OUTLOOK 2015:INDIAN EQUITY MARKETS
We have seen a rise of 29% on an year on year basis this year.What is likely to happen next?
1.Continuing administrative reforms:More reforms are expected to be institutionalized in the next six months like GST,Coal Ordinances ,Land Acquisition bill through Law.If needed a joint session of Parliament would hopefully do the needful.Also the government has not gone to Supreme Court over the Vodafone Tax ruling implying an accomdative stance.
2.Interest rate fall:An interest rate cut may be effected by RBI if lower inflation continues.Also in the next 3-6 months Capacity utilization improvements are likely to happen.
3.End of the Commodity Super Cycle:The commodity super cycle has come to an end from an medium term point of view.Hard Commodities are at an allpoint low .That augurs well for Manufacturing companies.
Institutional flows would continue in developed world given the 5% GDP Data for last quarter for the next six months till the QE stimulus withdrawal is initiated.
Overall our view and expectation is that earnings will improve in a Low inflationary economy and with a government committed to Administrative reform.Basis the same we expect markets to rally further with some corrections as a part of the course.
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