Moderating equity return expectations strike a note of caution
2024 will be a pivotal year globally and for India, says R Shankarraman, ED & CIO – Third Party Products, Centrum Wealth which has released an economic survey.
The Fund Managers’ Survey report titled ‘India Market Pulse 2024: A Survey of Opinion Leaders’ providing valuable perspectives from leading fund managers and investment https://www.investindia.gov.in/ professionals, on opportunities and risks across asset classes in the year ahead.
By polling CIOs representing over 80% of assets under management, Centrum https://www.centrum.co.in/ has gained invaluable perspectives on their outlook across asset classes amidst economic uncertainties.
“Though risks persist globally, India’s growth momentum remains positive,” Sandeep Das, MD & CEO, Centrum Wealth said on 7 Mar 2024 on the latest survey.
“As the investment landscape grows more complex https://rbi.org.in/ , reports like this serve as an essential compass to benefit from the best minds.”
Shankarraman added, “With looming elections, normalized economies post-COVID, and tightening policies, markets contend with evolving risks even as climate concerns persist.
“Based on the survey we observed that there is a broad consensus on India’s economic https://www.worldbank.org/en/home and political continuity, alongside optimism on corporate earnings growth.
“Within this, moderating equity return expectations strike a note of caution. On fixed income, there is confidence that rate hikes have peaked with expectations of a deferred and shallow rate cut cycle ahead. Easing financial conditions signal opportunities across the spectrum.”
Key findings from the Report:
• Global Growth Outlook Subdued: 67% of all respondents expect global growth in 2024 to be weaker than in 2023, citing tight monetary policy as a key reason.
• India Seen as Bright Spot for Growth: While there is near unanimity about India’s contribution to global growth, 89% foresee favorable capital flows into India.
• India GDP Growth Seen Between 6-7%: More than 75% of participants expect India’s GDP growth in FY25 to be in the range of 6-7%.
• Government and Private Capex Top Growth Drivers: Government capex ranked 1st and private capex ranked 2nd as growth drivers.
• Earnings Growth Seen Above Market Expectations: On a 1-year forward basis, the majority of respondents see their portfolio earnings growth higher than Nifty’s consensus expectations.
• Valuations Not Seen as Cheap Currently: Almost all participants are clear that their portfolios are not cheap vis-à-vis history.
• Portfolios Fully Invested in Equities: 78% are fully invested in equities with up to 5% cash. Mega caps most attractive.
• Industrials, Financials Top Ranked Sectors: Industrials, Financials, Realty & Home improvement, and Autos are top-ranked sectors.
• Fed Expected to Cut Rates by 100bps: 59% of respondents expect rate cuts by 100 bps from the US Federal Reserve in 2024.
• RBI Rate Cuts Expected in H2 2024: 65% foresee rate cuts from RBI to begin in H2, 2024.
• Corporate Bond Spreads Seen Widening: 82% expect corporate bond spreads to widen over government bonds in the next 6 months.
• Credit Quality Seen Plateauing: 53% see credit quality plateauing in FY25 after improvement in FY24.
• Long Duration Bonds Most Favored: Long-duration Gilt and dynamic bond funds most favored fixed-income strategies currently.
• Food Price Shocks Top Risk: Food price shocks ranked highest among risks to fixed income market.
• Short Term Yields Seen Falling More: A significant majority expect yields to decline with half the respondents expecting a sharper fall in short term yields. Fiinews.com
