Strong earnings, domestic flows support positive outlook on Indian equities: Report
New Delhi, Nov 10
India's economic fundamentals remain robust despite periods of market volatility, while the equity markets have an optimistic outlook over the next 2-3 years, supported by improving earnings, domestic consumption, private investment, strong credit growth and more reasonable valuations, a report said on Tuesday.
The report from Carnelian Asset Management & Advisors said credit growth averaged about 16 per cent in Samvat 2082, compared with 10 per cent in the previous year, while private capex, consumption and investment activity continued to strengthen across the economy.
Corporate earnings are also showing signs of a broad-based recovery. Of the 392 companies in the Nifty 500 that had reported quarterly results, revenue grew 24 per cent year-on-year while profit after tax rose 21 per cent, indicating improving earnings momentum across sectors.
The report said that domestic institutional investors continue to provide strong support to Indian equities. While foreign investors sold approximately Rs 4 lakh crore worth of Indian equities during the last Samvat, domestic institutional investors invested around Rs 7.1 lakh crore.
The report also highlighted that market valuations have become more reasonable. The Nifty 50 and Nifty 500, which were trading at one-year forward P/E multiples of 24-fold and 26-fold a year ago, are now trading at approximately 19x and 21x, respectively.
Brokerage firm Citi Research in a recent report said that India's benchmark index Nifty 50 will reach 28,000 points by the end of 2027, implying an upside of about 12 per cent from its last close of 24,986, supported by a strong earnings outlook, lower oil prices and the prospect of slower global artificial intelligence-related capital expenditure.
Indian equities had lagged global peers till recently as enthusiasm around the artificial intelligence trade and elevated crude oil prices weighed on the outlook for the world's third-largest oil importer.
— IANS
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