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Credit Suisse, a global wealth management firm, anticipates some selling pressure in the Indian equity markets in the coming weeks and has recommended that this could offer a good buying opportunity from a 6-9 month perspective.
“While the second wave of Covid-19 pandemic in India and subsequent restrictions may lead to some growth worries, we believe corporates are better placed this time. We do not expect a nationwide strict lockdown to curb the pandemic; instead policymakers could resort to partial lockdowns, faster vaccine approvals and strengthening of the healthcare infrastructure,” said Jitendra Gohli, Head of India Equity Research and Premal Kamdar, Equity Research Analyst at Credit Suisse Wealth Management India in the firm’s latest India Market Outlook Report.
We recommend investors use this weakness as a buying opportunity. We continue to prefer cyclicals over defensive and mid-caps over large caps as we believe the growth could rebound sharply in H2 FY 2021-22, the report indicated.
From an asset allocation perspective, equities offer a better hedge against rising inflation, and hence the firm’s constructive outlook on equities continue, it added.
Upbeat FPI flows
The research report highlighted that India has been attracting a disproportionate share of Foreign Portfolio Investors (FPI) flows (with $26 .6 billion in the past six months till March ). However, FPIs have turned net sellers, with $ 0.5 billion outflows from equities in April so far. The domestic mutual funds’ buying trend has been positive for the first time in the past nine months, recording a net purchase of $339 million in March.
The retail flows, represented by systematic investment plans, recorded an all-time high inflows worth ₹ 9,180 crore in March 2021, it noted
Credit Suisse Wealth Management India sees the country still delivering a low double-digit real-GDP growth in fiscal year 2021-22 even if one were to assume a cut of about 100-150 basis points to GDP post the faster spread of the virus since mid-March this year.
This low double-digit real GDP growth will be the fastest growth in the world, it added.
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