Market Outlook: Key triggers ahead…
Indian market takes all news flows in its stride and climbs the wall of worry… The Indian market stayed resilient amid news flows on Brexit and RBI Governor Rajan’s exit. Domestic news flows such as the steady progress of monsoons, the government’s decision to ease foreign direct investment (FDI) norms and Cabinet approval for recommendations of the Seventh Pay Commission fuelled investors’ positive sentiment. During June, the government eased foreign direct investment (FDI) norms in nine sectors, including defence, food products, civil aviation, pharmaceuticals, broadcasting and retail trade. Furthermore, the Cabinet also approved the implementation of the Seventh Pay Commission wherein the commission has recommended a hike in salary of government employees and pensioners by 23.5% or a flow of Rs. 1.02 lakh crore in the economy, which will provide fillip to consumption based sectors like Auto, FMCG, Consumer durables, Retail
Q1FY17E revenue s & earnings growth (ex BFSI, metals, oil & gas) expected at 9%
Excluding BFSI, oil & gas and metals, both topline & earnings (of the I-direct coverage universe) are likely to grow 9% YoY. Going forward, we believe Corporate India is expected to witness moderation in gross margins as commodity prices seem to have bottomed out. However, strong monsoons, government spend to boost rural growth and increased disbursement on the back of Seventh Pay Commission would give a fillip to revenues of automobile & consumption related sectors.