A guard walks previous the National Stock Exchange constructing in Mumbai, India, on February 9, 2018.
Danish Siddiqui | Reuters
Indian markets could also be on a tear, however investment financial institution Nomura says progress considerations, shopper sentiment and rising inflation might nonetheless weigh on stocks.
“Macro uncertainty is definitely a priority for the markets,” Saion Mukherjee, the financial institution’s head of fairness analysis in India, mentioned Wednesday throughout a digital session on the Nomura Investment Forum Asia 2021.
Indian stocks have surged this yr regardless of the financial affect of the coronavirus pandemic, which knocked the nation off its progress trajectory final yr.
The benchmark Nifty 50 index, which represents the weighted common of 50 of the most important Indian corporations on the National Stock Exchange, is up 11% yr up to now as of Wednesday. On the opposite hand, India’s GDP for the fiscal yr that ended on March 31 is estimated to have contracted 7.3% in contrast with 4% progress within the 12 months prior.
“I believe that there is no such thing as a robust correlation between GDP progress and earnings progress, a minimum of within the quick time period,” Mukherjee mentioned.
Microeconomic elements corresponding to company earnings are wanting “comparatively higher” at this level, he mentioned. Mukherjee added there may be sufficient cushion for company earnings, which tapered slightly as a result of pandemic, to come back again strongly. Nomura predicted that banks and metals stocks will drive earnings on the Nifty.
Mukherjee shared how the investment financial institution is navigating this atmosphere. Here are Nomura’s prime inventory picks and sector calls:
