New Delhi ,jun 2
Equity markets, which had shown signs of anxiety and heightened volatility in April and May 2024 due to political uncertainty, are likely to experience significant relief, according to Motilal Oswal’s report.With the election results providing a clear mandate soon, markets are anticipated to stabilize and shift focus back to fundamental business operations and growth prospects.India is currently enjoying a robust economic phase, often referred to as a “mini-Goldilocks moment,” characterized by a combination of strong macroeconomic indicators.
The country’s GDP growth reached 8.2 per cent in FY24, following a solid 7 per cent growth in FY23. Inflation has remained controlled at approximately 5 per cent, and both current account and fiscal deficits are well within manageable limits. Additionally, the Indian currency has shown stability, further contributing to a favourable economic environment.Corporate earnings have mirrored this positive trend, with the Nifty index concluding FY24 with 25 per cent growth in earnings.Projections for FY25 and FY26 indicate continued strength, with expected earnings growth at a compound annual growth rate (CAGR) of 14-15 per cent.This strong performance, coupled with the government’s focus on manufacturing, capital expenditure, and infrastructure development, positions India as a key destination for investment.The continuity in policy-making brought about by PM Modi’s victory is seen as a critical factor in maintaining and enhancing economic momentum.With a stable government at the helm, there is the confidence that ongoing economic reforms and initiatives will be pursued with renewed vigour.This political stability is likely to be perceived as a positive signal by both domestic and international investors, further solidifying India’s attractiveness as an investment destination.In light of the election outcome and the stable economic landscape, the model investment portfolio remains focused on key domestic cyclical themes, supported by consistent earnings growth.The preferred sectors include Financials, Consumption, Industrials, and Real Estate. Within these broad categories, specific emphasis is placed on Industrials, Consumer Discretionary, Real Estate, and Public Sector Undertaking (PSU) Banks.The financial sector, buoyed by strong earnings and robust balance sheets, remains a cornerstone of the investment strategy. Consumption, driven by rising income levels and a growing middle class, continues to be a significant area of interest.The industrial sector, benefiting from increased capital expenditure and infrastructure projects, is poised for substantial growth. Real estate, supported by favourable government policies and urbanization trends, also presents lucrative investment opportunities.
