US Regional Bank Crisis & Quarterly Market Outlook Presentation
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12th Apr, 2023
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Key points from the report:
• Most global markets register correction over the past year. India delivers flattish return in FY23 but has outperformed significantly over the medium to long term.
• Global growth slowdown underway; India still amongst the fastest growing major economies
• US Federal Reserve continues to hike rates, but we are near the end of the rate hike cycle.
• Unrealised losses in the US banking system are quite large, primarily due to sharp rise in bond yields.
• US regional bank crisis and stress in some European banks causes US Fed to launch emergency credit/ liquidity line. US Fed also co-ordinates with other major central banks to provide liquidity support.
• Global inflation has moderated from earlier highs but still remains elevated vs long term average.
• Indian banking system is quite healthy and safe. Mark to market (MTM) losses are not that large in Indian banking system compared to US banking system.
• India corporate earnings growth healthy and expected at 11-12% in FY23 & FY24.
• India market valuation has moderated from highs and is reasonable now. Equity outlook is evenly balanced with modest return expectations in the near term.
• FPI equity outflows have somewhat stabilised; DII inflows at a record high in FY23.
• RBI goes in for a pause in its rate hike cycle. We prefer medium term part of the yield curve presently.
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