India (Commonwealth Union)_ “Even when looking out 6 to 9 months, we do not see any big equities market downturn. Therefore, in contrast to its competitors, we continue to believe that Indian stock will dominate the equity market,” says Pradeep Gupta, co-founder and vice chairman of the Anand Rathi Group. The current earnings season has generally met expectations. There appear to be marginally more positive than negative surprises.Investors appear to have become more confident as a result of this, which has led to a recent notable rebound in the financial markets.
We continue to be bullish on equity as an asset class from a structural medium- to long-term view and continue to think that Indian stocks will outperform most other major markets in terms of risk-adjusted returns. When compared to EMs, the recent surge in the Indian market stands out. The upswing also increases the cost of Indian stock markets relative to those of other countries. Will India be able to maintain its superiority?
Corporate profits growth is significantly slowing down. This pattern is probably going to last. Having said that, analysts’ projections for earnings growth have been significantly revised lower. A rapid rise in discount rates could be a significant factor in this. In the first half of 2023, policy rates are anticipated to stabilize.
There may be a little re-rating of value multiples given this anticipation. This can compensate for the slowing of earnings growth. Overall, even looking out 6 to 9 months, we do not see a big decline in the equities market. As a result, we continue to expect that Indian Equities will outperform its competitors in the equity market. As was already mentioned, we are still overweight Indian equity and would prefer to stay that way rather than being overweight any other emerging market space.
