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Monthly outlook released by Motilal Oswal AMC says that the period of high profit growth in Indian markets is over. Going forward, the fund house expects value stocks to reach new peaks. The highlights of the report are as follows:
- If FPIs continue to buy, the positive momentum in the market is likely to continue
- 10-year bond yield has decreased from 7.2% in May to 7%
- FPI has increased in India due to weakening of the Chinese market
- IT and banking sectors are expected to deliver lower than average earnings growth
- Earnings growth in Indian markets could be at a premium
- Although valuations are higher than long-term averages, they should sustain due to higher growth outlook
- The fund house expects a short-term correction in the market and encourages investors to make use of such a correction
- Fiscal deficit was budgeted at 4.9% versus 5.1% in the interim budget in Feb 2024
- Defence and capex sectors are undergoing a year of consolidation after strong growth in the last 2 years
- Sustained FPI inflows in debt could pull the bond yields down
- The chances of increase in LTCG and STCG is low in future
- High tax rates could make India less attractive as an investment destination for FPIs. This can increase the attraction towards investment in MFs through GIFT City
- Removal of indexation will make premium real estate less attractive
- Urban consumption may increase due to reduction in income tax
- Discretionary consumption on the lower end will be aided due to government’s new employment subsidy
- Increase in capital gains tax will make equity investment in mutual fund more attractive. The fund house expects an increase in equity inflows going forward
- Arbitrage funds will retain their competitiveness despite change in STT
- Q1 results in FY25 have lower PAT (Profit After Tax) than expected. This is mostly due to commodities.
