Corporate earnings in Q1FY23 came below expectations. On one side Bank led the earnings growth trend buoyed by credit cost moderation and loan growth momentum. On the other side sectors like, Oil & Gas, metals, healthcare, cement led to reduction in EPS estimates. Technology & Real estate too shown decline in YOY earnings.
Globally, pandemic and geopolitical conflicts have sparked inflationary conditions through excess stimulus and commodity price shocks. It has in turn warranted higher rate regime. Fears of Global recession (decrease in oil demand by European countries) and covid lockdown in China are impacting demand are keeping energy prices in check.
Equity Outlook:
So far so good. Domestic macroeconomics strength is reflected in a way Indian equities have substantially outperforming the emerging markets and has shown relatively better resilience to global market shocks. The country weight for India has inched from 6% in 2020 to 14.50% by August 2022.
Investor should participate in staggered manner or systematically for the long term.
Debt outlook:
Establishing price stability is taking precedence over short term growth in order to achieve long term goal. The monetary policy measures will be aimed at anchoring inflation expectations. We expect terminal rate to be lower at 6% to 6.25% by end of FY23.
Domestic growth is expected to hold up in the months to come. Broad domestic Market movement is expected to be range bound between 21 PE to 25 PE until inflationary pressure is there in economy…
Happy Investing
(Inputs from Franklin Templeton has been given weightage in reading global economy including India)
