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Kotak Life Insurance Market Outlook by Mr. Rohit Agarwal


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hi everyone we thought it is the perfect time to reach out to you when the economic prints are not very good at the same time the market prints are pretty decent well that's the dichotomy that is called markets but why is the market being in a cheerful mode whereas the economy is not well there are aspects to it if you look at these segments within the market there are segments in the Market which are doing well and hence you're seeing good returns being made there it is not that everything in the market is moving that's the beauty of our market even going into FY 21 we believe that the Indian markets are likely to exhibit the same kind of traits where there is earnings visibility in a segment of market that is where you will see funds putting their bets on what are those areas those areas we believe are the private Corporate banks some of the PSU corporate banks as well the telecom companies and then some cyclicals encyclicals global cyclicals as well as some domestic citizens at the same time we do not see too much of capex happening in the near term so domestic capex and some of the IT and pharma side where we see challenges still going around in the world are places where you are not likely to see too many funds taking a big bet on in fi 21 the Consensus estimates are anywhere between 25 to 30 percent of earnings growth however we don't believe that that kind of earnings route is actually going to come but even if you get 15 or % kind of earnings growth in FY 21 which will be primarily led by the kind of sectors I told you about then the market returns could also mirror that unless of course you make a case for D rating of the multi now a case for a derating of multiples

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Might be made if the economic growth indicators do not improve from here on so let's talk about the economy per se of course the GDP prints have been lower than what we would have bargained for but we have to keep a few things in mind that some of the macro data points are actually pointing to better data points in the future what are those data points if you look at forex reserves the forex reserves of our country have gone up back fifty Billion dollars in the last six months or so that's a good 10 12 percent increase in the last 6 to 7 instances that we have looked at the data of forex reserves of an increase of more than 10 to 12 percent after any such increase the economic indicators show very good momentum after six to eight months of any such data this is nothing but indirect liquidity being pumped into the market even the normal liquidity by the RBI is quite a wash it is the risk Averseness which has made the financial institutions not length but we believe that at some point risk-taking will come back and people will start lending that is when we believe that they call me will start to pick up at the same time we expect the government to continue with its reformist agenda the reforms may or may not happen during the budget itself but it's an ongoing process some of the aspects that the market participants are expecting the Government to come out with reforms is the LTC G that dividend distribution tax and some tinkering on the personal income tax labs we don't know which of these steps will be actually taken but what we know for sure is that the steps will be something which will invigorate the economy that is what the endeavor will be we hope to come back and see you again around the budget with our views and change FN in the end I would like to Leave you with one of our Kodak life philosophies in the way of investing which is we believe that top line is vanity profits add sanity but cashflow is reality that is how we take bet on our company's cash flows thank you

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