![]() ![]() We expect the Fed will raise rates in May and will keep it higher for longer versus the market expectation of a pivot in the later part of the calendar year, as the recession in the US isn’t our base case. Our house view is relatively hawkish on the Fed stance but relatively dovish on the RBI compared to the market expectations. In terms of macro, India's composite PMI remained over 54 for the past 13 months, in a row.Īlso read: Shankar Sharma on his 4 AM strategy, Brightcom and lessons from losing betsĭo you think the Fed is likely to consider a pause in its policy meeting that begins later today? Will the RBI continue with the pause for the rest of the financial year? Do you expect a healthy rally in the second half of FY24? The dollar/rupee forward premiums have slumped from about 4 percent to about 2 percent currently and BOP (balance of payment) situation isn't as bad as feared, giving some confidence in INR stability in these volatile times.Ĭorporate net debt to EBITDA for BSE500 companies is expected to fall to about 1.5 times in FY2024 versus over 3 times pre-covid, also the banking sector has seen a marked improvement in its balance sheet as well. This is clearly reflected, for example, in India's 10-year government bond yield which has fallen, surprising many, to about 7.12 percent. Not just political risk premium but even financial risk premium has fallen for India. While India's relative valuation looks stretched compared to other markets, especially China, our view is that it deserves to trade at a premium valuation compared to the historical average once the uncertainty abates on the Fed's path. The Nifty index is currently trading at a twelve-month forward PE ratio of 17.9, in line with the 10-year average, which is a decent de-rating from the peak valuation of over 22 times during covid. Despite our positive view on India's macroeconomic fundamentals, we remain neutral on Indian equities in domestic portfolio context and recommend buying only on sharp corrections given significant uncertainty in the global markets. Nifty index valuation is fair but it isn't cheap enough in our view to go outright overweight now. Edited excerpts:ĭo you believe the valuation froth in the Indian equity market has settled after recent derating? He recommends buying only after sharp corrections, given the uncertainty in the global market.Īn expert with more than two decades of experience in the capital markets, Gohil tells Moneycontrol that he remains positive on the banking sector, which may continue to drive earnings and offset weakness in the IT companies. Though the firm has a positive view of India's macroeconomic fundamentals, its remains neutral on equities, Gohil says. Jitendra Gohil, Director–Global Investment Management, Credit Suisse Wealth Management, India, says the Nifty valuation is fair but it isn't cheap enough to go outright overweight. ![]()
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