Axis Mutual Fund report: India's economic narrative is expected to continue till 2024

 Axis Mutual Fund report: India's economic narrative is expected to continue till 2024

Axis Mutual Fund report: India's economic narrative is expected to continue till 2024

Even though India had an incredible year in 2023 and the world saw its fortitude in the face of the global recession, the nation has the makings for medium- to long-term growth in 2024.

India has the resources to accelerate growth in the medium- to long-term, as Gupta and Dewalkar noted.

In its Annual Outlook 2024 report, Axis Mutual Fund said that 2023 turned out to be a remarkable year for India and that the world noticed the country's tenacity in the face of the coming global recession.

Axis Mutual Fund's head of equities Shreyash Dewalkar and CIO Ashish Gupta said in the research that, by 2024, everyone would be watching global growth, inflation, and the results of monetary policy in the world's main nations.

The government will lower the budget deficit and try to hit the 5.9% objective in FY 2024, although this might be difficult, according to the article.

"A tight budget deficit combined with loose monetary policy may provide the ideal environment for declining rates. Through the addition of a worldwide index, inflows totaling over $24 billion will further assist this. The paper said that if crude oil and commodities prices stay low and there is a $30 billion balance of payments surplus, the current account deficit might decrease much further.

Overall, Gupta and Dewalkar said, India has what it takes to accelerate growth in the medium to long run. In the grand scheme of things, India stands to gain from long-term variables including formalization of the economy, enhanced digitization, manufacturing, and the China-plus-one policy.

The following six lessons should be learned from the 2023 equities market:

1. Small and medium-sized stocks outperformed

Indian shares had "spectacular gains" after a poor start, driven by a stronger outlook for profits, a solid macroeconomic environment, and strengthening company balance sheets. Leading the way in the group with significant domestic inflows were small and mid-cap companies. The majority of the $2 billion in domestic fund inflows in 2023 went into mid- and small-cap funds.

2. FPI Withdrawal

After almost two years of withdrawals, foreign portfolio investors (FPIs) re-entered the Indian equities market in 2023 with around $18 billion. "Industrials, consumer discretionary and financials, while energy and technology saw outflows" were the industries that benefited the most, the research said.

3. The $4 trillion club

India reportedly gained entry into the "coveted $4 trillion club" as a result of improved stock market performance. The sixth economy in the world to accomplish so is India. The market cap-to-GDP ratio of the index is now ~1.25, which suggests that it has surpassed India's nominal GDP, according to the article.

4. Capital spending is the focus of attention.

Although capital spending by the private sector has grown, the majority of capital expenditures are concentrated in industries such as steel, electricity, and refineries. The analysis suggests that the trend of capital expenditures could increase after the elections. a healthy cash flow position, a robust corporate balance sheet, and supportive policy framework.

5. The inflation rate will drop.

The paper states that although inflation decreased in 2023 from almost double digits to single digits, a steady drop in inflation may occur in 2024, helped along by a dip in the price of crude oil.

6. There are still issues with rural consumption

Rural consumption is suffering because of the irregular monsoon, although urban consumption has remained robust across the area. Although the urban sector has performed as anticipated, the research noted that there may be little financing available to the sector and only minimal employment in the formal sector. According to the paper, the tightening of regulatory standards for unsecured lending by the RBI may have an effect on consumption even as election-related expenditure would increase demand.