Despite multiple headwinds at the start of 2023, the Indian markets delivered a strong performance, posting 19-20 per cent growth for the year. Even as new records were set, investor sentiment remains strong going into 2024, given the lower inflation, expectations of steady to lower interest rates, higher economic growth, and strong inflows. However, the overriding concern for most brokerages is valuations.
Markets across the globe gained after China Securities Regulator removed its four-day-old circuit-breaker system.
'We will likely be buffeted by tailwinds from the global economy, geopolitical shifts and robust domestic demand.'
Experts believe the market will fall between 1 and 3%.
The move to demerge the hotel business into a separate entity by ITC has brought back focus on hotel stocks, which have already seen a good run thus far in fiscal 2023-24 (FY24). Analysts believe there could be more gains in store over the next one year for the stocks in this sector, but suggest investors put in money on a correction only from a long-term perspective. Hotel stocks, according to A K Prabhakar, head of research at IDBI Capital, have seen a good run as travel picked up post Covid in India. Not only have the room rents increased, the occupancy, too, has surged.
Uncertainties like the bankruptcies bill, rising non-performing accounts at banks and political uncertainty are expected to drive gold demand higher in India.
JP Morgan has downgraded the Indian information technology sector to 'underweight' as it believes the heydays of the sector are over. Rising margin headwinds in the near-term and the revenue headwinds in the medium-term from a potential macro slowdown, Ankur Rudra and Bhavik Mehta of JP Morgan said in the report, will mean that the sector's earnings upgrade cycle is behind. "We see peak revenue growth behind us and earnings before interest and taxes (EBIT) margins trending down from inflation, mean revision.
Wadia Group-owned Go First Airways' (Go First) insolvency plea could trigger a 'momentum rally' in shares of rival airlines, Interglobe Aviation (parent company of IndiGo) and SpiceJet, as they look to gain bankrupt airline's market share, said analysts. On the bourses, shares of InterGlobe Aviation hit a 52-week high of Rs 2,235.95, surging 8 per cent on the BSE in Wednesday's intra-day trade, before settling 4.5 per cent higher at Rs 2,164 apiece. Those of SpiceJet and Jet Airways, meanwhile, rallied up to 6 per cent in the intra-day trade, and ended 1 per cent and 5 per cent higher, respectively, following the development, which was announced post market hours on Tuesday.
The Indian government and RBI must keep foreign equity investors happy and avoid crushing growth expectations, notes Akash Prakash.
Companies from the capital goods space will under-perform.
Investors turn their attention to export-driven sectors.
Public-sector enterprise stocks have seen a good run thus far in 2023-24 (FY24), with the S&P BSE PSU Index surging by over 26 per cent during the period, compared to an 11 per cent increase in the benchmark S&P BSE Sensex.
Faster normalisation of central-bank balance sheets will drive yields higher.
MRF test drives a new, more luxurious, brand.
'For equities, inflation trending upwards but within the range of expectations can actually be a big positive as it helps earnings and may shift flows from bonds to equities.'
The failure of SVB was due to idiosyncratic reasons, but shows how higher rates can expose fault lines in unforeseen places, observes Neelkanth Mishra.
'They should decide their allocation based on their risk appetite and age, and not valuations.'
Developing more sources of supplies to guard against disruptions may emerge as the next big trend. But that may not necessarily mean flow of more investments into India, unless investors are assured, besides important economic factors and impartiality of institutions, that social disharmony will not cause unexpected disruptions.
The external environment has worsened further. While the Finnish economy entered into a recession, Swedish economic growth also dipped. The Finnish gross domestic product (GDP) dropped 0.6 per cent in October-December, 2022. It was the second quarter of negative growth, which is a technical definition of recession.
India has been a core portfolio holding for emerging market funds.
'If you want it to grow well and serve the true needs of the economy, it needs a lot of freedom and flexibility, which comes in terms of the reform objective set by the regulator.'
There seems to be no dearth of funds to fuel this growth, report Peerzada Abrar and Shivani Shinde.
IT and pharma companies again save the day; mask pain in domestic consumption.
'While we note the very strong cyclical recovery in the economy, we believe there is still uncertainty over medium-term prospects.'
Stock prices is due to valuation expansion
The expected interest rate hike in the US and the resultant volatility in the domestic secondary market could play a dampener to the over Rs 2-trillion initial public offering (IPO) pipeline in 2022. IPOs in 2022 look promising, with as many as 35 companies holding the Securities and Exchange Board of India's approval to raise roughly Rs 50,000 crore. Another 33 companies are waiting for the regulator's nod to raise around Rs 60,000 crore next year.
Thousands of retail investors are reaping the benefits of the disruption that the latest technologies have brought to the equity market. Brokerage firms are aggressively investing in technologies such as artificial intelligence, machine learning, big data and analytics, social media, chatbots, virtual assistants and so on.
Citing the impact of the second wave of the pandemic over the economy and consumer sentiment, Swiss brokerage Credit Suisse has lowered its nominal GDP growth forecast by 150-300 bps to 13-14 per cent, but expects a stronger recovery in the second half as it sees the lockdowns having limited impact on tax collections. Last month, Neelkanth Mishra, the co-head of equity strategy for Credit Suisse Asia Pacific, and India equity strategist, had told PTI that he expected the real GDP to fall to 8.5-9 per cent in FY22 due to the more severe pandemic attack. The virus case load has crossed the 25-million mark, death toll from the same is nearing 2.9 lakh mark, which is one of the highest in the world as the test positivity rate has been around 15 per cent for long.
The negative aspect about the Budget is that the capital expenditure has been marginally cut to achieve the fiscal deficit target assumptions, and the onus of sustaining investment demand till private capex revives continues to vest with the public sector enterprises, notes Jyotivardhan Jaipuria.
Will Vijay will go the most successful MGR/Jayalalithaa way, or that of Vijayakanth, Seeman or Kamalahaasan, or will he end up as another Rajinikanth who cries wolf at the last minute and quits the scene even before it all had really begun, asks N Sathiya Moorthy.
'Just the amount of work which is there just to become more and more successful in banking. For this to happen you need to have leaders who understand technology.'
A hotel in 1975, entry into paperboards in 1979, India's dominant cigarette maker, ITC, read the tea - or tobacco - leaves early, leveraged its enterprise strengths and stepped up the diversification agenda to create multiple drivers of growth. Some failed, some faltered, some were transformational, adding steadily to the top line. Now those efforts are making a difference: margins from non-cigarettes - FMCG, hotels, agri, paperboards, paper and packaging - are expanding and profits are kicking in more significantly than ever before.
HCL Tech was the top gainer in the Sensex pack, rising over 4 per cent, followed by HDFC Bank, Infosys, NTPC, Nestle India, TCS and HUL. NSE Nifty surged 337.80 points to 14,845.10.
'It has taken us 15 years to get to where we are. It obviously doesn't happen overnight.'
Premiumisation, improving demand aid realisation growth at most large firms
After demonetisation, sharp fall in PE valuation offers an attractive entry point into some quality names and these 3 FMCG companies are expected to see the fastest growth in earnings with at least 15 per cent upside potential
10 stocks which are most popular with brokerages right now and are expected to deliver maximum upside over the next 12 months.
'We expect the bull run to continue until economic growth continues.'
Multiple triggers such as asset sales, pickup in energy cash flows, increased traction in omni-channel retail, and rise in ARPUs could further drive the stock.
Experts say the trend is worrying as it could take a toll on the pace of equity flows and also hinder the penetration drive of the Rs 24-trillion MF industry.
