Indian economy is at a long-term secular megatrend where the relationship with the historical is being muddled with distinct secular drivers creating inflection that is of greater prominence for the current investment landscape. The risks to the macro are skewed towards the global slowdown, and geo-political mayhem that seed intermittent periods of volatility in the Indian equities market.
The foundation for our optimism lies in the narrative that India is advancing globally positioning itself as the fastest-growing major economy. GDP growth during the first half of FY24 has been robust, exceeding expectations.
Earnings in H1FY24 have been healthy additionally we have observed the proportion of profits in the GDP has experienced an upward trajectory, ascending to nearly 5% at present, and is projected to go further up over the next three years. We anticipate robust annual earnings growth over the next three years, driven by a multi-decadal growth outlook for the economy, healthier corporate balance sheets, an expanding capex trend focused around infra, a multiyear credit cycle for financials, a structural increasing trend in discretionary consumption and a dependable reservoir of domestic capital.
We expect earnings to continue growing strong in FY25 driven by a diverse spectrum of opportunities spanning various sectors driven by favourable factors that will benefit the large, mid, and small caps. We believe the markets are at reasonable valuations from the perspective of FY25 earnings and the rate cuts will benefit the markets disproportionately in terms of m-caps.
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