New Delhi, Nov 10 India’s medium‑term growth outlook remains constructive, with improving private capital expenditure and resilient consumption, which supported a strong recovery in equities in October, a report said on Monday.
"Nifty valuations are modestly above the 10-year average; we remain constructive on Indian equities," the report from HSBC Mutual Fund said.
In debt markets, the HSBC fund house said the 2-4 year corporate bond segment offers attractive opportunities, adding that inflation outlook and growth uncertainty raise the odds of a 25 bps rate cut on December 5.
Regarding equities, the report said, "The growth cycle may be bottoming out. Interest rate and liquidity cycles, decline in crude prices and a normal monsoon support a pick-up in growth".
The mutual fund said that the GST rate cut and prior income tax cuts should boost private consumption and support private capex amid global uncertainty.
Government investment, manufacturing push and a real estate recovery should sustain medium-term investment momentum, it added.
Indian equities recovered strongly in October, with Sensex and Nifty up over 4 per cent, aided by FII inflows and improved domestic sentiment.
The NSE Midcap index rose 4.8 per cent and the BSE Smallcap index gained 3.2 per cent.
Real estate led sectoral performance, while oil & gas, metals, banks and IT outperformed the Nifty, even as healthcare, power, FMCG and autos underperformed.
The upcoming macro prints such as November CPI inflation, trade deficit, GDP and GST collections will be closely watched by the central bank for its rate guidance.
The report noted tight liquidity despite RBI foreign‑exchange interventions, adding that markets expect liquidity infusion via open market purchase (OMO) purchases.
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