Economic growth to pick-up in India: Reddy.

  • 20th Jan, 2018
Bajaj Allianz Life Insurance’s Chief Investment Officer Sampath Reddy expects economic growth to pick-up in India, accentuated with a revival in the corporate earnings cycle, which would augur well for the markets over the medium to long term. Over the long term, market returns will reflect GDP growth and corporate earnings growth, and therefore investors should carry on investing in a disciplined manner to build wealth through the compounding effect of equities, was his opinion. 2017 was a good year for equity markets, helped by record high institutional flows from domestic mutual funds, and also a recent pick-up in foreign portfolio investor (FPI) flows. Investors have also been gradually shifting from traditional physical assets to financial assets, and this has especially picked up pace post de-monetization. 
Some of the reforms of the government have started bearing fruit, with India’s ranking jumping by 30 places in World Bank’s Ease of Doing Business 2018 rankings, from 130 in the previous year to 100 in this year—making it the biggest jump for any country in this year’s rankings. Corporate earnings revival and economic growth on recovery path are two of the major factors that will affect markets in this year. With corporate earnings being muted over the past few years, equity markets have been driven by PE expansion. Corporate earnings in India seem to have bottomed out. He expects earnings growth to pick up from 2HFY18 (second half of FY18), and that will drive markets, rather than PE expansion. The markets will be closely tracking this, as it has already priced in this revival. 

Source:- Western Times

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