Sensex Hits 4-Month High Above 84,000; Aditya Birla Sun Life AMC CIO Shares Outlook
The Indian stock market saw a strong recovery on Friday, with the Sensex reaching a 4-month high of 84,137.51, up 669.85 points (0.80%). Nifty 50 also climbed to a one-year high of 25,773.50, gaining 188.20 points (0.74%). FMCG and consumer durables sectors led the gains, while IT and media indices declined. Mahesh Patil, CIO at Aditya Birla Sun Life AMC, predicts Nifty earnings growth may accelerate to 12-13% over the next 12 months, citing consumption recovery, monetary easing, and reduced foreign investor outflows as contributing factors.
*this image is generated using AI for illustrative purposes only.
The domestic market recovered strongly on Friday with the Sensex reaching a 4-month high, trading above 84,000. The Sensex gained 669.85 points (0.80%) to 84,137.51, while Nifty 50 climbed 188.20 points (0.74%) to 25,773.50, hitting a one-year high. Gains in Reliance Industries ahead of its earnings announcement offset declines in Infosys and Wipro, which fell on margin concerns despite strong results.
FMCG and consumer durables sectors led with 1-2% increases, while IT and media indices declined over 1%. Asian Paints, Bharti Airtel, Max Healthcare, Apollo Hospitals, M&M, ITC and Reliance were top gainers, while Wipro, Infosys, Power Grid, Tech Mahindra and Hindalco were among the biggest losers. Broader markets also gained with midcap and smallcap indices trading positively.
Amid this market rally, Mahesh Patil, Chief Investment Officer at Aditya Birla Sun Life AMC, has shared his outlook for the Indian markets. Patil discusses potential Nifty earnings growth and identifies sectors he believes may perform well.
Market Outlook
According to Patil, the Nifty earnings growth may accelerate from single digits to 12-13% over the next 12 months. He attributes this potential growth to several factors:
- Consumption recovery
- Monetary easing
- Reduced foreign investor outflows
Sectors Showing Signs of Improvement
Patil notes that sectors that previously underperformed are now showing signs of improvement:
| Sector | Factors Potentially Contributing to Improvement |
|---|---|
| IT | GST rate cuts |
| Cement | 100-basis point policy rate reduction |
| Consumer | Improved liquidity transmission |
Valuations and Foreign Allocations
After a period of underperformance, Patil views India's valuations as potentially attractive, with metrics reset to near long-term averages. He suggests this adjustment could potentially bring back foreign allocations to the Indian market.
Sectors Expected to Perform Well
Patil identifies several sectors that he believes may drive market performance:
| Sector | Reason for Optimism |
|---|---|
| Autos | Strong festive season performance |
| Cement | Easing raw material costs |
| Consumer Staples | Easing raw material costs |
| Financials | Revival in credit growth |
Power Utilities: Potential Opportunity
Patil highlights power utilities, particularly thermal and transmission segments, as potential investment opportunities. This view is based on the reviving power capex cycle.
Investment Considerations
Portfolio Rebalancing: After gold's reported 60% return, Patil suggests considering rebalancing portfolios from gold to equities.
IT Sector: Despite ongoing headwinds, Patil views the IT sector as a potential contrarian buy opportunity.
As the Indian market continues to evolve, investors may want to consider these insights while making informed decisions about their portfolios. However, it's crucial to conduct thorough research and consult with financial advisors before making any investment choices.
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