ETMarkets Smart Talk: India stands out in terms of growth and policy stability albeit at higher valuation:

While we expect Nifty to give a 10-12% return over the next year, we also see volatility levels going up in the near term given uncertainties to global growth due to aggressive tightening by the US Fed. While the US Fed may not raise rates further, high-interest rates, withdrawal of liquidity by the US Fed and uncertainties over global growth will have an adverse impact on FPI flows.

In an interview, Kotak Institutional Equities’ CEO and co-head Pratik Gupta said the market will continue to consolidate around the current levels for the next few months and there is no major catalyst for a sharp rally or a sustained correction.

Consequently, some caution might lurk around in markets in the immediate short term, and multiples may see some softening. However, in the longer term, India is relatively isolated from these events. Indian banking systems rules are pretty robust.

The labour-intensive sectors hold immense significance in India, not only for their job creation potential but also for their substantial contribution to net high-value addition.

As Q4 GDP growth exceeds expectations, India looks to achieve a GDP growth rate of 7.2% in FY23, raising hopes that its FY24 growth will soon exceed 7%. However, the country will have to contend with the expected global slowdown which could negatively impact India's growth prospects.

India is set to identify several sectors with the potential to become global manufacturing hubs and will adjust policies and provide infrastructure support accordingly. Niti Aayog is conducting an exercise to pinpoint these sectors, evaluating their export potential and proposing strategies to develop them into global manufacturing champions.

Kotak AMC's CIO Equity, Harsha Upadhyaya, highlights the growth potential of banking, industrials, autos, and cement sectors in the Indian economy. Banking is set to have significantly higher earnings growth over the next two years as compared to the broader market. However, Upadhyaya does not see the auto sector continuing its rally due to lower-than-expected volume growth. Instead, the growing demand in the capital goods industrial segment, driven by overall investments from the public and private sector, may be a preferred area of opportunity to outperform the market.

Corporates in India are likely to step up their capital expenditure plans in the coming few years, materially higher than in the previous two fiscals with a focus on capacity expansion across industrial sectors, Fitch Ratings said. Capex was flat over FY19 to FY21 and grew 16% in FY22. The forecasts are for the 8 state-owned enterprises and 21 privately held Fitch-rated corporates in the country.

India News: "The third term of his government will begin from June, but the scale and speech with which it has been working have surprised people," PM Modi said r

“In India the largecaps – Nifty, Sensex can compound 12% longer term. I do not see a challenge in that. Markets are now close to historic multiples, slightly higher but I think there are three reasons why Indian multiples may settle higher than the past – faster growth, lower cost of capital and lower volatility.”