An eventful financial year has come to a close. Despite the economy growing at over 9%, performance of stocks during the year was mixed. Markets fell sharply towards the end of the year. Weak performance was primarily due to a correction in valuation of stocks, rather than any immediate concerns with growth. There was also a global correction with many markets across the world facing weakness. Though current sentiment towards equity investments seems subdued, we are starting to see some large companies looking interesting from valuation perspective for quite a few months.
Overview of the markets
Thought the large caps ending the month positively, mid-caps were down nearly 4% for the month. For the year, Nifty was up about 13%, whereas both the mid-cap and small-cap indices were in negative territory. More than 60% of stocks in the market delivered negative returns. Maximum weakness was seen among the smaller sized companies.
Portfolio & Outlook
After many months, we are starting to see value among large companies. Stocks like HLL have been down over 30% over the past year. The IT sector has also been weak in recent times due to concerns over the strengthening Rupee and additional tax impact. Over the past month, we have increased investments among some of these stocks. Many of the mid-sized firms are trading at attractive valuation. Dividend yields are starting to look interesting at near 4% levels.
We are likely to see some subdued performance till government policies ease a bit.India’s valuation relative to other emerging markets may dampen sentiment of international investors. We see the next few months as phase where one can accumulate stocks at attractive prices.
Detailed financial statement for the year, along with realized gains computation, bank statement, etc will be sent across later in April. There would be a few small changes like incorporation of Abbott buyback (company bought back about a third of the holdings at about a 20% premium to market prices on the last day of March, bank interest, etc.