In the last 4 to 5 months, the domestic equity market remains a recession after a sales-on-rally pattern. However, in the last two business weeks, Market movement in India Signs of improvement are shown. Since this innings is still in its early stages, it is very soon to determine whether the trend is developing from the sales-on-rally to a purchase-on-Deep strategy.
We assess that the domestic market environment has become more favorable, supported by a strong long -term economic approach. Central budget Consumption is stimulated, while capital expenditure is expected to maintain long -term development.
The real result of the budget is much better than the idea. 0.3% of GDP tax deduction, which is 3% of the government’s gross tax income. Salary donors are expected to provoke high consumption in FY 26-27 and have a multiplier effect for the economy in the moderate period. Although the CAPEX scheme falls below the long -term average, it is unlikely to affect the long -term approach to the friendly countries, as Capex FY27 is expected to focus. In addition, the CAPEX growth for FY26 is estimated at 10.1%, which exceeds the actual 7.3% increase in FY25, which is not expected to obstruct the increase in order growth from year to year. The rapid increase in consumption and continuity of capex is a winning position for the domestic economy.
Despite the positive structure of the budget, after the declaration of “trade war”, the global landscape was unable to achieve the market. Mexico and CanadaWith an additional 10% on China, the global markets were ignored. However, as measures were caught – the impressions were retaliated, leaving on Chinese, although the global spirit is cautious. The approach to the global market is coming in the perspective that Trump’s ideology tariff is to be used as a warning weapon. Moving forward, if the market fixes Trumponomics as an appearance criteria of American policy, then the global market may have an upside -down in trend based on economic data and rate policy in the global market.
It is widely estimated that no one will get any benefit from the tariff provided by the US. Conversely, such measures pose a serious threat to the global economy, potentially motivate equity investors to seek safe property. The global economy was ending under the development of global trade, which is in danger of protectionism. This will make the world less efficient and elevated inflation And Interest ratesDepending on the support of the threat of world institutions, leaders and contour measures, protectionism is not expected to flourish.
Additionally, RBI measures to increase financial liquidity by OMO, and rate cuts are helpful for the domestic economy. Developing expectations RBI monetary policy There will be more adjustment under the new Governor Sanjay Malhotra. It is supported by the fact of moderation in economic development, 5.4% Q3Fy25 Actual GDP growth, reduction in inflation, and elevated bank rates, which was 6.5% for the last 2 years. RBI has not cut the rate in the last 5 years. Currently, the market is expected to cut a total of 50-100bps in 2025, based on the instability of INR, which has depreciated at a rapid rate in the last 3 months. 87.5. It will also depend on the rate cut in the Fed rate, which is currently suspicious due to the trade war risk.
Although Economic environment The future is favorable for future economic growth, doubt in the stock market, as an increase in income compared to historical trends is considered to be subpare. Current assessment, while less, is not perfectly appropriate, given less, less income trajectory than previous year. In Q3Fy25, the broad market pat growth is 9% while one year forward P/E is more than doubled on 19X. However, Q4 is likely to be better on Qoq, which is due to increase in government and moderation in external inflation. For FY26, an increase in income is 12–13% for FY25 compared to 8–9%. If income increase for a long -term average of 15%, it may indicate possible recovery in equity market trends during the year.
The author, Vinod Nair is the head of research in Georgit Financial Services.
Disclaimer: The above views and recommendations are of individual analysts or broking companies, not Mint. We recommend investors to investigate with certified experts before taking investment decisions.
