Patience pays off....acchhe din aa rahe hain!!!! - Angel Broking

Views of Mr. Mayuresh Joshi (Fund Manager, Angel Broking):

"The overwhelming mandate received by BJP in the State elections especially Uttar Pradesh and Uttaranchal has paved a path for sustained political stability in the economy along with continuance of the economic policy reforms initiated by the Government. The huge rally witnessed in the Indian equity markets was a testimony of this fact and the markets need to get through the following headwinds that it encounters domestically (The index trades around 19-19.5x 1 year forward earnings)which can largely get classified into: a) Recovery in Corporate earnings which have remained soft and tepid so far (expected recovery in the second half of the coming fiscal),b) pick up in the private capex cycle (expected by q4 in the coming fiscal) and c) interim impact in the implementation of GST which might have a push through in the Inflationary trajectory but would over the next few years lead to better compliances and tax collection efficiencies on the Indirect tax front. The other headwinds that the markets are bracing internationally are a) The delay in recovery of the Chinese markets b) ECB stance and the state of the Euro zone economy as data points still indicate a fragile recovery taking place along with local elections occurring in France etc and the outcome thereof and c) Trump policies and associated announcements that can impact on world trade and effectively on emerging market currencies and bond movements. Markets to a large extent have gestated the Federal Reserve hike and associated commentary which can point out to 2-3 hikes happening in the coming fiscal though a short term momentum towards dollar denominated/backed assets is not ruled out. Albeit, the strong momentum and liquidity the markets are witnessing is keeping the bourses on a strong footing and as domestic factors start becoming more positive for all the headwinds enumerated above and we have respite from global factors over the next few months, there is a high probability of the markets rerating thereby justifying the premium valuations that the markets are discounting on a forward basis."

Source : Equity Bulls

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