INSUBCONTINENT EXCLUSIVE:
Kotak Institutional Equities sees earnings revival as the most important driver of the Indian equity market in 2019, despite expectations of
several global and domestic events that could cause volatility in the first half of the year.
Steady earnings revival could face noise from
But it expects around 10-15% returns from the Indian market next year, led by strong earnings growth, possible modest de-rating of overall
market multiples on global slowdown concerns and a potential de-rating of quality stocks and a broadly stable macro environment.
Kotak
Institutional predicts macro-economic conditions to be supportive of the market due to low inflation and a potential rate cut of 50 basis
points by the Reserve Bank of India in the first half of the year, mild depreciation in the rupee and continued strong GDP growth at 7.2% in
fiscal 2020.
The brokerage also noted global risks from tighter monetary conditions, higher-than-expected crude oil prices and escalation of
US-China trade hostilities.
It expects 27% growth in net profits of companies in the Nifty index in the financial year starting April 2019
On the stocks front, the brokerage said valuations of quality stocks were quite expensive while those of value stocks very inexpensive
It favours a mix of stocks in financials and IT services, and value stocks in other sectors.
