Indian equity outlook - The pessimism seems overdone, bull market should ... demand revival (especially urban demand) is expected during 2016. Current. 0. 1.
OUTLOOK 2016 Indian equity outlook - The pessimism seems overdone, bull market should resume in 2016 After a big rally in 2014, Indian markets struggled in 2015. The nifty was down marginally from the beginning of the year and close to 15% from its intra-year highs. It was notable that the rally which started in late-2013 did not see any meaningful correction till Mar-2015. Hence the subsequent correction should be seen as a healthy part of the bull market which is allowing for a reset of expectations to a more reasonable level. In fact all historical bull markets have seen multiple corrections over their cycle. As an example the 2003-07 bull market had at least 2 significant corrections of well over 20% and multiple smaller corrections of over 10%.
1997 2010 1994
2007
1989
2006
1985
2004
2005
1991
1986
2013
1992
2009
2000
1996
1984
1990
2003
1995
1987
1983
2014
1999
2011
1998
1982
1993
1981
2008
2001
2002
2012
1988
-20% and below
-20% to 0%
0% to 20%
20% to 50%
50% and above
S&P BSE Sensex: Yearly Performance
Source: ACEMF
Indian equity markets struggled in 2015 on account of three significant headwinds. Firstly global investors have been pulling out money from emerging markets and India has got caught up in that. Within India there has been a resetting of reform and policy expectations from the government even as the government has faced political challenges in passing reform legislation. Finally and most significantly, the ongoing economic recovery has been weaker than expected so far and consequently demand has not picked up sufficiently. This has led to disappointments in topline growth across sectors leading to earning downgrades.
Nifty 50 Index EPS - Consensus Estimates
(EPS)
700 650 1 YR Ago
Current
600 550 500 450 400 FY15
FY 16
FY17
OUTLOOK 2016 th
Current refers to 30 Nov 2015. Source of data: Bloomberg Consensus Estimates, IIFL Research
Corporate profits have trailed nominal GDP growth over the last few years. The pressure on profitability has come from a number of factors – weak demand, large capex projects in progress (many of which have got stuck or delayed), high interest rates and high input cost inflation. As these issues start getting resolved over time, we should be entering a period where earnings growth can outpace nominal GDP growth over the next few years.
FY16Estimate
FY15
FY14
FY13
FY12
FY11
FY10
FY09
FY08
FY07
FY06
FY05
FY04
FY03
FY02
Corporate Profit to GDP (%)
FY01
(%)
Corporate profits to GDP
9 8 7 6 5 4 3 2 1 0
Source: Motilal Oswal
2015 saw a sharp improvement in corporate margins. The fall in commodity prices (especially crude oil) has helped bring down input costs. The fall in commodity prices is also supporting the process of disinflation in the economy. This fall in inflation is creating the headroom for lower interest rates which should further bring down finance costs for companies.
Indian equity markets continued to move higher in July. The Nifty is ... exuberance has helped broaden market participation as mid-cap stocks have also rallied.
The US Fed is widely expected to raise rates in its June meeting even as US and global growth remains tepid. ... India's external accounts are likely to remain comfortable even as the BoP surplus ..... Axis Banking Debt Fund (an open-ended.
Risk Factors: Axis Bank Ltd. is not liable or responsible for any loss or shortfall ... Mutual Fund (Non-delivery based ) ... Partnerships (resident and non-residents).
The sell-off in Indian markets has seen midcaps under-perform large caps in 2016. ... The fund also includes bottom-up stock selection ideas in Pharma, IT and.
India's external accounts are likely to remain comfortable even as the BoP surplus has ... changed liquidity stance, should lead to lower market rates over the next 12 months ... and replaced with corporate bonds and money market instruments.
the various emerging technologies and leverage the social media platform. As the mutual fund .... the business from the industry is, with the top ten fund houses .... awareness through regular programs and campaigns beyond the top 15 cities.
However the relentless rise in non-performing loans at banks and a series of ... Thus the amount of debt (relative to equity) has come down and the interest ... recent times, the spread has widened and today is close to the highest levels for.
To be sure the right time to be concerned about weakening credit quality ... 20,000 non-government, non-financial public companies over the past three years.
