Equity Market:
RBI has trimmed the real GDP growth forecast for FY23 to 7.20% from 7.80% estimated earlier.
Continuation of the geopolitical conflict causing supply chain disruption and high global commodity prices for longer may weigh on the fiscal situation, trade deficit and currency weakness.
High oil prices may place a drag on the cyclical recovery for Indian economy.
On the positive side, various domestic macro factors such as tax revenue growth, improvement in consumption and industrial high frequency indicators, e.t.c. remain supportive of the economic growth.
Markets are on expected lines, searching for support levels. World is waiting for the war to end, so as India. With the ease in energy prices new opportunities will be driving the markets.
SIP / STP are the valuable tools to participate in the market rather sitting on sidelines…
Debt Market:
RBI has raised inflation forecast for FY23 to 5.70% from 4.50%, due to broad based jump into global energy, commodities and food prices.
The RBI intends to reduce the liquidity in gradual and calibrated fashion over multi-year time frame.
We can see 3 to 4 rate hike in this financial year by the Central Bank.
Given the expected rate hikes, gradual reduction of liquidity and substantial supply of Govt. securities, yields are expected to harden further in future.
As it is, stay invested in shorted end of the yield is always a defensive approach and we are maintaining the same going forward suggesting Floating rate funds for conservative outlook.
Happy Investing!
(Blog has inputs from Franklin Templeton)
