NO MAJOR & PROLONGED CORRECTION IN INDIAN EQUITIES

Predicts Credit Suisse

Global brokerage Credit Suisse is "cautiously optimistic" on Indian equities but added that it does not expect any major and prolonged correction in the stocks this year. Though it is enthused by the reform momentum in the country, the fiscal crunch, several state elections, earning downgrades and high valuations make it "nervous", it said. The report authored by Jitendra Gohil, Head of India Equity Research at Credit Suisse. Any sharp and prolonged correction in Indian equities is ruled out owing to robust domestic flows and a solid global growth outlook. "The ongoing reforms have not only put India on the top of investors' radar but also lifted India's long-term growth potential, in our view," it said. The report further noted that considering a benign outlook for investments in gold and real estate, coupled with changing investments and spending patterns of the millennials, equity mutual fund flows are expected to remain elevated. Within equities, Credit Suisse remained 'overweight' on consumption-related stocks, especially discretionary items with a rural focus and the energy sector, given a firm oil price environment and favourable government policies to support the sector. "Amid high valuations and a volatile macro environment, we recommend investors to focus on long-term structural themes that have been shaping up in India," it said. The report said while the recent reform initiatives like GST and demonetisation could potentially push India's GDP growth structurally on the higher path, the drag from these reforms, although fading, is here to stay for some more time. Around 45 per cent of India's GDP and 85-90 per cent of employment come from the unorganised plus agriculture sectors, which are under severe distress and will recover gradually, leading to below potential growth in 2018, it added.

Indices set Another Record

Benchmarks ended at record highs for the second straight session today as investors remained hopeful of upbeat corporate earnings despite lacklustre numbers from TCS. The BSE Sensex gained 88.90 points to end at 34,592.39, while the broader NSE Nifty finished at 10,681.25, up 30.05 points. The indices suffered a bout of volatility mid-session following an unprecedented press conference by four senior judges of the Supreme Court where they mounted a virtual revolt against the chief justice and listed a litany of problems afflicting the country's highest court. However, buying momentum resumed soon, which propelled the markets to record levels. After opening on a strong footing, the Sensex advanced to hit a fresh lifetime high of 34,638.42 on the back of continued buying by domestic funds and retail investors but later declined to 34,342.16. It finally settled 88.90 points, or 0.26 per cent higher at 34,592.39, breaking its previous record closing of 34,503.49 hit in yesterday's trade. The broader Nifty, after scaling an all-time high (intra-day) of 10,690.40 points, finished at 10,681.25, up 30.05 points, or 0.28 per cent.

- This was the sixth weekly gain in a row for the benchmarks. During the week, the Sensex gained 438.54 points, or 1.28 per cent, while the Nifty rose 122.40 points, or 1.15 per cent.

- Domestic institutional investors (DIIs) bought equities to the tune of Rs 770.02 crore, while foreign portfolio investors (FPIs) sold shares worth Rs 623.63 crore on net basis yesterday, provisional data showed.