Samvat 2080: Market Experts See India Having A 'Strong Footing'

Given the resilience of the Indian economy, its equity market and corporate sector is capable of withstanding geopolitical challenges and global uncertainty, and such a "strong footing" is expected to continue into Samvat 2080, according to experts.

"The domestic economy is doing well but (investors) have to be cautious about geopolitical challenges and energy prices. The economy is far more resilient and I expect the strong footing to continue into Samvat 2080," Hiren Ved, chief executive officer, director and chief investment officer of Alchemy Capital Management, told BQ Prime.

According to Sunil Singhania, founder, Abakkus Asset Manager, the September quarter earnings season has witnessed a slower sales growth, but in terms of operating as well as net profit, it has been 20%-30%.

"There might be a 3%-5% upgrade as far as earnings are concerned... The market, as a whole, is fairly balanced given the GDP growth we are expecting as well as the outlook on corporate profits from a two-three years perspective," he said.

A Case For 'Reasonable Premium'

In terms of valuations, Ved said prices are neither cheap nor expensive, though India has been cheap historically during big crises like the 2008 global financial meltdown.

"I believe corporate balance sheets today and in the next 5-10 years will be better than previously. Before 2020, we had a lost decade of manufacturing, a bad loan problem, leveraged corporate balance sheets and we didn't have an investment cycle kicking in. All of that has reversed," he said.

He expressed optimism for a bull market that is like 2003-2008, "minus the crazy leverage and better capital allocation by corporates".

Retail participation in equity markets, GDP growth and demographics should make a case for a "reasonable premium" for Indian markets to last a 10-year average, he said.

Key Headwinds

Singhania said India faces both global and domestic headwinds, but is still placed in a "sweet spot".

Noting the possibility of a continuing of the incumbent government after elections, he said the third term will be focused on growth and with further push towards manufacturing and infrastructure.

Global factors will bring in some respite in terms of easing inflation in the U.S. and peak of the interest rate tightening cycle, he said.

"The stars are aligned and we have to be positive," the fund manager said.

Watch the full conversation here: