Pickup in credit cycle, real estate are long term drivers of India Inc growth, says Tata MF Equity Report

livemint.com:

slowdown in the large economies such as those of US, UK and Europe, India’s economy is seen to be growing since there is a limited impact of other economies on India’s GDP/ profit growth. This is reflected, among other key points, in the Tata Mutual Fund’s Equity Outlook Report for March 2024. While commenting on the common challenge to the global economy, the report refers to the urgent need to bring inflation down without causing too much collateral damage to economy and labour markets.

ALSO READ: Is the US headed for a recession? Look at what richer Americans do on Black Friday Although inflation has moved down from its peak, it’s still way above the target, shows the report. The report further highlights that the direction of monetary policy in advanced economies is increasingly unambiguous now since bringing down inflation is within target range. While referring to the sectoral outlook, the report is positive on banks, capital goods and manufacturing.

It is neutral on IT and rural consumption and negative on urban consumption and commodities. In reference to a balanced portfolio strategy, the report lays emphasis on giving an active exposure to mid and small caps in order for investors to capitalise on investment cycle led economic growth. ALSO READ: How RBI is shaping the credit card market.

Explained The report shows that one-year forward PE stands at 20 times, higher than the historical average. In P/E terms, the Nifty 50 is trading at 80 percent premium to the MSC EM index, above its historical average of 49 percent. The report attributes the high valuation to stable macros, broad based earnings growth and robust banking/ corporate sector health.