India Strategy - Further Dip In Equity Risk Premium Unlikely; Growth Prospects Appear Robust: ICICI Securities
Electronic board indicating the latest stock figures are reflected in a glass facade at the NSE in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

India Strategy - Further Dip In Equity Risk Premium Unlikely; Growth Prospects Appear Robust: ICICI Securities

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

ICICI Securities Report

Key factors indicating high risk appetite of investors (or low equity risk premium) for Indian equities currently are:

  1. low earnings yield of Nifty 50 (trailing at 3.3% and forward at 4.7%) as compared to bond yield of 6.2% and declining earnings yield spread of mid, small and microcaps over large caps;

  2. fear index at one-year low (Nifty volatility index at 13);

  3. high Nifty 50 index returns in the recent past (up 108% since March 2020 lows) and even higher returns from mid and small caps and

  4. relatively low credit default swap spread of India over U.S.

Safe haven assets such as gold and dollar have also trended lower since 2020 but have resisted further downtrend in recent months.

Click on the attachment to read the full report:

ICICI Securities Strategy Weekly Memo.pdf

DISCLAIMER

This report is authored by an external party. BloombergQuint does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BloombergQuint.

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