AJAY VORA

India's primary equity gauges currently trade at a valuation of nearly 21 times one-year forward earnings, comparable with that seen in Japan or Wall Street. This valuation diverges from the more modest multiples of 11-13 times earnings prevalent in equity markets as diverse in economic heft and growth outlook as Singapore, Hong Kong, the UK, and China.

Coming to consumer stocks, "it is better to be pretty selective right now. I expect one more quarter of subdued volume growth. But my sense is that with the onset of the festive season post September onwards, we will start seeing consumption doing pretty well across most of the categories. So players who have really established or have a strong foothold in terms of their products, in terms of pricing and target customers like Trent are doing exceedingly well."

After the recent 12% rally from the March 2023 lows, we can see some retracement/consolidation but the uptrend remains intact given the strong earnings growth trajectory.

Indian equities have performed well in the first half of 2023, reaching all-time highs, and money managers are optimistic about the market's prospects for the rest of the year. According to a survey, 86% of brokerages expect the benchmark Nifty 50 to be above 19,000 by December, and 79% believe the Sensex will surpass 65,000. Foreign and domestic fund flows are also expected to sustain, driven by strong corporate earnings and attractive growth potential. However, volatility may persist due to global interest rate hikes and geopolitical risks. The automobile, FMCG, and realty sectors are expected to continue gaining momentum in the second half of the year, while banking stocks are expected to rebound. Midcap and smallcap stocks are also expected to perform well, outperforming benchmark indices.

Further in the list are chemicals and information technology companies. While 11 stocks are trading above average in the chemicals sector, 13 stocks are in the technology sector.

We, too, have witnessed a reasonable slowdown in certain pockets of the economy. Still, at an overall level, India will continue to see 11-12% nominal GDP growth, and one can expect similar returns over the next 6-9 months.