The commentary around RBI raising rates in its coming meeting would be that much more relevant - Motilal Oswal Financial Services
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By Mr. Motilal Oswal, MD & CEO, Motilal Oswal Financial Services.
The writing was there on the wall. Any sudden and sharp fiscal consolidation steps announced could have throttled the nascent and uneven recovery of the Indian Economy. A 6.9pct fiscal deficit target alleviates that pain. The successive waves of the pandemic have made it more difficult to reduce government debt as a share of GDP in the medium term. The budget has focused on boosting overall demand though and has invested more in infrastructure.
Hence as I see it, we are in high growth, high inflation environment. The budget is behind us and now 9th februrary’22 become relevant. The commentary around RBI raising rates in its coming meeting would be that much more relevant. Having said that, in my opinion, equity markets in India are likely to see 20000 on the nifty and about 65000 in SENSEX by December 2022 on the back of 15-20 per cent earnings growth in FY23. The journey, however, is likely to be very volatile. Markets will test patience on the downside as markets adjust to higher risk premiums on the back of an impending increase in interest rates, both globally and locally. The Indian rupee is likely to depreciate which could see FII selling, particularly those names where private equity holding is high (Read consumer tech and other self-proclaimed tech companies). Sectors like infrastructure , real estate , industrials , financials ,Information technology and pharmaceuticals are likely to outperform while consumer staples and discretionary likely to underperform”
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