India Strategy - Second Covid-19 Wave Unlikely To Prevent Cyclical Recovery: ICICI Securities
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ICICI Securities Report
Despite the significant impact of Covid-19, cyclical upturn is visible in corporate profits and economic growth while credit and investment cycles are clearly bottoming out along with the strengthening of corporate balance sheets.
Although it is difficult to gauge whether these trends are part of a structural super cycle or a shorter term cycle, it is amply clear that we are closer to the bottom of the cycle in terms of corporate profits, economic growth, credit growth and capex while consensus optimism is missing.
The above environment has typically not been a precursor for large drawdowns in equity markets.
Current phase of ‘stock price consolidation’ and ‘continued earnings traction’ will result in market valuations retreating from stretched levels.
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