The key event for the market next week is the RBI's interest rate decision. According to Vaibhav Porwal of Dezerv, the latest escalation in the Israel-Iran war will put upward pressure on commodities, which may influence the RBI's decision.
He believes the RBI will aim to strike a balance between the risk of currency depreciation and the need to stimulate growth, which seems to be slowing down.
On the primary market, the Co-Founder of Dezerv and Chartered Accountant with more than 20 years of experience in wealth management believes the IPO market is flourishing due to positive key macroeconomic indicators, strong inflows into domestic mutual funds and robust capital formation. "This primary market buzz will continue as several companies like Hyundai Motor India, Swiggy, and NTPC Green Energy want to raise around Rs 60,000 crore in the next 60 days, he said.
Do you see the RBI changing its policy stance in the October policy meeting?
Though RBI was expected to take cues from the Fed and China Central Bank, the latest escalation in the Israel-Iran war will put upward pressure on commodities, which may influence the RBI's decision. RBI will aim to strike a balance between the risk of currency depreciation and the need to stimulate growth, which seems to be slowing down.
Do you see the geopolitical tension as a major risk factor for the market rally?
The geopolitical landscape has been markedly strained following Iran's direct missile attacks on Israel. This escalation has raised concerns about stability in the Middle East, with crude oil and freight prices already experiencing volatility. Crude oil has risen 8.5 percent this week. The potential for further disruptions in energy supply chains and increased transportation costs could impact various sectors globally.
What does the China stimulus mean for India?
On September 24th, Beijing announced an aggressive stimulus package, triggering a substantial rally in Chinese stocks. This stimulus aims to bolster economic growth and market confidence. However, the robust performance of Chinese markets may divert foreign investments from India towards China. This poses a potential challenge to the China +1 strategy, which has been a key driver of private capex in India. However, it is too early for anyone to say if the announced measures will be sufficient to address underlying challenges to growth or existing vulnerabilities within China's economy. Especially if Donald Trump wins the US presidential election, China may face more heat.
Do you expect the IPO market to remain busy considering the big bunch of consistent filings with the SEBI?
The Reserve Bank of India called September the busiest IPO month in 14 years with 12 mainboard IPOs. The IPO market is flourishing due to positive key macroeconomic indicators, strong inflows into domestic mutual funds and robust capital formation. This primary market buzz will continue as several companies like Hyundai Motor India, Swiggy, and NTPC Green Energy want to raise around Rs 60,000 crore in the next 60 days. While this IPO frenzy may persist in the short term, risks of market corrections could impact this sentiment in the long run.
Do you still expect the market to end the current year 2024 with more than 20 percent gains? If yes, then does it mean there won't be any major risk factor in the rest of 2024?
We are observing a growth slowdown from the demand and supply side. Demand indicators like consumption and car inventory data indicate a slowdown. Private final consumption expenditure (PFCE) grew only at 3 percent in FY24, and fell sharply compared to the last year (6.8 percent in FY23). This affects business sentiment and their capex expenditure.
On the supply side, indicators like GST collection have been pertinent. Growth in GST collections slumped to a 40-month low of 6.5 percent in September, with revenues at Rs 1,73,240 crore, about 1 percent lower than the tally in August. September Manufacturing data revealed a mild setback in manufacturing growth across India. For the third straight month, rates of expansion in factory production and sales receded, both of which were at their weakest since the turn of the year.
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