Equity Monthly View for March 2024

S&P BSE Sensex grew by 1.59% in the month of March 2024. S&P BSE Midcap Index increased by 0.01% & S&P BSE Small cap Index declined by -4.8% respectively. Equities across the globe (except China) did well in March. S&P 500 was up 3.2%, tech heavy Nasdaq 100 Composite Index was up 1.85%; MSCI Emerging Markets Index was up by 1.77% in March.

Near term economic indicators continue to trend well; December quarter GDP print was strong at 8.4% yoy (partly supported by base revision) and as result India is slated to finish FY24 on a strong note. Some of the external rating agencies such as Moody's have upgraded FY24 growth to 8% from 6.6% during the month gone by. Reflecting the economic momentum; tax collection has also continued to trend positively with 11.5% yoy growth in March 24. Latest CAD numbers at 1.2% of GDP for 3qFY24, also point to improving external balances supported by services export. On the inflation front, while trajectory is declining, latest reported CPI inflation number came at 5.1%, mainly due to volatile food inflation. This remains higher than RBI's target range of 4%. Corporate India commentary largely reflects the buoyancy in the economy; the only sore point being lack of consumption pick up especially in rural belt.

Quantum Long Term Equity Value Fund (QLTEVF) saw an increase of 0.28% in its NAV in the month of March 2024; Tier-I benchmark S&P BSE 500 TRI and Tier-II Benchmark S&P BSE 200 TRI increased by 0.86% and 1.47% respectively. Technology and Financials driven by banks were a key drag in our portfolio mainly due to NIM pressures.

How have the major sectors fared in FY24?

Sector Returns in FY24

From portfolio actions during FY24, we added to stocks where upside potential remains high and trimmed/exited out of position where upside was low or negative. Some of the key sectors which we added during FY24 are Banking, Cement, Life Insurance, and consumer durable. We exited out completely from an Industrial name, which we had accumulated during covid period and trimmed out of sectors such as Utilities, Auto, Healthcare and select NBFC.

Where do we find value now?

We continue to remain positive on financial especially private banks. Some of the private banks are trading at decadal low valuation, in a benign credit cycle and should witness reasonable credit growth. Consumer discretionary (Auto-2W) also remain reasonable allocation, although we are trimming in some of these names due to sharp uptick in valuations.

To conclude, our portfolio is well positioned to benefit from cyclical economic upcycle over the medium term with major overweight being Financials and Autos. While there could be uncertainty emerging globally or in India; investors should not be unnerved by the near-term volatility and focus on allocating prudently to equities based on their financial goals. Any sharp correction due to near-term headwinds can offer additional valuation comfort and should be used to allocate more to equities with a long-term perspective.

Data source: Bloomberg

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: S&P BSE 500 TRI Tier II Benchmark: S&P BSE 200 TRI	• Long term capital appreciation • Invests primarily in equity and equity related securities of companies in S&P 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.

Above article is authored by Quantum.

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