Samvat 2078: Brokers Expect Construction and Real Estate Stocks to Perform

Brokers anticipate sectors such as cement, construction, real estate, infrastructure, finance and select auto companies will do well in the upcoming Hindu New Year. Most analysts, however, assume that the liquidity-driven momentum will end in Samvat 2078.

According to brokerage reports, most central banks around the world, including the US Federal Reserve, are considering easing monetary policy and reducing the monthly asset purchase program (US $ 120 billion in the US) in the coming months; a liquidity-driven market worldwide is likely to take a back seat in the CY22.

Brokerage Views

Motilal Oswal, MD & CEO of Motilal Oswal Financial Services, said, “As the business cycle starts to pick up, we expect corporate earnings growth to pick up too. The markets have always moved in parallel with earnings growth. Although there would be ups and downs in between, we expect the overall market trend to remain positive for Samvat 2078. “

Kotak Securities said: “We expect strong economic and earnings recovery and a stable Covid-19 situation to support the market in the short term. We see no change in India’s mid-term narratives, including favorable demographics and the likely multi-year investment cycle led by corporate and household investment. “

Axis Securities expects Samvat 2078 to be a year of balance sheet debt, led by a significant improvement in corporate profitability. The cumulative and rolling net income of the NSE 500 universe over the past 4 quarters has hit an all-time high, with loss-making sectors turning positive and contributing significantly to net profitability. In addition, the RoE for the broader market will improve after a subdued development over several years for the next two years.

Faced with a faster economic recovery, Samco Securities said more cyclical sectors are likely to join the rally as higher government spending is expected. The markets have seen an ever growing investor base and are showing resilience despite macro and short term challenges and we believe it will continue to offer ample investment opportunities.

Reliance Securities said the spread between Nifty Earnings Yield and G-Sec Yields has approached the historical average of 190 basis points, which still offers consolation given the RBI’s continued accommodative approach to supporting economic momentum. “However, the sustainability of the yield recovery will be an important tailwind for the market for Samvat 2078, its highest after FY15). In addition, Nifty can potentially achieve a 12-15 percent return on Samvat 2078. “

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