‘Current rally is comparatively more sustainable’
Indian equity market has witnessed several upswings in recent years, but the current rally is particularly noteworthy for its strength and breadth. Though inflation concerns and risk aversion due to Fitch’s downgrade of US credit rating may have led to some sobering of sentiments in the India Equity, the long-term growth prospects look intact. If we look at the broader macro backdrop in the past cycle, there are notable differences between the current rally vs the pre-covid times — that is, 2013-2018 (especially in mid/small category).
The current rally is positively different from the previous rally in the 2013-18 period in several ways.
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View Details»Stronger economic growth: India is currently in cyclical upturn after a period of anaemic growth from 2015-20. We expect growth in this period to be more broad- based as opposed to what we witnessed in the past cycle. Some of the capex related themes be it, real estate, construction or broader manufacturing has seen good traction and can drive employment generation and overall growth.
Robust earnings growth: Current rally is also driven by broad-based earnings growth, as opposed to just valuation expansion, observed in the past cycle.
Impact of policy reforms: Some of the policy decision by the government in the past such as GST implementation/ RERA/ Digitization had a disruptive impact within certain pockets in the economy. In the current cycle, the positive impact of these reforms clearly outweighs the disruption; and as a consequence, the Indian economy is on a better footing than in the past.
India’s Economy better placed within EMs: India’s GDP print continues to remain strong,
