India s stock market is poised to become the fourth-largest hub of equities, surpassing Hong Kong. Investors are eagerly awaiting for Dalal Street to produce its first $1 trillion stock. According to calculations by ICICI Securities, this milestone could be achieved by 2032. HDFC Bank, Reliance Industries, and Bajaj Finance are among the top contenders. Achieving this feat will deepen Indian markets and provide more investment opportunities.
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India Inc s net profit as a percentage of the country s gross domestic product (GDP) is just shy of reaching 5 per cent, bolstered by strong earnings growth in the second quarter of 2023-24.
Analysts interpret this as an indication that a corporate profit upcycle is in progress, with projections suggesting that this share could exceed 8 per cent within the next five years, driven by bullish earnings growth expectations. We believe we are only halfway through a profit cycle, with the profit share in GDP rising from a low of 2 per cent in 2020 to about 5 per cent currently, and likely heading to 8 per cent in the coming four to five years. This implies about 20 per cent compounding of earnings growth. Underscoring this forecast is the start of a new private capex cycle, under-geared balance sheets, a healthy banking system, lower corporate tax rates, improving terms of trade, and structural consumption demand outlook albeit somewhat offset by likely consolidation in government def
“From a cycle perspective, we are looking quite good in terms of corporate profitability. Overall, the profit cycle continues to be trending upwards in terms of profit to GDP. Even within the NSE 200, which is the investable universe, the cyclicals are driving earnings growth. The maximum beats and upgrades we saw were within financials and some of the industrials, the typical cyclical companies.”
During the quarter, FIIs raised their stake in at least 529 stocks, out of which a vast majority of 496 counters have given positive returns in the fiscal year and 95 have more than doubled investor wealth, shows ACE Equity data.