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Below the views View on the Sensex movements and the reasons for the comeback Mr. Amar Ambani, Group President & Head - Institutional Equities, YES Securities

“Corporate earnings season has had a reasonable start with 35 companies, that account for 15% of NSE500 market cap, witnessing their profit grow by nearly 21% on year on year basis.

Sensex earnings kicker will come from expansion in margins, as companies keep some part of the gain from falling input costs, and strong results from Banks and NBFCs. The Indian government’s thrust of infrastructure, including digital public infra, and pick up in private consumption through rise in credit offtake, will help the India story chug along.

Taking comfort from the recent fall in inflation, anticipating the end of the rate hike cycle, investors are massively turning positive on risk assets. Even if inflation remains sticky at these lowered levels, it is much better to be invested in assets rather than stay in cash and see inflation eat into your purchasing power.

Our own sense is that the recent price drops look sustainable, because they seem to have come on the back of reinstatement of disrupted supply, rather than demand destruction. The supply chain index that we track is back to pre-Covid level. Global Central bankers are close to the peak of their rate hike cycle. 20 out of 23 countries tracked on Bloomberg, may begin to see rate cuts in 2024.

India stands out in a slowing world and a weakened China. Manufacturers as well as investors are looking for alternatives to China and presently, India is the best bet in all of Asia. A lot of money is on the side-lines and the carry trade is playing out from Japan. FPI money should keep flowing into India, with expected stable yields and healthy INR outlook.

The broad-based participation in this rally, strength in midcaps, positive moves in high beta sectors, suggests that there is significant strength in this market. Valuations are not expensive at 17x FY25 earnings and we expect 2023 will be a robust year for the Indian stock market."

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