2025-06-03 02:41:55 pm | Source: PR Agency
On the currency front, the rupee's Real Effective Exchange Rate (REER) has corrected significantly, and India's proposed trade deal with the US should set it apart in the ongoing trade upheaval. Sluggish oil prices are beneficial for current account deficit (CAD), and corporate balance sheets are strong. The financial sector's earnings have been in line with expectations while overall, earnings growth for FY25 has been tepid. The weak market performance in FY25 has largely bridged the gap between earnings growth and equity returns, particularly in large caps. So large-cap valuations are relatively attractive, while mid and small-cap segments remain above their long-term averages. Overall, we have a cautious outlook on both global and domestic markets. Despite this, we continue to highlight the importance of equities as a long-term asset class. Considering the current global uncertainties, a diversified approach is advisable, and hybrid funds may offer optimal risk adjusted returns during such uncertain times. This phase requires discipline and patience.
Since March 2025, we have increased duration across our various fixed income portfolios, supported by high liquidity and expected rate cuts. The current portfolio positioning is further strengthened by RBI's INR 2.69 lakh crore surplus transfer to the Government as dividend for FY 2024-25, which is expected to boost core liquidity and support the yield curve.
Gap between earnings growth and equity returns largely bridged in large caps by Mr Avinash Satwalekar, President, Franklin Templeton India
The global economic landscape continues to remain fraught with challenges and uncertainties. Trade policy uncertainty, particularly due to tariff hikes, is anticipated to adversely affect global trade and growth at both macro and micro levels, as companies delay capital expenditures in search of more clarity. Global GDP growth is expected to slow down due to increased trade barriers, heightened geopolitical and policy uncertainty. The market is likely to consolidate rather than continue with a momentum-driven, one-way trend, given the lack of clarity on the global front. Despite the impact of trade tensions on the growth outlook, India's relative growth remains higher supported by strong economic fundamentals.
On the currency front, the rupee's Real Effective Exchange Rate (REER) has corrected significantly, and India's proposed trade deal with the US should set it apart in the ongoing trade upheaval. Sluggish oil prices are beneficial for current account deficit (CAD), and corporate balance sheets are strong. The financial sector's earnings have been in line with expectations while overall, earnings growth for FY25 has been tepid. The weak market performance in FY25 has largely bridged the gap between earnings growth and equity returns, particularly in large caps. So large-cap valuations are relatively attractive, while mid and small-cap segments remain above their long-term averages. Overall, we have a cautious outlook on both global and domestic markets. Despite this, we continue to highlight the importance of equities as a long-term asset class. Considering the current global uncertainties, a diversified approach is advisable, and hybrid funds may offer optimal risk adjusted returns during such uncertain times. This phase requires discipline and patience.
History suggests that fear often creates opportunities for long-term investors willing to accept near-term volatility in exchange for future price appreciation. With valuations now more attractive and sentiment deeply negative, this may be one of those moments. The money market curve has steepened due to ample liquidity, and the G-sec curve has continued to shift downwards on softer yields.
Since March 2025, we have increased duration across our various fixed income portfolios, supported by high liquidity and expected rate cuts. The current portfolio positioning is further strengthened by RBI's INR 2.69 lakh crore surplus transfer to the Government as dividend for FY 2024-25, which is expected to boost core liquidity and support the yield curve.
Above views are of the author and not of the website kindly read disclaimer
Disclaimer:
The content of this article is for informational purposes only and should not be considered financial or
investment advice. Investments in financial markets are subject to market risks, and past performance is
not indicative of future results. Readers are strongly advised to consult a licensed financial expert or
advisor for tailored advice before making any investment decisions. The data and information presented
in this article may not be accurate, comprehensive, or up-to-date. Readers should not rely solely on the
content of this article for any current or future financial references.
To Read Complete Disclaimer Click Here
Latest News
Germany aims to finalise Free Trade Deal with India ...
Seshasayee Paper Q2 net profit falls 21 pc to Rs 22....
Piyush Goyal set to address India`s deeptech ecosystem
Kotak Mahindra Bank`s Q2 net profit dips 2.7 pc to R...
India aims for 350 airports by 2047: Civil Aviation ...
Reliance, Meta announce new Rs 855 crore AI joint ve...
RBI proposes to allow banks to finance corporate acq...
Adani Group`s `energy-to-compute` ecosystem to power...
Add Colgate Palmolive (India) Ltd For Target Rs. 2,4...
Broader indices outshine benchmarks this week, 16 sm...
More News
Creating Tax-Efficient Regular Income Through SWP in Equity Hybrid Funds by Rajesh Bansal, M...
Kriscore Capital Announces First Close of Its Maiden Rs.200 Cr Early-Stage Venture Capital Fund
The Alternate Opinion : Global Liquidity Tracker: Momentum in US ETF flows fading after 2-years. India Midcap flows showing re...
Franklin Templeton and PIF Sign MoU to Invest $5 Billion in Saudi Financial Markets
