Ashish Ghosh is a research analyst for the global and Indian financial markets (macro/techno-funda). With more than 12 years of experience in the capital market, Ashish has been published in high-profile online media regularly. He holds a B.Sc. in Math along with NCFM certification for Technical and Fundamental analysis. Presently, Asis is working with iForex as a continuous freelancer financial analyst/content writer since 2017, analyzing mainly the global and Indian markets. You can have a glimpse of his works on his Twitter feed (asisjpg).
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Dow and Nifty Future recovered on Friday as Iran downplayed the Israel retaliation; India may be heading for a hung Parliament as BJP may not get over 250 seats alone
Depending on likely poll outcome and various scenarios, Nifty may scale 23500-24500 by FY25, while may also correct to 20300-19500 (if BJP fails to get min 273 seats alone)
RBI has to lower borrowing costs of the government/economy to promote double-digit GDP growth for the next 25 years with below 4% core CPI
Although Modi-3.0 is still almost certain, looking ahead Modi-4.0 may be tough if India’s real economic issues can’t be properly resolved
The market is concerned about names/images of electoral/political donors including not only big private corporations but also their PSU peers
India’s real GDP ($) has grown from around $1.61T in FY14 to an estimated $2.08T in FY24; i.e. an average rate of only around +3% in the last ten years
The market is quite optimistic about Modi-3.0 and the vision of $5T nominal GDP by 2030
Ahead of the general election, RBI/Government is now more cautious about maintaining some price stability, while the economy growing above 7%
RBI holds rate with 5-1 votes; RBI may officially shift to neutral mode in April and start cutting rates from Aug’24 (in line with Fed)
The Feb’24 interim budget (vote on account) may be a visionary document for the next five years without any major fiscal stimulus/policy decision
Earlier Nifty stumbled on a subdued report card by HDFC Bank & RIL coupled with FPI regulatory tightening by SEBI
Hawkish talks by ECB policymakers and increasing geopolitical tensions between Houthi rebels/Iran and US/Israel dragged the risk sentiment
RBI may go for rate cuts from Aug’24 if the Fed goes for the same from Jun’24, everything being equal; also by then India’s CPI may dip toward 4% on a sustainable basis
RBI may ask private banks and SFBs to lower CD ratio below 75% while tightening screws on unsecured retail lending
Higher USDINR, policy/macro stability, huge CAPEX, lower borrowing costs, and robust domestic demand may help GDP & Nifty EPS in the coming years
Dalal Street is boosted by political & policy stability, the attraction of Modinomics and 6D (development, deregulation, demand, demography, digitalization, and democracy)
Ahead of the general election, RBI/Modi admin may officially restrict MFI/NBFCs to charging sky-high interest rates for priority sector lending
Also, lingering uncertainty about the Gaza war trajectory affected risk trade sentiment despite hopes of an early RBI/Fed rate cut
Considering the present trend of India’s core inflation and the Indian general election, RBI may cut from Feb’24
Israel may go for a ceasefire for a hostage-free deal with Hamas after securing Al-Quds Hospital and the suspected Hamas HQ tunnels
But Dow as well as Nifty Future may recover on easing of Israel-Hamas geopolitical tensions as Hamas is now gradually releasing hostages
Subdued discretionary consumer spending amid higher cost of living, higher cost of borrowings, and lingering global macro-headwinds affecting earnings
Also, the diplomatic rift with Canada, fading hopes of an early election by Dec’23, and ONOE (one nation, one election) affected the Indian market
Positive global cues amid hopes of Fed pivot and targeted Chinese stimulus may also help India’s Dalal Street despite subdued report card for Q1FY24
Nifty was undercut by an unexpected hike in additional CRR; RBI is now keenly watching the core inflation trajectory and adapting higher for longer stance
Subdued Chinese economic growth and lingering macro-headwinds are affecting steel prices/spreads negatively despite upbeat Indian demand
The next Nifty move will depend upon U.S. inflation data/Fed/RBI stance and trajectory of Q1FY24 earnings/guidance
Infy won the large deal for around $2.3B in Q1FY24, up 9.5% sequentially and 35.3% yearly; may report at least 8% growth in core operating EPS in FY24
Nifty EPS grew by only +6% in FY23 and is projected to grow +8% (6-10%) in the coming years on an average
SBI may report a 15% CAGR in core operating EPS for FY: 24-26 amid robust credit demand, NIM, NPA management, and domestic macro stability
RBI may hike in Dec’23 by +25 bps for a terminal rate of +6.75% if Indian core CPI again surges towards +6.00% and Fed goes for two hikes in H2CY23
For FY: 24-25, Nifty EPS may grow by around +10% (CAGR) against +8% in FY23; Nifty may scale around 19250 shortly and 21175 by Mar’24
Axis Bank may report a +20% CAGR in core operating EPS for FY: 24-26 amid robust credit demand, NIM, NPA management, and domestic macro stability.
