Independence Day 2023: Gold glitters, equities shine - a look at how 3 asset classes performed in last one year
US Federal Reserve have raised its key policy rate by 500 basis points (bps) to take the Fed funds rate to 5.25%-5.50% in more than the last one year period. Following this, the Reserve Bank of India (RBI) has raised the repo rate by 250 bps (bps) since May 2022. As we celebrate the Independence Day 2023, let us take a look at the performance of key asset classes since the Independence Day of last year.
The Indian equity benchmark indices have seen a decent rally since August 15, 2022. The Sensex has jumped 10%, while the Nifty gained 9.82% in this one year period. However, a major rally in the Indian stock market began in April 2023 after the Reserve Bank of India paused repo rate hikes.
Gains in the domestic equity markets were also led by a combination of healthy micro and macro, complemented by strong foreign capital inflows. Going ahead, markets have factored in the end of interest rate hike cycle and analysts expect the rally in the Indian market to sustain. However, the key trigger for the domestic equities would be the general elections in May 2024 and markets will remain volatile in the countdown to the polls.
“Markets do not like political uncertainties and favour a government with a strong mandate. Investors will be in a wait and watch mode ahead of the key trigger, which is general elections. However, there may be no negative surprises for the markets.
The 9-10% returns given since last Independence Day is likely to be mirrored in the upcoming one year period," said Avinash Gorakshakar, Director Research, Profitmart Securities. Gold prices have delivered robust returns since last year’s Independence Day despite an environment of rising interest rates. Gold rate in India, which was around ₹51,800 per 10 grams
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