Rohit Walia

India Market Outlook Report
16th September, 2013

Alpen Asset Advisors Limited, the newly created Independent Financial Advisory and Asset Management Company and associate of the investment bank, Alpen Capital published its “India Market Outlook for 2013-14”.

According to the report, in 2013, Indian equities have been a lot more volatile vis-à-vis initial expectations. Also, 1QFY14 earnings season was below par, with net income down almost 7% YoY despite the 4% YoY growth in sales. Higher interest costs and depreciation led to a contraction at the net margin level. The sharp fall in the rupee also contributed to lower-than-expected operating performance. However, the performance of the IT sector was relatively better as improvements in the US economy accelerated revenue growth and weak USD/INR aided margins.

On the macro front, performances of key indicators such as inflation, IIP, and fiscal deficit have been mixed. In fact, the sudden sharp decline in the rupee has, to some extent, meddled with RBI’s plans of curbing the fiscal deficit and adopting a growth friendly stance on interest rates. Factors such as a stable and sustained recovery in the US, an unlikely scenario of further deterioration in the Eurozone, slow, but persistent improvements in the domestic policy, and investor-friendly investment and rate cycles could act as mid-term catalysts for a recovery in the Indian economy. However, the GDP growth forecast of 6.4% for FY14, as estimated by the Prime Minister’s Economic Advisory Council (EAC), is well above the consensus estimate and could still prove to be aggressive, given that GDP growth was just 5% in FY13. That said, India’s general elections, to be held in May 2014, could have some impact on market movements. Historically, election periods in India have been characterised by high market volatility, which seems likely this time as well, given the lack of clarity of the eventual mandate so far.

For more details please click here to access the complete version of the India Market Outlook 2013-14 Report.