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Market Expectations - 2013


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The year 2012 has seen some dramatic swings in the Indian Equity Markets. The question that now presents itself is - Will this positive upswing continue in 2013? View the presentation to find out:

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Market Expectations - 2013

  1. 1. MarketDemystifying Stocks expectations: 2013
  2. 2. Highlights of 2012 •The year 2012 has been an interesting year in itself for the Indian Equity Markets. •After a sharp up-move in the first two months, markets drifted downwards given global recession, delays in decision making on reforms and the threat of India’s ratings being downgraded. •However, in the last two months, the markets have rallied significantly and have provided the much-needed relief to participants. •The one question that dominates our mind-set now is – Will this positive upswing continue well into 2013?
  3. 3. New Year : 2013 •New year heralds many new finance & investments specific resolutions when we decide to participate or not in equity. •There seem to be several factors which point towards possible gains in 2013. Having said that, we need to be cognizant of the potential headwinds. •The reasons for positive expectations are many, starting with the fact that the Indian Government after months of indecision, has started pushing reforms.
  4. 4. Rupee Depreciation •The Government has opened up the doors for more funds to come in which might help in the funding needs and may also curb rupee depreciation over a period of time. •Looking at the current scenario, it is expected that the Government will take up reforms in other areas like insurance, banking, pensions, aviation, etc in the short term.
  5. 5. Inflation •RBI is looking up to Government reforms and concrete action on the same may make it change its monetary stance in favour of easing. •While WPI inflation has remained at elevated levels, the core inflation has been contained at relatively lower levels. •If these factors come true, corporate revenue growth and profit growth may be higher in the coming quarters. •Consequently, the downgrades might stop at least and that should be positive for markets.
  6. 6. Quantitative Easing •From a global perspective, the EU problems are well-known and are likely discounted by the markets. That economy is expected to remain stagnant at least in the foreseeable future, if not de-grow. There may not be any negative surprises from that part of the world. •This, along with the quantitative easing already announced by EU and USA, should keep the global markets, as well as fund –flows into India, buoyant. •Consistent inflows from FII might have a salutary impact on the rupee, which has been under pressure for some time now. •An appreciating rupee may help in reducing our oil import bill, which will be a further positive.
  7. 7. BRIC nations •FIIs are looking for opportunities to participate in the Indian growth story given its attractive growth potential amongst BRIC nations and its favourable demographics. •Our savings and investment rates are also among the highest in the world and that should support future growth of the economy in the medium term.
  8. 8. BRIC nations •The growth of India is better than that of most other emerging economies like as Brazil, Russia, etc that have grown at a much lower pace. •Even with a growth rate of sub-6.5% levels, India has a lot of potential and thus remains attractive to foreign investments especially with the reforms underway.
  9. 9. Core Sector Front •While these are the structural medium-to-long term positives, India will have to strive hard to revive the growth rate in the short term also. •For that to happen, we need to see more reforms on the core sector front •land acquisition •availability of natural resources •fuel linkages •GST, etc. •These are the factors which will improve the business confidence and sentiment and lead to further investments.
  10. 10. Budget 2013 •We all know that, consensus building may be necessary to achieve these reforms and we need to see if the Government is able to achieve this consensus. •Also, we do have the 2013-14 budget coming up and markets are expecting some populist measures to be announced. •We need to watch out for the same and any significant impact on the deficit may weigh on the market sentiments.
  11. 11. Market Watch •Markets will look closely at the Government initiatives on disinvestment and revenues from the telecom licenses. •If the Government exhibits prudence and is fast enough to cash in on market cues, it would help it in its efforts to meet the revised fiscal deficit target. •This would be closely watched not just by domestic participants but also by foreign investors who will wish to benefit from the India story.
  12. 12. Final Note •For Indian markets, the key to a successful 2013 is sustainability: • in growth •in policy and implementation •in curbing expenses and inflation. •The recent action taken by the Government is positive but work still needs to be done in terms of further reforms and implementation. •This might turn out to be the key for the economy and market performance in 2013.
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