PMS Bazaar recently unveiled a captivating magazine highlighting various articles by skilled fund managers. This blog covers the perspectives of Mr. Vijay Chauhan and Mr. Prabhat Ranjan, both Co Fund Managers at Right Horizons, on emerging economic opportunities in India.

Indian Equities: Weathering Global Uncertainties

According to the Authors, the dynamic landscape of Indian equities has woven a compelling narrative over the past year. Against the backdrop of global uncertainties casting shadows over advanced economies' equity markets, Indian equities have showcased impressive resilience.

Navigating Turbulence: Expert Discourse

These seasoned professionals engage in an insightful discourse about the journey of Indian equities amidst turbulent market waters. Global economic intricacies—characterized by monetary and fiscal tightening, energy shocks from geopolitical events, and the ongoing pandemic impact—have intensified market volatility. Advanced economies' aggressive rate hikes to curb inflation have slowed global growth, driving investors to seek safer assets and leading to unanimous selling in emerging markets as the US Dollar strengthens.

Shifting Fortunes in Indian Equities

The Authors point out that the winds of change are shifting the Indian equity landscape. Once-challenging headwinds have transformed into tailwinds for emerging economies like India, fortified by robust fundamentals. As domestic inflation moderates sharply and interest rates peak within the country, advanced economies contemplate further rate hikes. The anticipated weakening of the US Dollar stabilized commodity prices, and falling bond yields contribute to a sense of stability.

Recovery and Growth Trajectory

The Authors underscore the recovery path for domestic equities, commencing after the FY23 earnings season's closure. Fueled by a stable macroeconomic environment and robust institutional investor inflows driven by strong corporate earnings, Indian equities have reached new heights. Transformative policies and structural reforms, including the Real Estate Act, digitalization of social transfers, and the Insolvency and Bankruptcy Code, have set the stage for a formalized economy with remarkable growth potential.

Driving Transformation: The PLI Scheme

At the heart of this transformation lies the Production-Linked Incentive (PLI) scheme, propelling capital expenditure, manufacturing, and exports while diminishing import dependence. Free Trade Agreements with significant economies and an unwavering focus on infrastructure development enhance India's global positioning. Combined with the economy's trajectory, these factors are primed to trigger a multi-industry multiplier effect.

Sectoral Growth Prospects

The Authors emphasize growth prospects within key sectors like Industrials, Auto Ancillaries, BFSI, and building materials. Structural drivers such as Product Linked Incentives (PLIs), Free Trade Agreements (FTAs), and robust domestic demand are central to this growth. The report delves into the housing and real estate sector's role in driving economic expansion, buoyed by government initiatives and infrastructure investments.

Emerging Trends: Autos and BFSI

An uptrend emerges in the auto sector, spurred by urban demand, Electric Vehicle (EV) preferences, and new OEM launches. The BFSI sector, a significant contributor to domestic earnings, is projected to maintain momentum as interest rates evolve.

Unlocking Potential: Small and Microcap Segments

Through meticulous historical trend analysis, the authors highlight the potential of the small and microcap segment, suggesting superior returns driven by valuations and business potential. These segments play a crucial role in the broader economic cycle.

A Glimpse into the Future

With an economic transformation backdrop, policy reforms, and burgeoning growth prospects, India's equity landscape is poised for significant expansion. The authors' insightful expertise provides investors with a nuanced understanding of the unfolding narrative in Indian equities, offering a glimpse into a future ripe with possibilities.

If you find this blog informative and look forward to reading the article by Mr. Vijay Chauhan and Mr. Prabhat Ranjan, then check out our July Edition Special Edition Magazine – Click HERE.