October 3, 2023: The benchmark BSE Sensex index clocked its worst quarterly returns in four years during the April-June quarter of 2023, gaining just 1.7%. This was largely due to a combination of factors, including rising inflation, interest rates, and geopolitical tensions.
The Sensex had gained in the previous 12 quarters, but the streak came to an end in Q2 as investors became more cautious amid a challenging global economic outlook. The index fell by over 3% in April, its worst monthly performance since March 2020, and continued to decline in May and June.
Despite the weak quarterly performance, the Sensex has managed to stay afloat in 2023, with gains of over 6% year-to-date. This is largely due to strong inflows from foreign institutional investors (FIIs), who have invested over ₹1.5 lakh crore in Indian equities so far this year.
Analysts believe that the Indian stock market is likely to remain volatile in the near term, given the uncertain global economic outlook. However, they remain optimistic about the long-term prospects for the market, citing factors such as strong corporate earnings growth and a favorable demographic profile.
“The market has been under pressure for a number of reasons, but we believe that the fundamentals of the Indian economy are still strong,” said Vijay Bhushan, head of research at a leading brokerage firm. “We expect to see a rebound in the market in the coming months, led by strong corporate earnings and government reforms.”
Other analysts also agree that the market is likely to recover in the coming months. However, they caution that investors should be prepared for volatility in the short term.
“We believe that the market is well-positioned for a rebound in the coming months,” said Sanjiv Bhasin, managing director at another leading brokerage firm. “However, investors should be prepared for volatility in the short term, as the market is likely to remain volatile until there is more clarity on the global economic outlook.”
In the meantime, analysts advise investors to focus on quality stocks and to avoid panic selling.
“Investors should focus on quality stocks and avoid panic selling,” said Bhushan. “The market will eventually recover, and investors who stay invested will be rewarded.”
Disclaimer: This article is for informational purposes only and should not be construed as financial advice. Investors should always consult with a qualified financial advisor before making any investment decisions.
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