IndianEquity Market Moving Ahead

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IndianEquity Market - Moving Ahead
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GDP Growth to remain strong
Source CSO
3
Inflation under control
WPI, YoY
Source Ministry of Industry, GOI
4
Fiscal Deficit in check on the back of strong
tax collections
Source CMIE, Comptroller General of Accounts
5
Interest Rates near peak -CRR hikes to
manage liquidity
Source RBI, CMIE
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Repo Reverse Repo Stance
Source RBI, CMIE
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Forex Market

• FDI inflows more than tripled in last 5 years
• Strong FII inflows
• ECBs, IT Exports Growth, Invisibles strong

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FDI Inflows
US mn
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ECB Inflows
Gross in US Mn
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Credit Growth Softening
Source RBI
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Imports rise, Exports soften
Source CMIE, Bloomberg, Ministry of Commerce
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Widening Trade Deficit
Source CMIE, Bloomberg, Ministry of Commerce
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Stock Exchange Reforms

• Regulations comparable to Developed Countries
• -Dematisation
• -Screen based trading
• -Settlement mechanism
• -Derivatives
• - Trade Density

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Net FII Investments Vs Sensex
Source Bloomberg
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Net MF Investments Vs Sensex
Source Bloomberg
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10 Yr GSec Yield Vs Sensex
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Valuations Getting Expensive
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Reducing Equity Risk Premium
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Rally driven by fewer stocks
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Comparison with Emerging Markets
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Way Forward
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India Story Sustainable

• Agriculture- moving on.
• Industrial Growth
• Services Sector Growth

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Real GDP Growth to remain strong
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IIP based growth
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India 3rd largest Economy on Purchasing Power
Parity ( PPP ) - since 2006
GDP at Current Prices (US bn)
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India Story Sustainable

• Corporate Performance
• Investment Cycle
• Softer / Moderate Interest Rates
• Exchange Rate moderately appreciating

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Top line Profits growth decelerating
- but sustainableat current levels.
Source Capital Line Database
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Corporate Fixed Investment Boom
Source RBI
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Investment boom supported by increasing Gross
Domestic Savings
Source CSO
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Rupee Appreciating
Source Kotak Securities Research
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Economic Trends

• Growth to remain strong in near to medium term
• Industry Services to support growth
• RBIs monetary tightening cycle moderate
• Continued capital inflows
• Rupee to appreciate moderately

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India Story Sustainable Key Risks

• Policy uncertainty on capital flows
• Global Political Developments
• Upward revision in domestic oil prices
• Global crude prices up by 60 in last 1 yr
• Reversing just the February oil price reduction,
  will increase inflation by 0.35

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Indian Equity Market - the Elephant on
Majestic Move.