New Delhi, June 9 (IANS) An SBI Mutual Fund report on Monday changed the Indian equities’ outlook to neutral from an underweight stance in 2024, as the domestic benchmark indices continue to perform well despite global uncertainties.
From a contrarian viewpoint, this shift to neutral from underweight equities represents a healthier market outlook and better long-term entry points for investors, “though we are not yet ready to recommend overweight positions”, said the SBI ‘Market Outlook’ report.
The Indian equities gained in May despite tariff uncertainties. Nifty and Sensex increased 1.7 per cent and 1.5 per cent (on-month), respectively. FPIs turned net buyers even as overall market breadth weakened.
The Q4 FY25 corporate earnings scorecard was modest (single-digit profit growth), but largely in line with expectations, which has helped to arrest incremental earnings, downgrades in May, according to the report.
Even as metals, healthcare, capital goods, PSU banks, and chemicals have recorded a healthy profit growth, weakness in private banks results, coupled with a drag from Oil and Gas (ex OMCs), put pressure on profitability.
“Earnings growth is expected at around 10.5 per cent in FY26. Revival in India’s economic growth and hence topline is critical for the expectations to be met,” the report further stated.
In the context of the Indian equity market, valuations have become more reasonable after the recent decline in Indian 10-year bond yields and a de-rating in price-to-earnings multiples.
“Our preferred measure — the earnings yield to bond yield spread — now suggests modest valuations compared to last year’s highs,” the report mentioned.
“In our view, quality and long-term fundamentals will start getting rewarded versus narrative-based and, to some extent, speculative price action of the past year,” it added.
The current turbulence should bring the focus back on fundamentals.
“We remain of the view that increasingly the market will become more discerning and move back towards companies which have strong business models, long-term earnings growth visibility and sustainable cashflows,” according to the report.
Q4 FY25 real GDP came in at 7.4 per cent compared to 6.4 per cent in Q3, surpassing RBI’s and market expectations of 7.2 per cent and 6.8 per cent, respectively.
This growth was primarily driven by a sharp rebound in fixed asset investments and sustained momentum in agricultural activity, even as aggregate private consumption remained underwhelming.
“We expect India’s growth to be flat at 6-6.5 per cent in FY26. While the tariff troubles have been averted for now, global policy uncertainty is a risk to India’s growth,” it added.
–IANS
na/vd
Disclaimer
The information contained in this website is for general information purposes only. The information is provided by BhaskarLive.in and while we endeavour to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk.
In no event will we be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from loss of data or profits arising out of, or in connection with, the use of this website.
Through this website you are able to link to other websites which are not under the control of BhaskarLive.in We have no control over the nature, content and availability of those sites. The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.
Every effort is made to keep the website up and running smoothly. However, BhaskarLive.in takes no responsibility for, and will not be liable for, the website being temporarily unavailable due to technical issues beyond our control.
For any legal details or query please visit original source link given with news or click on Go to Source.
Our translation service aims to offer the most accurate translation possible and we rarely experience any issues with news post. However, as the translation is carried out by third part tool there is a possibility for error to cause the occasional inaccuracy. We therefore require you to accept this disclaimer before confirming any translation news with us.
If you are not willing to accept this disclaimer then we recommend reading news post in its original language.
