Here is a compilation of foreign brokerages view on the Indian economy and the stock market for 2018.
India Outlook in 2018 | View | Rationale |
MARKET OUTLOOK | ||
Bank of America Merill Lynch | Underweight | More bullish earnings/growth |
Less bullish multiples | ||
Increased global liquidity to hurt P/E | ||
HSBC | Underweight | Unwinding of QE programme to increase volatility |
Current strength of Asian economies could raise the risk of rate rises | ||
Most Asian markets at all time highs | ||
Valuations one standard deviation above historical average | ||
Kotak Institutional Equities | Cautious | Strong earnings recovery in FY19 but valuations discount the same |
Modest recovery in GDP growth (7.1 per cent in FY19) | ||
Higher crude prices, weak GST revenues and unknown political outcomes add to risks | ||
Risk of derating of multiples in sectors driven by policy, regulatory and technological changes | ||
Nomura | Positive | Strong revival in corporate earnings |
Stage set for a multi-year recovery | ||
Positive macro and lower cost of capital | ||
Strengthening of macro economic fundamentals | ||
ECONOMIC OUTLOOK | ||
Deutsche Bank | Positive | Economy poised for a cyclical upswing |
GDP growth of 7.5 per cent in FY19 vs 6.6 per cent in FY18 | ||
Some pickup in private capex activity | ||
Buoyant consumption growth | ||
RBI to remain on an extended pause through 2018 | ||
Morgan Stanley | Positive | Full fledged recovery in 2018 |
Recovery in private capital spending-first time in six years | ||
Goldman Sachs | Positive | GDP growth to accelrate to 8 per cent in FY19 |
Current activity indicator suggets signs of recovery | ||
Activity growth to pick up in H12018 | ||
RBI to hike rates by 50 basis points in 2018 | ||
Credit Suisse | Negative | Growth to remain weak |
Weak investment demand | ||
Weak consumption demand due to low agricultural income | ||
However equity market not expensive on a relative basis |
Source: Reports
Compiled by Priya Kansara