BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
ICICI Securities Report
Economic recovery slowing in Q2 FY21 as per Q1 FY21 management commentary, the Reserve Bank of India’s latest survey of manufacturing firms, consumer confidence and high frequency indicators like purchasing managers index (PMI.
On the positives, corporate cashflows are improving on resilient rural demand, government payments and ample liquidity.
However, expectations of demand recovery by H2 FY21 have started getting ‘priced-in’ by equity markets (Nifty forward price to earning ratio exceeds 1 s.d.), but the recovery is contingent on:
1) India’s Covid-19 curve during Q2 FY21, and 2) improvement in consumer confidence towards ‘future expectations’, which incidentally picked up for the first time since Covid-19 began.
Evidence of a slow but surely improving global economic environment, earnings beat in Q1 FY21 so far and continued commitment by central banks for continuing quantitative easing (QE)—has the potential to keep markets expensive in the near term.
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