Experts caution against tough times in Indian equity markets in 2015.
'Earnings will be the catalyst for markets to march higher from here on out.'
The sweeping economic sanctions on Russia - the second largest producer of crude oil - following its invasion of Ukraine late last month can cull global and domestic growth along with the added pains of higher inflation and currency depreciation, RBI Deputy Governor Michael Patra has said. And if the war lingers on, it can even lead to deglobalisation and even a recession, he added. The ongoing war has only added a whole new dimension to the outlook, and in fact, a weighty downside, Patra said in a lecture at the industry lobby IMC on Friday evening.
Foreign portfolio investor (FPI) flows into India may remain tepid in 2022, said a recent note by Goldman Sachs, who now peg the foreign portfolio investment into India at $5 billion in 2022, down from their earlier forecast of $30 billion with risks skewed to the downside. "There has been $15 billion of equity outflows YTD in India already, and the IPO of the largest insurance company has been pushed out. "Additionally, with no mention of India's inclusion in global bond indices in the Union Budget, there are risks to our already conservative base case assumption of an announcement of India's likely inclusion into the GBI-EM Global Diversified Bond Index in Q4-2022," wrote Andrew Tilton, Goldman Sachs' chief Asia-Pacific economist in a co-authored report with Santanu Sengupta and Suraj Kumar.
'As China's reopening euphoria fizzled out on the back of some disappointing economic data, we saw inflows coming back to India with full force in the past 3-4 months.'
The finance ministry and RBI must get less conservative and improve co-ordination.
The world economy's growth engine is slowing, but not collapsing.
'Rising Covid cases and localised lockdowns are being closely monitored.'
'Historically, the markets tend to perform well during election years as governments aim to increase spending and call attention to growth.'
The rating outlook change is relevant now, as the US Federal Reserve is set to end its monthly bond-buying programme in October.
'Today, there is no easy money to be made after the run-up in equities.'
There is uncertainty in most investors' minds as to whether China is transitioning to a new growth model or simply collapsing.
Risk sentiment is likely to be favourable if oil prices stay benign, global growth sentiment remains robust and the dollar index does not break out, says B Prasanna.
A strengthening dollar, rising interest rates, tightening liquidity and a surge in oil prices - all are combining to create a toxic atmosphere for EM assets, says Akash Prakash.
India has been a core portfolio holding for emerging market funds.
We have our own problems for sure and they are not trivial, but for now, our economy is in not too bad a shape, our politics is as personality-driven and authoritarian as that of most countries in the world. We must make the best of what we have and not be excessively unhappy looking at the grass on the other side of the septic tank which may not be greener after all!, observes Shreekant Sambrani.
Citing the massive surge in Omicron infections and the resultant impact on overall economic activities in the March quarter, Swiss brokerage UBS Securities has revised downwards its India's growth forecast for the current financial year to 9.1 per cent from 9.5 per cent earlier. However, UBS Securities does not see the third wave impact extending to the next financial year as it has revised upwards its real GDP forecast to 8.2 per cent, up from 7.7 per cent earlier, expecting the real GDP growth to remain well above the historical average. The World Bank pegs it at 8.3 per cent, unchanged from its June assessment, saying the recovery is not broad-based yet.
'I am not optimistic about the global economy for the next couple of years.'
'You may see some movement indicating a simpler tax regime with less exemptions but with fewer tax rates making life simpler for taxpayers.'
'We believe 2017 could see higher flows from foreign institutions as money comes back to growth markets like India.'
China's domestic debt is a major concern.
So, what does 2016 have in store for the Indian markets? Will they be able to take a giant leap forward in the leap year, and what are the key risks?
The upbeat earnings from Reliance Industries will set the tone for the truncated week ahead
India remains an attractive destination and the recent sell-off has made valuations attractive in the large-cap space.
Is the worst over for Indian banks? The past two years saw them ride on treasury trades as deposits soared and credit growth dipped sharply. Gross and net non-performing assets (NPAs) moved south, and the provision coverage ratio (PCR), capital buffers, and profitability indicators are back at pre-pandemic levels. So, what's the plot ahead?
Money will flow to Europe, Japan - and the emerging markets, including India.
And why markets could give up 25 per cent of all these gains made since March 2020
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