For a while now, retail investors have been supporting the Indian stock market. Is this going to keep happening?
Retail investors are only drawn to stock investing when stock prices have been rising for a while. Look at the chart that is there.
After two years of Covid-19-related store closings, customers are returning to malls and freestanding retailers. This occurs at a time when inflation is straining consumers’ wallets.
India’s consumption has reached pre-pandemic growth levels of 17%, according to a recent analysis by BCG-RAI, despite the pandemic driving a new trend of digitally focused customers.
As mobility increases, mall traffic has also started to rise in lower-class communities.
Now that retailers are speeding up their expansion plans for FY23, economists anticipate an improvement in same-store sales growth in the first half of the current fiscal.
The strong recovery in India‘s GDP bodes good for retail, according to VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, in an interview with Business Standard. Retail stocks are a strong long-term investment since urban and metropolitan areas are experiencing an increase in consumption.
He recommends Avenue Supermarts as a good investment.
Over the past few months, Indian retail players have implemented many rounds of price increases to combat increasing inflation as well as rising freight and power expenses.
For example, in April 2022, prices at Jubilant Food, Westlife Development, V-Mart Retail, Barbeque Nation, and Devyani International increased by 6% to 11%.
Analysts therefore anticipate a short-term increase in consumer spending, along with lower commodity prices. The shift in customer preferences is favourable for retail, according to Nishit Master, Portfolio Manager at Axis Securities, and spending is not expected to slow down any time soon.
He believes that the stocks of ABFRL, Trent, and V-Mart Retail are good bets.
Retail stocks have had a mixed six-month performance on the stock exchanges.
Shoppers Stop, Trent, and Metro Brands had gains of up to 56 percent while equities like V-Mart Retail, Barbeque Nation, and Jubilant Foodworks saw losses of up to 33 percent. In contrast, the S&P BSE Sensex and Nifty50 both had a 10%+ decline during that time.
While investors watch the wholesale and retail inflation numbers for June, India’s macroeconomic data may influence markets this week.
In addition, several important businesses, including HDFC Bank, Mindtree, L&T Infotech, and HCL Tech, are expected to release their Q1FY23 financial results this week.
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