Upadhyaya feels monsoon progress until now has been above-normal despite some softening recently, which augurs well for many rural oriented businesses.
The Goods and Services Tax (GST) may take a toll on corporate earnings for the April-June quarter of FY7-18 and the overall earnings are likely to be muted, believes Harsha Upadhyaya, Chief Investment Officer, Equities, Kotak Mutual Fund.
"Overall earnings growth is going to be muted with GST related adverse impact due to destocking and discounts in a couple of consumption-related sectors and export/global oriented businesses continuing with sluggish trend," Upadhyaya said.
Upadhyaya feels, monsoon progress until now has been above-normal despite some softening recently, which augurs well for many rural-oriented businesses.
The monsoon delivers about 70 percent of India's annual rainfall, critical for the farm sector that accounts for about 15 percent of India's USD 2 trillion economy and employs more than half of the country's 1.3 billion people. India's farmers depend on the monsoon since half their lands lack irrigation.
According to India Meteorological Department or IMD, cumulative monsoon rains have been 2 percent below average since the beginning of the rainy season in June until July 9. However, recent rains have been heavier, as in the week to July 5, the seasonal showers were 21 percent above average.
He expects that consumer inflation declining further opens room for a possible interest rate cut which would further aid support to market going forward.
The Consumer Price Index (CPI) fell to 1.54 percent in June from 2.18 percent in May."The pace of money flowing into equity market has been faster than the pace of corporate earnings growth, thus leading to stretched valuations," Upadhyaya said.