Indian Markets Outlook: A Bright Future Ahead
ValueQuest Investment Advisors Founder and Chief Investment Officer Ravi Dharamshi believes that the outlook for markets from here on is bright. He said that after a long time, Indian markets’ short-term, medium-term, and long-term — all three appear positive.
The steps the Government has taken along with the Reserve Bank of India’s monetary policy tweaks and regulatory steps in the past six months have made the outlook positive, he said. The Government of India rationalised the GST rate structure ahead of Diwali, which came into effect from September. Prior to this, the government gave tax incentives to boost consumption in the economy.
RBI’s Monetary Policy Tweaks
The RBI surprised the street with a jumbo 50-basis points rate cut in its June policy meeting. The central bank also eased regulatory norms. This move is expected to boost economic growth and increase credit growth, which had fallen to 9% from 15% primarily because the impulse went down in the economy.
Asset-Class Rally
Gold and silver outpaced equities in India. However, the precious metals are rising in tandem with global markets. US and other emerging markets have advanced significantly. Dharamshi said, ‘I won’t read too much into, in terms of geopolitical situation, gold price rising.’ Metals have done well. It’s a board asset-class rally, he said.
Consolidation Year for India
India had a consolidation year because of the high valuation and policy gap. However, the RBI has taken enough steps to revive the impulse, Dharamshi said. In last September, the credit growth revived to 11.5%, which suggests the growth outlook improving. Basically, the decline in credit growth has bottomed out, he said.
Banks in Focus
In terms of the margin, banks delivered better-than-expected numbers. All things are aligning in terms of growth, Net Interest Margin expansion, and credit quality, he said. Banks stocks will likely be in focus for the next two-to-three years perspective, he said.
Foreign Direct Investments
Foreign direct investments have been good. The RBL Bank and Emirates NBD deal shows the robustness of the Indian banking system and economy. It’s a landmark deal. With such a strong bank coming in, it’s likely that another large bank may emerge, he said.
Overall, Dharamshi’s positive outlook on Indian markets is a bullish sign for investors. With the government’s initiatives and RBI’s monetary policy tweaks, the Indian economy is expected to grow, and the stock market is likely to follow suit. Investors can consider investing in bank stocks and other sectors that are expected to benefit from the economic growth.
