Automotive, Banking, Defense and Aerospace Sectors Will Remain Positive in NDA 3.0: Prabhudas Lilladher

The report indicated that after successful electoral competition and formation of the central NDA government, the government will continue capital expenditure.

The report highlighted that the government will continue to focus on capex-led growth in PLI, roads, ports, aviation, defence, railways and green energy, given 20 basis points lower fiscal deficit in FY24, normal monsoons and a dividend of Rs 2.1 trillion from the RBI.

The fiscal deficit for FY24 will be 5.6 percent, which gives the government room to act on economic growth and populism. The RBI’s Rs 2.1 trillion dividend has further expanded fiscal space, enabling investments in key sectors such as green energy, electric vehicles and rural development.

However, the report also highlighted the need for the government to focus more on farmers, rural people, the urban poor and the middle class to mitigate the impact of new social policy changes triggered by giveaways in some states during the recent elections.

On the stock market front, the report shows a positive outlook for sectors including automotive, banking, capital goods, defence, hospitals, pharmaceuticals, cement, aviation and discretionary consumption, with increased shares behind capital goods, telecom and cement.

The latest quarterly results showed strong performance in sectors such as automotive, oil and gas, metals, capital goods and pharmaceuticals. While some sectors such as consumer, IT and oil & gas recorded weak results, there is optimism about the growth potential in the automotive, capital goods and pharmaceuticals industries. Mid- and small-cap stocks outperformed, reflecting market confidence in the economy.

According to the report, NIFTY is trading at an average 15-year PE (price to earnings ratio) with an EPS (earnings per share) of 14.9% CAGR over FY24-26.

The report said that for the next 12 months, the NIFTY target is 25,816 (earlier 25,810). It states that a progressive budget, normal monsoons and strong fund inflows will further overvalue the markets.

NIFTY has shown consolidation with a growth of 5.4 percent in the last 2 months, which were marked by extreme market volatility during elections, strong DII inflow of Rs 892 billion and FII outflow of Rs 449 billion.

The report pointed out that the Indian economy remains on solid footing with 8.2% GDP growth in FY24, a dividend of Rs 2.1 trillion from the RBI and a smooth onset of monsoons. The RBI is keeping interest rates unchanged for fear of inflation, although the ECB (European Central Bank) and several other countries have started announcing rate cuts.

The report added that hopes for normal monsoons and a move on the defensive in the current volatile environment have seen some recovery in the FMCG and consumer durables industries. Private banks and IT services are doing poorly.

Overall, the report concluded that the Indian economy is contributing positively to growth, with particular emphasis on infrastructure development and strategic investments. The outlook for the stock market remains positive, with sectoral opportunities driving economic momentum. With a strong fiscal position and government initiatives to support economic growth, India’s economy will continue to grow in the coming years. (OR)

This report is auto-generated from ANI news website. ThePrint is not responsible for their content.