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Research Capview Navigating Optimism – December 2023

Navigating Optimism – December 2023

Written by - Fisdom Research

December 18, 2023 2 minutes

Fundamental Tracker

Key Themes to Navigate in the Economic Landscape

Key Themes/ideas

  • Capex
  • 5G Roll Out
  • Make in India
  • Cyclicals Over Defensives
  • Growth Over Value
  • Duration Over Accrual

Asset Class & Marketcap Views

Key Highlights

Key Themes/ideas

  • Global Slowdown
  • Rise in Inflation
  • Geopolitical Uncertainties
  • Moderation in earnings
  • Rise in commodity prices

In 2023, despite common market challenges, the Indian markets exhibited resilience, surging to achieve a market capitalization of $4 trillion.

A Closer Look at Valuation Concern

Here’s the rationale behind justifying the current market valuations

Despite reaching new highs, the Indian market’s 82% PE premium indicates a comparatively less expensive valuation than last year.

Factors driving the market’s premium valuation relative to other nations:

  • Robust economic growth compared to other countries. India has the highest real GDP growth at 7.6% among emerging markets.
  • A promising outlook for strong corporate earnings.
  • Witnessing robust demand across various sectors
  • The banking sector exhibits improved stability and resilience.
  • Anticipating positive trends in private capital expenditure cycles
  • The ruling party’s favourable performance in state elections contributes to market sentiment.
  • Strengthening market confidence for political stability, anticipating continuity of macro policies in the 2024 general election.

Asset Class & Style Returns

Equities Surge, Bond Yield Decline Amid Signs Of Economic Moderation

Source: Bloomberg Barclays, FTSE, LSEG Datastream, MSCI, J.P. Morgan Asset Management. DM Equities: MSCI World; REITs: FTSE NAREIT Global Real Estate Investment Trusts; Cmdty: Bloomberg Commodity Index; Global Agg: Bloomberg Global Aggregate; Growth: MSCI World Growth; Value: MSCI World Value; Small cap: MSCI World Small Cap. All indices are total returns in US dollars. Past performance is not a reliable indicator of current and future results. Data as of November 2023

Overview: Global Markets

Equities Thrive on Economic Resilience, Small Caps Rally

Source: FTSE, LSEG Datastream, MSCI, S&P Global, TOPIX, J.P. Morgan Asset Management. All indices are total return in local currency, except for MSCI Asia ex-Japan and MSCI EM, which are in US dollars. Past performance is not a reliable indicator of current and future results. Data as of November 2023

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