India to re-emerge as 'investors paradise'
Top 15 stocks can give up to 77% return
Centrum Wealth Research said if Indian corporate earnings can experience long term mean-reversion to those levels at 5.30 percent, robust earnings uptick can be expected.
2018 is a year of consolidation (after breath-taking extended-honey-moon rally of 2017) for the market. We believe top priority of investors in 2018 should be capital preservation through efficient asset allocation (increasing allocation to large caps, high quality mid-caps, gold and hedging strategies).
On equity front, the stock selection has to be spoton as markets have become quite unforgiving for stocks even with minor taint. Markets have been rewarding right stocks (backed by quality research and advice) quite generously, as smart money is eagerly chasing quality.
We are in the winner-takes-it-all market with top quality stocks getting top valuations; and markets are ignoring companies with doubtful credentials even though optically they appear to have low valuations. So, it is crucial for investors to take professional advice backed by research.
Indian political developments will keep the markets guessing about upcoming Lok Sabha election outcome, which is quite crucial as the very foundation of 2014-2017 Indian market rally was political stability. Investors can keep the buffer of dry powder ready, to take advantage of volatility around elections.
With the in-built volatility in the markets on the back of host of complex variables (oil price, bond yields, politics, elections, trade war), 2018 is turning out to be classic traders market (where trading is offering higher returns than buy-and-hold). Of course, with the underlying Indian potential, this scenario will change and India will re-emerge as “investors paradise” (once variables unfold positively).
Further, Indian corporate financial health is apparently improving as the long-awaited earnings pick-up is unfolding with Corporate-Profits-to-GDP ratio moving up to 3.10 percent in FY18 and expected to reach 3.30 percent in FY19E, from a multi-year low level of 2.90 percent in FY17.
To put things in perspective, for the period between FY05–FY17, this ratio was at an average of 5.30 percent. If Indian corporate earnings can experience long term mean-reversion to those levels at 5.30 percent, robust earnings uptick can be expected.
Further, with major debt clean-up taking place, Indian corporate aggregate balance sheet is also getting healthier with BSE 500 (ex-financials) Debt/Equity ratio slipping to lowest levels in two decades.
On a crucial note, if there is a repetition of positive political surprise in the ensuing Lok Sabha elections with a single party winning full majority, the current market correction is just a hiccup in the feast of wealth creation.
On balance, we believe we have to be more hopeful than to be fearful, but admittedly the number/degree of 'fear' factors is increasing.
Happy Investing
Source:Moneycontrol.com
Top 15 stocks can give up to 77% return
Centrum Wealth Research said if Indian corporate earnings can experience long term mean-reversion to those levels at 5.30 percent, robust earnings uptick can be expected.
2018 is a year of consolidation (after breath-taking extended-honey-moon rally of 2017) for the market. We believe top priority of investors in 2018 should be capital preservation through efficient asset allocation (increasing allocation to large caps, high quality mid-caps, gold and hedging strategies).
On equity front, the stock selection has to be spoton as markets have become quite unforgiving for stocks even with minor taint. Markets have been rewarding right stocks (backed by quality research and advice) quite generously, as smart money is eagerly chasing quality.
We are in the winner-takes-it-all market with top quality stocks getting top valuations; and markets are ignoring companies with doubtful credentials even though optically they appear to have low valuations. So, it is crucial for investors to take professional advice backed by research.
Indian political developments will keep the markets guessing about upcoming Lok Sabha election outcome, which is quite crucial as the very foundation of 2014-2017 Indian market rally was political stability. Investors can keep the buffer of dry powder ready, to take advantage of volatility around elections.
With the in-built volatility in the markets on the back of host of complex variables (oil price, bond yields, politics, elections, trade war), 2018 is turning out to be classic traders market (where trading is offering higher returns than buy-and-hold). Of course, with the underlying Indian potential, this scenario will change and India will re-emerge as “investors paradise” (once variables unfold positively).
Further, Indian corporate financial health is apparently improving as the long-awaited earnings pick-up is unfolding with Corporate-Profits-to-GDP ratio moving up to 3.10 percent in FY18 and expected to reach 3.30 percent in FY19E, from a multi-year low level of 2.90 percent in FY17.
To put things in perspective, for the period between FY05–FY17, this ratio was at an average of 5.30 percent. If Indian corporate earnings can experience long term mean-reversion to those levels at 5.30 percent, robust earnings uptick can be expected.
Further, with major debt clean-up taking place, Indian corporate aggregate balance sheet is also getting healthier with BSE 500 (ex-financials) Debt/Equity ratio slipping to lowest levels in two decades.
On a crucial note, if there is a repetition of positive political surprise in the ensuing Lok Sabha elections with a single party winning full majority, the current market correction is just a hiccup in the feast of wealth creation.
On balance, we believe we have to be more hopeful than to be fearful, but admittedly the number/degree of 'fear' factors is increasing.
Happy Investing
Source:Moneycontrol.com
No comments:
Post a Comment