Rally in markets is supported by monsoon, GDP growth and cool-off in commodity prices

 


  • The Nifty50 index showed 15% YoY earnings growth.
  • The broader market saw approximately 10% growth.
  • Financials and auto enjoyed the most significant upgrades.
  • IT, pharma, and metals experienced downside.
  • The Indian economy witnessed a real GDP growth rate of 7.2% in FY23.
  • The market expects better corporate profit performance in FY24, despite a projected slowdown.
  • Companies with stable domestic demand and those oriented towards the domestic market are likely to benefit the most.
  • Value-oriented investments and stock-specific approaches are recommended.


Here are some of the key factors that contributed to the better-than-expected results:

  • A strong economic recovery in India, led by robust growth in the manufacturing and services sectors.
  • A pickup in consumer spending, driven by rising incomes and employment.
  • A favorable interest rate environment, which has helped to boost corporate earnings.
  • A decline in commodity prices, which has helped to reduce input costs for companies.


However, there are some risks to the outlook for corporate earnings in FY24, including:

  • The possibility of a global economic slowdown, which could impact demand for Indian exports.
  • Rising inflation, which could erode corporate margins.
  • A tightening of monetary policy by the Reserve Bank of India, which could dampen economic growth.
Despite these risks, the market expects corporate earnings to grow in FY24, albeit at a slower pace than in FY23. Companies with stable domestic demand and those oriented towards the domestic market are likely to benefit the most from this growth. Value-oriented investments and stock-specific approaches are recommended.

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