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D-Street is keenly awaiting significant announcements on infrastructure spending, tax sops, disinvestment and more
The Indian economy is relatively better placed than peers and advanced economies. In the near term, returns maybe moderate in India due to relatively higher valuations, global growth slowdown (or even recession) and some domestic slowdown as well.
Sampath Reddy of Bajaj Allianz Life feels that auto sector will be a disruptor going ahead. Taking about the earnings, he said Nifty companies, on aggregate, have delivered over 15 percent growth in FY21 despite the shutdowns last year.
Earnings are likely to grow by around 25 percent in FY22, however, investors should keep an eye on the impact of the second COVID wave and partial lockdowns, says Reddy
From an investment perspective, at this juncture, investors should systematically invest in equities, or use an asset allocation approach (based on their risk profile), says Reddy.
For the year FY22, we believe earnings are likely to grow by 20%-30% for the Nifty companies with most of the growth being front-ended due to the base effect, says Reddy of Bajaj Allianz Life.
Investors are focused on FY22/23 earnings which will depend on the sustenance and progress in the recovery trajectory of the overall economy, says Sampath Reddy, Chief Investment Officer, Bajaj Allianz Life.
Markets may prefer a Trump victory (especially due to expectations of continuity in his administration’s tax reforms & fiscal expansion), and therefore we may see some volatility in the short term.
MNCs can also capitalize on tech and product support from their global parents for new and more relevant product launches.
The technology sector is expected to be relatively less impacted due to the domestic slowdown—therefore making it a more attractive defensive play, says Sampath Reddy, CIO, Bajaj Allianz Life.
Once we see the first signs of economic recovery, stock prices will react faster. Anyone who is investing in markets now should at least have a time frame of 3-5 years.
The possibility of some fiscal slippage is high considering that tax revenue collections have been below Budget estimates
India is still a stock picker’s market and there is scope for active management, and for fund managers to deliver alpha over the long term. says Sampath Reddy.
The overall tone of the policy was a bit dovish, with inflation forecasts being cut substantially. The bond markets reacted positively, and the 10-year yield closed at 7.44 percent.
With gold losing sheen and real estate prices cooling off, we believe Indian households will prefer financial products for savings.
Finance minister shall be walking a tight rope to manage the fiscal austerity path. Though the chances of a slippage from the FRBM path are high, owing to 7th pay commission payouts, but these would to a certain extent get offset by higher revenues.
A carefully-picked portfolio of equity investments is a good option. Also, tax free bonds offer attractive long term returns for investors in the high tax bracket, says Sampath Reddy.
Sampath Reddy of Bajaj Allianz Life Insurance Co feels that there is still good amount of steam left in most of the IT services companies.
Sampath Reddy of Bajaj Allianz Life Insurance Co prefers private sector banks.
