The 6.5-7 percent is doable for FY23. FY24 growth will depend a lot on how recession or slower growth shapes up in US / developed world. A lot of probabilities out here.
The future trajectory of FII flow, to a large extent, depends on the inflation in US and in India. Higher interest rates in the US typically lead to flows moving to the world's largest economy, resulting in the strengthening of the US dollar at the cost of emerging markets like India.
Markets are trading at slight premium to long term averages on FY24 consensus earnings. Hence it should consolidate at current levels before resuming the uptrend.
Except for resource companies, i.e. producers of commodities and crude oil, most of the other sectors should report strong revenue and earnings growth over the next several years. Demand is likely to remain strong in the near to long-term for Indian companies.
One reason is that FIIs have stopped relentless selling and are now turning buyers, says Santosh Joseph. In fact, he says as time passes, more and more FIIs may come back and even the volumes and investments may increase.
Rahul Singh, chief investment officer-equities, Tata Mutual Fund expects the rupee to remain in the 79-80 per dollar range and take broader cues from movements in the dollar Index.
August has got off to a good start, but evidence is needed to show that this trend is more structural than cyclical
Right Horizons remains positive on sectors like banks, auto, infrastructure, capital goods, and pharma, where valuations and earnings continue to be reasonable.
Once global inflation cools off, there may be brisk inflows from FPIs, which may just be around the corner, Sanghavi said.
We believe a lot of companies in the small and mid-cap space are ready to outperform, given that they’ve completed or are close to completing their capacity expansions, are sitting on lean balance sheets, generating healthy cash flows and are trading at reasonable valuations post the correction.
The pharmaceuticals sector has witnessed a sharp correction and quality stocks in the sector are available at compelling valuations.
Markets work on expectations, and with commodity prices cooling off and global inflation contracting, equity investors are buying on the expectation of an economic recovery.
India is in a sweet spot and the equity market P/E premium versus peers should remain elevated given the marked improvement in macroeconomic fundamentals and significant improvement in corporate balance sheets
If the US inflation which is around 9 percent remains sticky even at a slightly lower level, it might be difficult for Fed not to take more rate hikes. Hence it is difficult to foresee any immediate change in Fed stance.
Corporate earnings are on expected lines and the consumer sector has demonstrated healthy trends, which is an indicator of a strong economy.
One should invest in companies that are competitively well positioned and stay disciplined on valuations.
Many economists are warning that the present aggressive style of interest rate hikes may be damaging and may push the economy towards recession. Whether that happens or not, slowdown is a reality.
While, one can never be certain on what market has priced in, but we believe market has factored in the peaking of inflation.
I think going forward, Federal Reserve's focus has to be on oil prices. If they also soften, policy stance could incrementally be less hawkish.
Year-to-date the market run-up is led by Power and Auto stocks and then FMCG stocks. FMCG stocks performed after a poor performance in the calendar year 2021. Given the long-term opportunities for the business in this sector, there is still plenty of reasons to invest in FMCG space.
Once you invest in fundamentally great companies and follow the two principles of discipline & patience, success is a matter of when & not whether….
"In the longer run, the rupee can climb to 85 against the US dollar given the natural course of depreciation. However, in the short term, a 5-6 percent movement is unlikely due to five reasons."
In terms of sectors, Sharekhan continues to prefer banks, engineering companies, real estate & allied sectors and select consumer companies.
If the Fed succeeds in engineering a soft landing of the US economy, the Indian IT segment will stage a smart bounce back. This will happen when the signals of a soft landing are visible.
"We think the Fed is likely to tone down its hawkish stance. Even though the headline inflation has come quite high at 9 percent, the crude and commodity prices trending downwards bode well," said Vikas V Gupta of OmniScience Capital