Chief Executive Officer
Broking & Distribution
2015 was not exactly a year of two halves but definitely a year of two parts. The first part was short-lived , with Nifty scaling new lifetime highs in early March 2015. However, post that the Indian stock market has been on a downward trajectory with Nifty declining approximately by 4%. However, the mid-cap segment was a relatively better performer with some gains under its belt.
Global factors played a critical role in dictating Indian market trends on account of the potential US Fed interest rate lift-off and the Chinese economic slowdown. While certain global factors tend to have a collateral impact on our markets such as temporary liquidity squeeze and lower exports, India has benefitted from falling global commodity prices. It must be noted that despite uncertainty in the global economies coupled with domestic challenges pertaining to slow progress on certain crucial reforms and the delay in anticipated economic recovery, Indian market outperformed the emerging markets. The relative outperformance signifies a strong economic moat, which is likely to improve further in our view.
With inflation and current account deficit under control, sectors being opened up for FDI, public spending on the rise and an accommodative monetary policy; what India needs is continuous support from policy actions to attract private capex and consumer spending. The progress on vital reforms will also play an important role in supporting sentiments and accelerating growth hence, 2016 is expected to be the year where the domestic economic recovery will pick up pace.
We prefer to play India’s recovery through sectors like Private Banks, which will be the key beneficiaries of the uptick in economic cycle. Superior return ratios along with easy access to capital market will support valuation and growth. We are also positive on Pharma sector stocks based on ANDA pipeline in the US and steady domestic formulations business. IT sector is also expected to provide stable growth based on continuity of strong deal wins, scaling of digital offerings, increased M&A activity, vertical-specific drivers and services-specific drivers.
In conclusion, while 2015 may have been a forgettable year for Indian equities, we expect several opportunities disguised as short-term challenges to come investors’ way, which we expect will turn 2016 into a memorable year."