A guard walks previous the Nationwide Inventory Change constructing in Mumbai, India, on February 9, 2018.
Danish Siddiqui | Reuters
Indian markets could also be on a tear, however funding financial institution Nomura says development considerations, shopper sentiment and rising inflation may nonetheless weigh on shares.
“Macro uncertainty is definitely a priority for the markets,” Saion Mukherjee, the financial institution’s head of fairness analysis in India, stated Wednesday throughout a digital session on the Nomura Funding Discussion board Asia 2021.
Indian shares have surged this yr regardless of the financial influence of the coronavirus pandemic, which knocked the nation off its development trajectory final yr.
The benchmark Nifty 50 index, which represents the weighted common of fifty of the most important Indian corporations on the Nationwide Inventory Change, is up 11% yr to this point as of Wednesday. However, India’s GDP for the fiscal yr that ended on March 31 is estimated to have contracted 7.3% in contrast with 4% development within the 12 months prior.
“I believe that there isn’t any robust correlation between GDP development and earnings development, no less than within the quick time period,” Mukherjee stated.
Microeconomic components resembling company earnings are wanting “comparatively higher” at this level, he stated. Mukherjee added there may be sufficient cushion for company earnings, which tapered a little bit as a result of pandemic, to return again strongly. Nomura predicted that banks and metals shares will drive earnings on the Nifty.
Mukherjee shared how the funding financial institution is navigating this atmosphere. Listed below are Nomura’s high inventory picks and sector calls: