Nifty hit a record high in June! What's in store for markets in 2H2023?

economictimes.indiatimes.com:

During that period, the domestic market underwent an 11% correction, driven by concerns about a global recession that could potentially result in a local slowdown. However, on the contrary, the global economy has demonstrated resilience and fared out from the crisis. Now it is projected that the US economy is well poised and will avoid the deep correction to a hard landing in CY2023.

Main indices crossed into a new zone as inflows rallied from FIIs, DII, and retail investors. In the short term, the upside of indices could be limited as looks the downside risks adequately safeguarded. The market may trade in a range with a mixed bias in the near term.

After the strong rebound of the global and domestic markets, equities could underperform other assets in the short term because of fundamental and technical parameters. The valuation of the United States has experienced a notable increase to one year forward 19.2x up from 15x 9 months back. This is above the long-term average of 17.5x and doesn’t represent a market barred by high inflation and a dragging economy.

It is important to note that the country's interest rate cycle has not yet peaked, as the Fed Chair has indicated the possibility of two additional interest rate hikes in CY23, which are expected to further slowdown economic growth. The recent rally is supported by the fact that the economy has handled itself better than anticipated by avoiding a deep recession, Fed support to overcome the US medium-sized bank crisis, and AI development bringing new business opportunities. However, sustaining the current historic levels may prove to be a challenge in the face of a fading economy.