Monday, July 22, 2024

Indian equity market faces potential correction in the coming months


Share post:


Shillong, July 30: A senior official from Acuite Ratings & Research, a credit rating agency, has warned that the Indian equity market is likely to undergo a correction in the next few months. However, the market may witness sector-specific momentum based on factors like global demand and an increase in private sector investments.

Suman Chowdhury, Chief Economist and Head of Research at Acuite, shared insights on the Indian stock market’s performance when asked about the possibility of the current uptrend continuing or coming to an end. He highlighted that the Nifty (NSE 50 index) has delivered a remarkable 77.4% return over the last three years, with a one-year return of 14.5%, even excluding the impact of the pandemic recovery.

Comparatively, developed markets like the S&P500 have recorded a three-year return of 40.1% and a one-year return of 10.9%. The Indian equity market’s superior performance can be attributed to factors such as domestic demand resilience, macroeconomic and financial system stability, increased participation of domestic retail investors, and the gradual return of foreign investors during the current calendar year.

As per IANS, Chowdhury acknowledged the strength of domestic demand, pent-up demand for services, and increased public investments in infrastructure, leading to India’s GDP growth of 7.2% in FY23. However, he cautioned that GDP growth may moderate to 6% in FY24 due to global economic slowdown and some lagged impact of higher interest rates on the economy.

Several potential risks, including a resurgence in oil prices and surging food prices in certain categories, may reverse the gradual downtrend in headline inflation and keep interest rates higher for a longer duration. Additionally, political uncertainty associated with upcoming general elections in the following year could be a factor to consider.

The corporate sector in India has witnessed robust earnings growth in the past three years due to demand recovery and lower commodity prices. However, sustaining high earnings growth will be challenging in FY24 as demand normalizes and no further benefits from lower commodity prices are expected.


Related articles

Int’l pressure mounts on China over human rights violations

Hague, July 21: Human rights advocates have stressed the need for solidarity and measures to ensure accountability for...

Nepal PM wins vote of confidence in Parl

Kathmandu, July 21: Nepal's newly appointed Prime Minister K P Sharma Oli comfortably won a vote of confidence...

Top court slashes govt jobs quota amid escalating tensions in B’desh

DHAKA, July 21: Bangladesh's top court on Sunday scaled back a controversial quota system for government job applicants,...

Transfer Buzz

Striker Alan Saji joins FC Goa FC Goa on Sunday signed a multi-year contract with young Indian striker Alan...