Greetings from Wudstreet Investment Services !!!
Budget 2012 had a few positives and surely no major negatives.
Positive aspects of the budget was the low fiscal deficit forecast and the promise of more reforms in the budget session. The budget is pro- consumption and provides additional thrust for infrastructure development. Sectors positively impacted by the budget are Financials, Auto, Agri Inputs, Construction and Infrastructure, while sectors negatively impacted are Cement, Oil and Gas, Travel and Tourisim, Healthcare and Retail.
Post the initial euphoria on the budget, the market would have to negotiaite near term term headwinds like high inflation (rising crude price), rising interest rates, and likely earnings downgrades for FY12. With the more than 10% correction from recent highs, market valuations are now at reasonable levels compared to long-term averages. The relative underperformance of Indian markets in recent times vis a vis the developed markets and other emerging markets also makes our markets less prone to major FII outflows, other things remaining equal. Hence, despite near-term cautious view, we are have a positive outlook on the market from a medium to long-term perspective and would expect outperformnace in the 2H of CY11. The interim period will be provide a good opportunity for long-term investors to accumulate amidst market volailtity and generate decent returns over the next 2-3 years which we expect to be in line with corporate earnings growth @ 16-18%p.a.
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