile and jittery, we believe that the medium- to long-term growth narrative for India remains intact,” said the note.

The FIIs have registered net inflows for the second straight month, investing around $1.3 billion in April, with DIIs too supporting by pumping in $3.3 billion for the month, making India the top-performing market in April.

Among key global indices, Indonesia and Brazil led the gains with a 4 percent rise each in April, followed by India and Korea at 3 percent, Germany at 2 percent, and Japan and the MSCI Emerging Markets Index with 1 percent gains (in local currency terms).

On the other hand, Taiwan, China, and the UK declined by 2 percent each, while the US slipped 1 percent on a month-on-month basis.

During April, the Nifty Midcap 100 gained 4.7 percent MoM, outperforming the Nifty 50 and Nifty Smallcap 100, which rose 2.2 percent apiece for the month. Over the last year, largecaps gained 8 percent, outperforming midcaps which gained 6 percent, with smallcaps losing 3 percent.

All major sectors ended higher in April, with Telecom pack up 9 percent, while Private Banks rose 7 percent, Consumer and Automobiles grew by 5 percent. Finally, PSU Banks jumped 4 percent, while Metals and Technology lagged behind in April.

The earnings scorecard so far has been in line with Motilal Oswal's expectation, with 78 percent of coverage universe either meeting or exceeding expectations, the note said.

The brokerage remained Underweight on oil & gas, cement, auto, realty, and metals.