Market Perspectives: First Quarter, FY 2024-25

As we step into July and the Union Budget 2024 remains the centre of attention, it is time to look back at the market’s performance in the first quarter of FY25 — spanning from April 1, 2024, to June 30, 2024. Understanding these market perspectives is crucial for traders and investors who want to enter new positions in the current quarter or close positions opened in the first quarter. 

In this article, we delve into how the benchmark indices performed in Q1 FY25, check out which sectors delivered and discuss the quarterly results that are making headlines. 

Nifty and Sensex Performance in Q1 FY25

In the first quarter of FY25, the two benchmark indices reported fairly favourable performance. The Nifty closed at a little over 22,400 at the start of the quarter, but quickly rose to over 24,600 by the end of June 2024. The Sensex was also mostly bullish over this period — closing at around 74,000 at the start of Q1 but quickly rising past 80,700 by the end of the quarter. 

The primary driver for this market pattern was the anticipation surrounding the Lok Sabha elections and their outcome. This was particularly evident on June 4, the election results day, which saw both the main indices crashing steeply as the results seemed to indicate a less-than-absolute majority for the incumbent party. While the Sensex dropped by over 3,300 points, the Nifty fell by over 1,100 points. However, the indices recovered strongly thereafter and closed the first quarter on a bullish run.

Deeper Market Perspectives: Sectoral Performance in Q1 FY25

Studying sectoral performance can give you a more in-depth market perspective that clarifies how various market segments turned out in the first quarter of FY25. Check out which sectors outperformed and which ones underperformed in the period ending June 2024.

Sectors that Delivered Superlative Returns in Q1 FY25

While many sectors delivered decent returns, five segments stand out for their performance in the first quarter. Let us explore these sectors further. 

• Capital Goods

The capital goods sector shone in the first quarter of FY25, driven by increased government spending on infrastructure and strong demand from the manufacturing sector. In June alone, the sector recorded an upside of 9.79%. Over 30 small-cap stocks in this sector reported double-digit returns too. Furthermore, revenue for the sector is projected to increase by 9-11%, driven by substantial investments in railways, defence, and renewable energy.

• Healthcare

The healthcare sector also continued its strong performance into FY25’s first quarter, supported by robust demand for pharmaceutical products and healthcare services. The sector benefited from ongoing healthcare infrastructure investments and increased public awareness about health and wellness. Companies like Sequent Scientific, Wockhardt, Strides Pharma Science and Narayana Hrudayalaya reported gains of 15% to around 40%, leading to significant stock price gains. 

• Realty

Driven by strong housing demand and favourable interest rates, the realty sector witnessed impressive growth in Q1 FY25. Government incentives for affordable housing and a resurgence in commercial real estate activity also contributed to the sector's positive performance, which came in at 9.35%. With leading real estate companies now poised to post relatively solid quarterly results that reflect increased sales and project completions, the sector's outlook remains optimistic.

• Auto

The auto sector experienced a notable upswing of 6.76% in June of the first quarter. This was primarily fuelled by recovering consumer demand and new vehicle model launches. Both passenger and commercial vehicle segments saw increased sales, leading to over 40 small-cap stocks in the auto and auto-ancillary sectors delivering double-digit returns for investors. Most of these stocks belonged to tyre makers and auto component manufacturers.

• Consumer Discretionary

Consumer discretionary stocks also enjoyed strong performance in the first quarter of FY25, thanks to rising consumer confidence and spending. The sector, which includes automobiles, apparel and luxury goods, among others, saw robust demand recovery and recorded returns of 5.94%. E-commerce growth and the return of brick-and-mortar retail contributed to this trend. Market leaders like Titan and Bajaj Auto reported significant sales growth, reflecting the sector's resilience and ability to capitalise on economic recovery.

Sectors that Fell Short of Expectations in Q1 FY25

On the flip side, some sectors that have delivered consistently high returns in the past quarters witnessed lukewarm performance in the first quarter. Among these are information technology, oil and gas, banking and financial services. However, it remains to be seen how these sectors will perform in the rest of the financial year.

Quarterly Results for Q1 FY25

With many companies ready to release their results for the first quarter in the coming weeks, you can follow the news to obtain newer market perspectives and figure out which stocks to watch in the next quarter. Some companies have already released their results. Here’s a quick recap of what we know so far:

• HDFC Life: This insurance provider saw its net profit rise 15% to Rs. 479 crore and recorded an 18% year-on-year growth in its back books. Looking ahead, HDFC Life aims to issue Rs. 2,000 crore worth of non-convertible debentures (NCDs).
• Bajaj Auto: The automaker also had a stellar first quarter, with its revenue growing by over 15% to Rs 11,928.02 crore and its standalone profit after tax (PAT) climbing to Rs. 1,988.34 crore. This record revenue can be traced back to premium vehicle sales.
• Asian Paints: This top FMCG company saw a 25% reduction in its quarterly profits to Rs. 1,170 crore and a 2% dip in revenue. The reasons behind this setback include poor demand due to heatwaves and the election frenzy.
• Jio Financial Services: The new yet popular financial services provider also had a setback this quarter, with profits dipping by 6% year-on-year to Rs. 312.63 crore. Revenue, however, rose marginally by 0.89% to Rs. 418 crore.

Conclusion

This sums up the key market developments and sectoral as well as stock performances in the first quarter of FY25. The true outcome of this quarter can only be gauged once more companies have declared their quarterly results. In the coming weeks, as other companies that are lined up to announce their results continue to make their profit and revenue figures public, you can track these numbers on the Motilal Oswal Research 360 platform.

This platform also provides detailed analyses of industry performance and individual stocks and offers valuable insights into top-performing sectors. What’s more, you can track upcoming earnings reports using our results calendar and stay informed about the latest financial updates and trends in the market.