Covid 4.0: Scenario Analysis & its impact on Equity Market - Motilal Oswal Financial Services
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Covid cases have sharply aggravated in China, and is fast spreading to countries like Japan, South Korea, Thailand and US. While the world economy is already struggling with fears of recession, sharp spread of Covid to other countries could result in additional global curbs. However, MOFSL believe, Covid is less likely to surge in India given comprehensive vaccination coverage and early preparedness by the Government. Hence MOFSL have tried to present a perspective on different scenarios of Covid and its impact on domestic equities incase Covid hits in India too.
Key themes to focus on in 2023.
Credit Growth
Credit growth at decadal high of more than 15% for past few months. While Retail and MSME has so far driven the credit growth, corporate credit too is bouncing from decadal bottom and is expected to gather pace with pick up in private capex.
Capex/ Housing
Central Government to boost capex ahead of general elections 2024. Cyclical upturn in many sectors (Real estate, Auto, Banking, Telecom etc.) is expected to fuel fresh private capex. The Residential Real Estate sector is poised for an upcycle, primarily buoyed by the improved affordability.
Manufacturing
Industry consolidation have led capacity utilization to recover to LTA of 75% which would push private investment. Rising scope of outsourcing on account of China+1 and Europe+1. Government initiatives like Atmanirbhar Bharat, make in India, PLI will propel manufacturing contribution to GDP higher from current 15%.
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