Dolat Capital – ThePrint – ANIFeed

New Delhi (India), August 21 (ANI): Indian equity markets have outperformed emerging markets over the last 18 months, driven by strong domestic flows and strong financial performance, a report by Dolat Capital has revealed.

He added that macroeconomic data from the United States may limit further valuation increases.

“We also believe that macroeconomic data from the US will limit significant valuation growth between now and the end of the current calendar year,” Dolat Capital added in a report.

The impact on stocks will depend on whether the US economy experiences a soft or hard landing.

Expressing optimism about the revival of consumption in India, the report added that the focus is on reviving rural consumption and expectations are for a positive recovery amid concerns like food inflation.

“We are re-examining our bias towards a rural-led recovery in consumption, with the rural sector doing better than the urban sector. We maintain that these factors will eventually fade away in the context of a good monsoon and increased seasonality in the food basket. Comments from players in the consumer goods sector, as well as other consumption categories, support the view of a rural reversal,” the report added.

The recovery in monsoon and seasonal factors is expected to boost the food basket, potentially improving rural spending. This year’s monsoon season has been much better compared to last year and will provide a boost to income and spending sentiment in agriculture

“We also see inflation expectations showing signs of peaking. While the near-term risk to our view comes from the recent rise in food inflation, we read that as seasonal rather than otherwise. Ultimately, we expect it to start to moderate and start to normalize, with signs of this visible in the July data,” the report said.

The report also mentions the employment schemes announced by the government in the July budget and calls them “employment enhancing measures”. Five new schemes have been launched as part of the Prime Minister’s package to promote employment opportunities for the youth. The budget allocates Rs 2 lakh crore to create over 4.1 crore employment opportunities over five years.

“The budget presented seems to take concrete steps towards job creation. In the latest budget, the FM had emphasised on the need to create more jobs in the formal sectors through employment-linked incentives (ELI). She wanted to do this through three EPFO-based enrolment schemes. The focus was on providing financial support to first-time workers and their employers,” it added.

In terms of portfolio strategy, the report said that preferred investments are shifting towards rural consumption, discretionary sectors (preferring consumer durables over autos), select pharma stocks, CNG companies in the power sector and chemicals, which is part of the structural shift.

“We remain aligned to leverage the earnings cycle, which we believe has the strength and incentives to see us through FY25 and FY26 based on the current environment,” the report mentioned. (ANI)

This report is generated automatically by ANI news service. ThePrint is not responsible for its content.