JM Financial Mutual Fund, a part of JM Financial Group while commenting on recent happenings in the Indian economy and equity market scenario said that GDP quarterly numbers improved in Q1 FY10 over the previous quarter mainly on account of a good growth of industry.
This growth was mainly the resultant of a huge rise in manufacturing YoY growth. But both services and agri GDP growth fell in Q1 FY2010 compared from Q4 FY2009, the AMC expects the GDP growth to accelerate over the next 2 years.
July 2009 IIP (index of industrial production) showed exceptional growth of 6.8% YoY due to high growth in mining, intermediate, manufacturing and consumer non-durables goods.
Manufacturing (highest weighted in Sectoral IIP) growth continued to remain optimistic. It grew at 6.8% YoY in July 2009 vs 7.8% in June 2009 and 6.9% in July 2008. Continuation of this trend ahead will signal a revival in demand.
Advance tax collections for the second quarter of the current financial year (2009-10) have shown robust growth of 35 to 40% across industries, reinforcing the hopes of a sooner-than-expected recovery. The second quarter is significant, since companies for banks pay almost 45% of the total annual tax payable. The first quarter accounts for 15%. The target for direct tax collections for 2009-10 has been fixed at Rs 3,700 billion, roughly 10% higher than Rs 3,382.12 billion last year.
However, among all the good news, monsoon continued to be the spoilsport and the season has ended with a 23% deficit. How much impact would it have on the agri production and its consequent impact on the GDP is yet to be seen.
Globally too, like India, optimism ruled and hopes of a early recovery in the global GDP strengthened.
Commenting about the stock markets, the fund house said that markets awash with liquidity remained stable during the entire month and displayed strong sectoral rotations as the Nifty ended above 5,000 for the first time in 2009. FII flows were at USD 3.8 billion which took the annual FII inflow to over USD 12 billion.
Sectors like pharma, tech and financials outperformed rest of the market. Midcaps also played strong till the last week when they displayed fatigue. Sensex which began the month at 15,555 ended Sep. 2009 at 17,127 crossing the physcologically important 17,000 mark for the first time in 2009. Overall markets in India remained tremendously resilient than the rest of the Asian peers.
Large fund raising through the QIP route has absorbed most of the FII flow this month thus preventing volatility. Among the corporates Reliance, Axis Bank and Jaiprakash Associates are some of the corporates who raised money.
Giving its outlook about the market the fund house said that Sensex is now over 17,000 and at current levels trades at over 16x FY11 which now puts it in a historically traded average band. India has been a beneficiary of strong flows like the rest of the Asian peers and there is a strong likelyhood of the continuation of the flows in the near future. On the other hand, there are several large offerings lined up through the IPO, QIP routes etc as a consequence of corporates trying to use the optimism in the environment to raise equity capital.
Although JM Financial is reasonably optimistic about the prospects of the Indian economy in the medium to long term; it remains slightly cautious in the short term. It believes markets are likely to consolidate around the current levels and keenly await the Q2 FY10 results to show further direction to markets in the near term.
Any correction, if at all, would be healthy for the markets and should not be source of any anguish to long term investors thus the fund house advices disciplined and systematic manner of investment to capture the Indian growth story.
This growth was mainly the resultant of a huge rise in manufacturing YoY growth. But both services and agri GDP growth fell in Q1 FY2010 compared from Q4 FY2009, the AMC expects the GDP growth to accelerate over the next 2 years.
July 2009 IIP (index of industrial production) showed exceptional growth of 6.8% YoY due to high growth in mining, intermediate, manufacturing and consumer non-durables goods.
Manufacturing (highest weighted in Sectoral IIP) growth continued to remain optimistic. It grew at 6.8% YoY in July 2009 vs 7.8% in June 2009 and 6.9% in July 2008. Continuation of this trend ahead will signal a revival in demand.
Advance tax collections for the second quarter of the current financial year (2009-10) have shown robust growth of 35 to 40% across industries, reinforcing the hopes of a sooner-than-expected recovery. The second quarter is significant, since companies for banks pay almost 45% of the total annual tax payable. The first quarter accounts for 15%. The target for direct tax collections for 2009-10 has been fixed at Rs 3,700 billion, roughly 10% higher than Rs 3,382.12 billion last year.
However, among all the good news, monsoon continued to be the spoilsport and the season has ended with a 23% deficit. How much impact would it have on the agri production and its consequent impact on the GDP is yet to be seen.
Globally too, like India, optimism ruled and hopes of a early recovery in the global GDP strengthened.
Commenting about the stock markets, the fund house said that markets awash with liquidity remained stable during the entire month and displayed strong sectoral rotations as the Nifty ended above 5,000 for the first time in 2009. FII flows were at USD 3.8 billion which took the annual FII inflow to over USD 12 billion.
Sectors like pharma, tech and financials outperformed rest of the market. Midcaps also played strong till the last week when they displayed fatigue. Sensex which began the month at 15,555 ended Sep. 2009 at 17,127 crossing the physcologically important 17,000 mark for the first time in 2009. Overall markets in India remained tremendously resilient than the rest of the Asian peers.
Large fund raising through the QIP route has absorbed most of the FII flow this month thus preventing volatility. Among the corporates Reliance, Axis Bank and Jaiprakash Associates are some of the corporates who raised money.
Giving its outlook about the market the fund house said that Sensex is now over 17,000 and at current levels trades at over 16x FY11 which now puts it in a historically traded average band. India has been a beneficiary of strong flows like the rest of the Asian peers and there is a strong likelyhood of the continuation of the flows in the near future. On the other hand, there are several large offerings lined up through the IPO, QIP routes etc as a consequence of corporates trying to use the optimism in the environment to raise equity capital.
Although JM Financial is reasonably optimistic about the prospects of the Indian economy in the medium to long term; it remains slightly cautious in the short term. It believes markets are likely to consolidate around the current levels and keenly await the Q2 FY10 results to show further direction to markets in the near term.
Any correction, if at all, would be healthy for the markets and should not be source of any anguish to long term investors thus the fund house advices disciplined and systematic manner of investment to capture the Indian growth story.
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