According to the “Annual Equity Outlook 2023” report by Aditya Birla Sun Life AMC (ABSL AMC), the projected compound annual growth rate (CAGR) for earnings is expected to be between 13%-15% for the fiscal years 2022-2024. This growth is mainly attributed to the banking, auto, consumer, and infrastructure sectors.
No major downside risk is seen to earnings growth in the near term as domestic demand is resilient, credit growth is on an uptrend, and commodity prices have seen contraction from the highs.
A Balasubramanian, Managing Director and CEO, ABSL AMC, said: “Domestic focused themes viz. banking and financial services, discretionary consumption, domestic manufacturing, are preferred to global cyclicals. India is in a relatively better position – more domestic-demand driven, political stability with a progressive reform agenda, and overall liquidity could improve with government spending before elections. Over a longer term, positive levers in the form of the pace of reforms, demographic dividend, China+1 strategy, domestic manufacturing, and digital push should drive India to become the 3rd largest economy by 2030. Rural recovery is expected going forward.”
ABSL AMC does not see any durable duration gains as rate cuts are not in sight. India’s inflation is expected to settle closer to 5.25% in FY 2024. “Liquidity will be the focus point incrementally. RBI can focus on growth once external stability is assured,” Balasubramanian added.
