New Delhi: pickup in consumer demand, low interest rates record and increased prospects for the manufacturing sector may trigger a rally in stock, even when the decorative rate of increases increases economic risk.
This is the conclusion of the new research from Bloomberg Intelligence and Bloomberg Economics after the NIFTY 50 Index NSE rose 130% to record from the lowest position touched in March 2020, supported by a central bank liquidity injection, millions of new retail investors, and new retail acts.
In China.
Rally has added about 1 percentage point to GDP growth every quarter from October-December.
“The case for Indian equity is structurally positive, we believe, amid rising consumer demand, manufacturing in the world ‘China plus one’, regulatory resulb and fiscal policy trajectory,” Gaurav Patankar and Nitin Chanduka, analyst with Bloomberg Intelligence, write in the notes.
However, sharp run-up in the increase has increased economic vulnerability to market setbacks.
Nifty is now traded at 22.2 times an estimated 12-month income, far above the average five years 18.5.
In comparison, the MSCI developing market index traded on multiples of 12.7.
Retreat for a good, trading around 35% above the level of historical trends, will reduce GDP by 1.4% in the same quarter with surprises and 3.8% over the following year, Ankur Shukla, an economist with Bloomberg economists, wrote on the note separated.
“Higher stock climbs, the greater the risk of the economy if they are right – important consideration when the Federal Reserve weigh the time of the tapering stimulus,” Shukla said.
Record record in stock increases risk for the economy
