Bonjour, new guests from small-town India
Puneet Dhawan of Accor is brimming with ideas on ways to revive the hospitality sector
The year 2021 should see a transition at multiple levels — from virus to vaccine, from lockdown to reopening, from recession to recovery, and from a narrow rally to broad-based rotation — leading to a cusp of a new cycle. Overall, a ‘Goldilocks’ macroeconomic backdrop (strong growth and low rates) for equities is driving risk-on sentiment globally, which should benefit emerging markets like India.
The Indian economy is also at an inflection point. The Covid-19 vaccination should start from mid-January. Economic activity is at pre-Covid levels and rural economy continues to be resilient.
Consequently, economic growth estimates are being upgraded. India’s growth has the highest catch-up potential after major reforms announced by the government.
Prior to Covid, India’s GDP growth was below 6 per cent, but post-normalisation, it could sustain at 7 per cent over the next five years.
We are now entering an earnings upgrade cycle after a long time, which should drive markets going forward.
FY21 and FY22 earnings estimates had seen sharp downgrades between February-end and September. However, after September, the trajectory has stabilised, and EPS estimates are being upgraded across sectors. Cyclicals such as metals, auto and cement have surprised positively.
Corporate performance has been robust in Q2 FY21.
Earnings are projected to rebound sharply, and Nifty 50 earnings CAGR in FY22-24 can be higher than the long-term average of around 11 per cent.
Earnings rebound is likely to be led by digital economy, deep cyclicals and domestic consumption themes.
Economic recovery and abundant liquidity can drive the bulls in the Indian equity markets. The outlook on most sectors is turning positive, giving a lot of comfort on the recovery.
Domestic cyclicals and financials can do well in 2021.
After the recent rally, markets seem fairly priced in the short term.
Markets could see a minor correction, but it is difficult to time the market.
Upgrades to economic growth and earnings estimates can provide upside.
In this environment, it would be best to take a three-year view. From current levels, we can expect a 10-12 per cent CAGR return for the Nifty 50. During economic recovery, mid- and small-caps typically do well and could outperform large-caps. Market breadth improving can provide opportunities for active funds to generate alpha.
Investors should stay invested, continue their SIPs, and buy into any dips.
Lump-sum investments can be spread out over next few months.
Excerpts from Annual Investment Equity Outlook 2021 of Aditya Birla Sun Life Mutual Fund
Puneet Dhawan of Accor is brimming with ideas on ways to revive the hospitality sector
Citroen’s first vehicle sports a novel design and European interiors. It is also meant to be as comfortable as ...
The pandemic is only the tip of the iceberg that the country’s cash-poor airlines — both regional and national ...
The government is yet to specify the framework of its recently announced old vehicle scrappage policy
Here is a checklist that equips you to discern the market nuances
Sensex, Nifty 50 have witnessed sharp decline
The fund has consistently outperformed S&P BSE 100 TRI over one, three and five years
Returns are superior to immediate annuity plans, but SCSS can secure better rates for new investors sooner if ...
With the public looking beyond mainstream media for reports from the ground, independent digital platforms are ...
A book on Badri Narayan is a tribute — albeit a belated one — to an artist who did not enjoy the recognition ...
The country hasn’t had a quiet moment since the military seized power on February 1
The Tatmadaw sees itself as an embodiment of the nationalist soul of Myanmar. But their brand of nationalism ...
Its name is the starting point of a brand’s journey and can make a big difference in the success sweepstakes
Sober spirits are the in thing
A peek into where ad spends went last year and where they are headed tomorrow
Can Swiggy Instamart disrupt the ecommerce groceries space, currently ruled by the Amazons and Big Baskets? ...
Three years after its inception, compliance with GST procedures remains a headache for exporters, job workers ...
Corporate social responsibility (CSR) initiatives of companies are altering the prospects for wooden toys of ...
Aequs Aerospace to create space for large-scale manufacture of toys at Koppal
And it has every reason to smile. Covid-19 has triggered a consumer shift towards branded products as ...
Please Email the Editor