Equity Monthly View for September 2024

Posted On Monday, Oct 07, 2024

IndexPerformance (September 2024)
BSE Sensex2.34%
BSE Midcap Index0.62%
BSE Small cap 2.07%
S&P 5002.13%
MSCI Emerging Markets Index6.67%
Sectoral Performance
BSE Healthcare2.46%
BSE Auto3.40%
BSE Information Technology-2.57%
BSE FMCG3.33%
BSE Bankex2.96%
BSE Capital Goods-0.06%
BSE Metal7.27%

Data source: Bloomberg

Indian markets continued to well in September. There are some signs of weakness in the mid/small cap pockets after months of outperforming the frontline indices and given the valuation differential, we find large-caps better placed than small or mid-caps. Globally, MSCI EM outperformed the BSE Sensex driven by MSCI China, which increased by a staggering 23.4% in the month of September after a slew of measure by Chinese government to revive growth.

From a macro standpoint, the key event from market perspective was the much-anticipated rate cut by US federal reserve. Post this event, market across the globe have continued to be on a strong footing. PBOC (People Bank of China) has announced a series of measures to boost growth and consumption such as interest rates cuts, supporting ailing property sector and setting up of facilities to stabilise the Chinese stock markets. Sectors such as metals have rallied on these developments.

Quantum Long Term Equity Value Fund (QLTEVF) saw an increase of 1.24% in its NAV in the month of September 2024; Tier-I benchmark BSE 500 Index and Tier-II Benchmark BSE 200 Index increased by 2.08% and 2.14% respectively. Financials and auto helped our performance, whereas IT services and pockets within consumer discretionary where the key drags. During the month, we continued to trim aggressively in Autos, where we find risk-reward unfavorable, and continue to add our existing holdings within banking and cement during the month. Cash in the scheme at the end of month stood at 15.9%.

Key updates w.r.t to some of portfolio companies/sectors in the month gone-by:

• For banks, gap between credit and deposit are narrowing driven by slowdown in credit especially in pockets such as retail. This is also driven by regulatory interventions such as increasing focus on credit to deposit ratio, increase in risk weight etc. Credit costs are also inching up in some segments such MFI, credit cards and personal loans. With normalizing credit costs, we expect differentiation between banks with better underwriting to be more evident.

• Auto: Monthly auto volumes point to weaker demand in Passenger vehicles (PV), Commercial Vehicle (CV). Relatively, 2W volumes and tractor volumes are doing well. Incrementally we are also witnessing 2W traditional players gradually ramping up and gaining market share within EV opportunity.

• Commentary from a large global IT vendor, points to a gradual recovery in IT spends. Sectors such as IT and FMCG have done well in the recent past on anticipation of demand recovery; it would be important to track the commentary and evolving demand environment here.

• In the recent past, Chinese exporters have depressed global pricing for many products worldwide due to weak domestic demand. Chinese authorities have announced a series of measures to drive growth in the economy. While there have been few such false starts in the past, we would be keenly watching our improving domestic demand in China. Sectors such as metals as a sector has rallied, anticipating better demand from China.

The key near term is risk are emanating globally such as weaker global macros and geopolitical tension across middle east. While India while continues to enjoy favorable macros and good corporate earnings growth; the valuation remains on the higher side. Thus, investors should moderate their return expectations; maintain the right asset allocation at all points in time and prudently invest towards equity.

Data source: Bloomberg

 


Product Labeling

Name of the Scheme

This product is suitable for investors who are seeking*

Riskometer of scheme

Riskometer of Tier I & Tier II Benchmark

Quantum Long Term Equity Value Fund

An Open Ended Equity Scheme following a Value Investment Strategy.

Tier I Benchmark: BSE 500 TRI

Tier II Benchmark: BSE 200 TRI

• Long term capital appreciation

• Invests primarily in equity and equity related securities of companies in BSE 200 index


Investors understand that their principal will be at Very High Risk

*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.


Disclaimer, Statutory Details & Risk Factors:

The views expressed here in this article / video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments.


Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Above article is authored by Quantum.

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