RBI again clarified it’s a pause not a pivot; depending on actual Fed action, RBI may go for another one/two hikes and hold till at least FY24
In FY23, core operating EPS jumped almost +295% due to the lower base effect of various incubating businesses (airports, roads); the trend may continue in FY24-25 too
Nifty earnings may be boosted by improving macro, huge fiscal/infra stimulus, growing affluent middle class, RBI/Fed pause, and higher USDINR
RBI raised corporate governance concerns and smart/innovative accounting methods being employed by some banks to hide NPA and ever-green stressed assets
RIL is a big beneficiary of Russia-Ukraine geopolitical tensions and economic sanctions on Russian oil, especially in the EU
The market is now expecting an RBI pause in June; Nifty EPS declined to 835 so far in Q4FY23 against 850 sequentially and 809 yearly; FY23 estimate 875
With almost $10B order in hand for FY24, Infy may beat the subdued guidance despite the chorus of an imminent recession in U.S-Europe
A good business model in temporary distress amid the Adani saga; like steel, the cement industry is also a major beneficiary of India’s infra boom
RBI minutes show RBI has opted for a tactical pause on 6th April, not pivot; RBI may hike again on 8th June if Fed goes for a +25 bps hike each in May and June
TCS is one of the big beneficiaries of digital transformation by global corporates to optimize cost, and business processes and stay ahead of the competition
Tata Steel may scale around 130 by Sep’23, 159 by Mar’24, and 195 by Mar’25 amid stable steel prices/realizations and India’s infra push
RBI gave priority to financial stability over price stability, depending on actual Fed rate action, RBI may or may not hike in June and is very close to a pivot
At FY24 projected EPS around 956*20 (average PE), Nifty may scale around 18900-19100 by Mar’24
Voltas may now fall towards 735-600-535 levels on the loss of market share, thin EBITDA margin, and tepid discretionary consumer demand
RIL may scale 2866 by June’23, 3392 by Mar’24, 4017-4758 by Mar’25 amid expected robust O2C, retail, telecom/digital and Oil & gas (E&P) business
But the Indian banking system is now quite resilient after years of consolidation, various regulatory reforms, and also elevated NIM/NII regime
JSW Steel may scale around 741-963 by Mar’24-Mar’25 on expected higher demand driven by India and China coupled with better realizations/spreads
February RBI minutes show ongoing rate hikes at +25 bps till at least June’23 to keep pace with Fed and to bring down India’s sticky core inflation
But RBI may also go for rate cuts in early 2024, just ahead of the general election if India’s sticky core inflation indeed falls below 5% on a sustainable basis
ACC may be another example of a good business model in temporary disruption amid Adani\'s chaos; may scale 2900-4500 levels by Mar’24-Mar’26
But Nifty may scale around 21400 by FY24 (projected consolidated EPS 1070 and average PE 20)
TCS may scale 3900-4700 levels by Mar’23-Mar’24 on higher revenue growths and better EBITDA margin in the coming days
India’s economy may grow around 6.50-7.00% and Nifty earnings 15-20% in FY24. India has a huge potential to improve its GDP/Capita, now lowest in G20
ICICI Bank may scale 1154 by Mar’23 and 1385 by Mar’24 amid steady business growths, lower NPA provisions/credit costs, and higher NIM
RBI may hike further by +25 bps each in February and April for a terminal rate of +6.75%
Axis Bank may scale 1031 by Mar’23 and 1435 by Mar’25 on the robust business model, steady advance growths, and resilient NIM
Nifty may scale 21000 levels by Dec’23 (projected FY24 EPS around 1050 and average PE 20) if there is no WW-III (nuclear war) triggered by Russia
Infy is a major beneficiary of global inflation as companies are now embarking on cost optimization by adopting greater automation, digital and cloud adaption
RBI may like to keep the repo rate at +7.50% against average core inflation around +6.00% and a probable Fed rate of +5.50%
Looking ahead, jumbo Fed hiking and elevated domestic inflation may force RBI to continue to follow the Fed hiking path and RBI may hike +0.50% on 30th September
With a focus on EV transition, JLR reimage, cost control, deleveraging, and buoyant domestic operations, Tata Motors may scale 540-648 by FY: 24-25
RBI may hike another +75 bps minimum till Feb’23 (@25 bps) for a terminal rate +6.15% (if Fed goes for +150 bps rate hikes in rest of 2022)
TCS may scale 4000 levels by FY23 on higher revenue and better EBITDA margin in the coming days
RBI may hike +0.50% on 5th August
Tata Steel may face capacity constraints in FY23, but is on the way to adding another 10MT production capacity by FY30
JSW Steel may be an example of a good business model under temporary disruption; strong domestic demand may help despite various global headwinds
RBI is now effectively treating the +6.00% upper tolerance band of CPI as a target against official +4.00%
As the pandemic has turned into an endemic, it should help LIC profitability; also COVID scare will help new business
Inflation may not come down meaningfully if Russian geopolitical tensions and economic sanctions linger
Nifty stumbled in line with Dow Future ahead of U.S. inflation data after the White House indicated elevated CPI
Indian economy and Nifty EPS may continue to grow at a reasonable pace despite various headwinds
The Indian market was also supported by upbeat PMI and in line with estimated GDP data
Previously RIL plunged on the subdued report card (Q4FY22) and no comments by the management about R-JIO and R-Retail listing
Depending upon the trajectory of the Russia-Ukraine peace agreement/lingering war and inflation, RBI may cumulatively hike to +6.50% or +7.15% by Feb’23 (against Fed’s +2.75% or +3.50% by Dec 22)
But the volatility may be an opportunity to buy a quality blue-chip private bank in adversity
RBI goes for an unexpected, unscheduled rate hike just ahead of much anticipated Fed hike; RBI may now hike +0.75% in June and +0.50% in August to match Fed
Infy tumbled on mixed guidance coupled with below expected revenue and operating margin, but the plunge may be a good opportunity to enter a blue-chip in adversity
RBI may be compelled to hike @0.50% five times (in line with Fed) for a policy repo rate of +6.50% by Feb’23
Eventually, Yes Bank may merge with Kotak Bank
RBI May Start Hiking From June and May Hike 5-Times in FY23 in Line With Fed
Hero Motor was already under pressure even before the IT raid incident due to a weak Q3FY22 report card. Looking ahead, Hero Motor is quite confident of demand revival, easing of higher raw material costs, and supply chain disruptions along with a robust export market.
Wipro is a good investment idea around 590-520 levels, considering a good business model, strong balance sheet, and impeccable corporate governance. The short to mid-term target is around 750-900, while the long-term target is around 1080.
