ITI Asset Management Company today said that Indian markets will see a multi-year bull cycle owing to the confluence of macro and micro tailwinds, with 7% GDP growth, moderating inflation prints, range-bound crude prices, easing 10-year G-sec yield, stable currency, and resilient corporate earnings leading the path.
Sectors like general insurance, life insurance, telecom, domestic and global pharma, power and power finance companies and defence will have multi-year growth opportunities in front of them. However, the recovery in the consumer staples minus discretionary is weak and elusive at this point of time, but food delivery and quick commerce companies may do well as they are an emerging business, although profitability needs to be factored in.
For sustained valuations and market growth, earnings growth trajectory, capex, policy initiatives like PLI, etc., Lok Sabha election outcome, and the timing and quantum of interest rate easing globally will be closely monitored.
Rajesh Bhatia, CIO, ITI MF, said, “We are at an early stage of economic cycle unlike in 2003-07 wherein markets were in late stage of valuation cycle and economic cycle and they corrected sharply. We continue to believe that the investment environment going forward will be a stock picker’s market. There could be instances where companies operating in the same sector may end up reporting a diverse set of financial results. Our approach in such an environment would be the same as what we have been following over the last few quarters. It would revolve around the thesis of identifying companies based on the “bottom up” approach.”
Going forward, the focus would be on the demand scenario in rural areas, as the rural segment continues to be weak on account of a lower than expected monsoon. While there are nascent indications of rural demand bottoming out, it is too early to call out a recovery for certain. Also, the upcoming elections and the phase of government formation may lead to some delay in the announcement and ordering of various projects and equipment. Stability and continuation of policy post-elections would augur very well for our markets despite any short-term volatility.
The Nifty-50 index was up 2% MoM in March-24 and closed FY24 with a stellar return of 29%. But in March-24, returns were muted for the NSE Mid cap 100 and NSE Small cap 100, and they were down 1% and 4%, respectively, though in FY24 they were up 60% and 70%, respectively.
(The above inputs are from a report from ITI Mutual Fund)
