Credit Suisse Wealth Management India expects the upcoming festival season to be good — after a gap of two years of pandemic induced disruption — not only from a demand improvement standpoint, but also in terms of having positive impact on equity markets. 

Ahead of the festival season, there could be “good restocking” and this could boost equities in sectors where there would be increased consumer spending, Jitendra Gohil, Head of India Equity Research, Credit Suisse Wealth Management told BusinessLine.

Consumer demand improving

Despite higher inflation in India, consumer demand is improving, he added, discussing the firm’s latest ‘India Market Outlook’ for August 2022.

Gohil asserted that India’s medium-term outlook for equities is “still attractive” and noted, in the near term, the firm prefers banks and pharma, as well as sectors that could benefit from higher consumer spending ahead of the festive season.

“We expect the festive season to be good this year, especially if the oil prices and inflation remain well anchored at current levels. Today, we are neutral on Indian equities. We see markets remaining choppy. But I am positive on the upcoming festive season”, Gohil said.


Given that macroeconomic and geopolitical risks are still significant, and the US yields have started to rise again after the US Fed reconfirmed its hawkish stance, there is a possibility of some correction in India equities in the near term, he said.

“However, we believe it could be temporary and any sharp correction could be a good buying opportunity”, Gohil added.

He also noted, Credit Suisse Wealth Management India is not perturbed about the Indian equities valuation premium being at near all-time-high-levels as the macro picture is quite stable. 

“Now valuation premium is at 97 per cent over MSCI EM. We may see minor correction. India is going to remain expensive, but is relatively in better position. The only concern is oil and If dollar strengthens and oil increases to $ 125, then we can see underperformance”, he said.


Global equity markets saw a powerful rebound last month in response to signals of slowing inflation in the US and better-than- feared corporate earnings. Softening oil prices as well as the return of FPI inflows helped the India equity market to outperform its global peers.

Foreign Portfolio Investors (FPIs) turned net buyers of Indian equities in July after remaining net sellers for nine consecutive months. FPIs net purchased $6.2 bn in July and August so far. A reversal of FPI flows combined with a softer USD helped the INR to appreciate marginally against the US dollar by 0.2 percent.

Gohil said, after the Jackson Hole meeting — where US Fed Chair Jerome Powell is scheduled to address  today, if the US yields fall and oil remains in control, then FPI flows will continue in India. “FPIs holding is now at ten year low. There is a fear that they might be missing India’s growth story. The domestic outlook here is very strong and so they are returning. This reversal was long due”, Gohil said.

Growth slowdown

Gohil also noted, global growth slowdown is not actually going to be bad for India. “Our major pain point is oil and commodity prices. If global growth slows down, it will bring down oil prices and it will return flows to India”, he added.

He said, Credit Suisse Wealth Management India was positive on mid caps over large caps. “We are still expecting GDP growth of 7.15 per cent. We are more optimistic on GDP growth than the market. The market is underestimating India’s medium term GDP growth. If oil remain in control then real GDP could be 7-7.5 per cent this fiscal. Nominal GDP could be 13 per cent. Tax collections could be higher. Markets are underestimating growth”, Gohil added.