After a prolonged period of market exuberance with certain sectors experiencing significant price increases, there was a decline in major Indian indices and numerous stocks during last week of February 2024, with small caps and mid-caps leading the decline whereas large-caps providing support to the decline. Three important economic indicators played a role which made the market participants cautious, they were US GDP and inflation data, and India GDP data. The US GDP data was slightly below expectations which negatively influenced Indian markets and the US Inflation did not signal a high inflation situation. India’s Q3FY24 GDP growth rate stood at 8.4% which was much above the estimate, suggesting a healthy and growing economy. The GDP release made the markets rally at least 1% on 1st March 2024, led majorly by infrastructure stocks.

As of today 5th March, 2024, it looks like the market has gone sideways, and the broader markets continued to witness pressure. While the overall market outlook remains cautiously optimistic, investors need to be vigilant about profit-booking or even corrections in numerous industries and sectors that had a solid bullish run-up in 2023. Several factors, including delay in interest rate cut, inflation concerns both domestic and globally, and re-occurrence of geopolitical tensions, could potentially dampen market sentiment. During this period, large-cap companies, especially those in the Nifty 50 index, may offer some stability compared to smaller companies. Maintaining a diversified portfolio across sectors and asset classes is crucial for mitigating risk

Based on the current trend and future potential, there are 3 sectors which may be worth considering.

Renewable energy: The ongoing shift towards clean energy presents opportunities for companies involved in solar, wind, and other renewable technologies.

Healthcare: The aging population and increasing demand for healthcare services could benefit companies in this sector.

Technology: Although the tech sector has experienced corrections recently, certain segments like cybersecurity and artificial intelligence might still hold growth potential. We are more bullish on mid cap and small cap IT companies as they are getting new deal because of smaller deal size.

Stocks to track in renewable energy space: Adani Green Energy, KPI Green Energy, Indian Renewable Energy Development Agency.

Stocks to track in healthcare space: Krsnaa Diagnostics, Krishna Institute of Medical Sciences, Dr Reddy’s Laboratories, and Narayana Hrudayalaya.

Stocks to track in technology space: Netweb Technologies, Ksolves India, Cigniti Technologies