The Indian Economy Thrives Under a Stable Political Environment: New Insights
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Synopsis
The Indian economy remains robust under a stable political regime, bolstered by recent electoral successes and a positive budget. This environment presents favorable conditions for investment and anticipated earnings growth. The market's current status suggests potential for significant returns in equities, despite short-term volatility driven by global economic factors.
Key Takeaways
- Indian economy shows stability under BJP-led NDA.
- Quarterly earnings expected to improve with government spending.
- Market is oversold, indicating potential for growth.
- Investment opportunities abound for double-digit returns.
- Global factors contribute to market volatility but long-term outlook remains positive.
New Delhi, Feb 16 (NationPress) The Indian economy is currently experiencing a very stable political environment. Recent victories in various assembly elections, along with a favorable budget, have reinforced the standing of the BJP-led NDA government as a solid regime, as highlighted in a recent report.
Quarterly earnings are anticipated to show sequential improvement, driven by increased government spending and a promising revival in private sector capital expenditure, according to the CIO memo from Axis Securities for February.
The market currently sits in an oversold territory, with domestic institutional investors witnessing robust inflows throughout January.
“Thus, it is merely a matter of time before market dynamics shift, likely reaching new peaks by year-end,” the memo states.
Overall, the structural narrative remains intact, making the present market conditions an excellent opportunity for investments aimed at achieving double-digit returns from equities.
The global macroeconomic landscape continues to shift under the Trump presidency in the US.
In the short term, market volatility is expected as the threat of tariffs looms.
“However, in the medium to long term, equities will align with earnings trends alongside the cost of funds,” Axis Securities notes.
Despite a challenging January for Indian equities, our strategies experienced a setback and lagged behind the benchmark index considerably.
Nevertheless, when assessing performance over the entire fiscal year, they outperformed the benchmark significantly.
Moreover, the substantial correction has unveiled considerable value in most of our holdings, which continue to demonstrate strong earnings growth.
“Thus, it is only a matter of time before the performance of the portfolio aligns with its earnings growth,” the report concludes.
