Indian economy in very stable political regime, structural story remains intact
The Indian economy is in a very stable political regime and with recent wins in various assembly elections and a good budget, the current BJP-led NDA administration has further cemented its position as a stable regime, according to a new report.
Quarterly earnings are expected to improve sequentially as government spending accelerates and the capex revival in the private sector appears on the horizon, according to the CIO memo for the month of February by Axis Securities.
The market is in the oversold zone, and domestic institutional investors have continued to see good inflows during January.
“Thus, it is a matter of time before market orientation changes, and would likely touch new highs by the end of the year,” said the memo.
Overall, the structural story remains intact, and the current market conditions present an excellent opportunity to invest and achieve double-digit returns from equities, it added.
The global macroeconomic scenario continues to evolve with the Donald Trump presidency in the US.
In the near term, the market will remain volatile as the threat of tariffs continues to loom.
“However, over the medium to long term, equities will track the earnings trajectory in conjunction with the cost of funds,” according to Axis Securities.
As January was tough for Indian equities, our strategies also took a hit and underperformed the benchmark index by a significant margin.
However, if we look at the performance over the entire fiscal, they still outperformed the benchmark by a significant margin.
Moreover, as the correction has been significant, value has clearly emerged in most of our holdings, which have continued to report good earnings growth.
“Thus, it is just a matter of time before the portfolio performance also catches up with its earnings growth,” according to the report.
