Cement Stocks Drive Growth Amid Rising Auto and FMCG Markets – Insights by Pradeep Gupta

Key Triggers for the Markets

Before the earnings season begins in October 2024, short-term market triggers will likely be led by macroeconomic data releases, especially from the US. Important indicators include growth rates, labour market dynamics, and actions from the Federal Reserve and other significant central banks like the RBI, crucial for market direction.

Potential Rate Cuts and Market Reactions

We predict a 25-basis point rate cut by the Federal Reserve in September 2024, coupled with a dovish surplus indicating possible further reductions within the next 12 to 18 months. However, these expectations might already be priced into the global market. Unless the Fed surprises with deeper cuts or a significant change in commentary, we do not anticipate major volatility.

Downside Risks and Market Valuations

Although global growth has surpassed expectations, caution remains due to underlying complacency. Any sharper-than-expected growth slowdown or cautious Fed commentary could quickly shift investor sentiment. In the current scenario, Indian equities, especially in large and small-cap segments, appear fairly valued.

Investor Insights and Sector Recommendations

Looking ahead, with India positioned as the fastest-growing major economy, and macroeconomic conditions favorable for equities, we maintain a positive outlook for the long term. Consumption-driven sectors such as autos, consumer durables, and FMCG remain active areas of interest, whilst our specific favorite is cement stocks, alongside IT and healthcare in export sectors.

FII Flows and India's Market Appeal

Dynamically, with India’s robust economic performance and favorable valuations, FIIs are predicted to remain net buyers of Indian equities. Historical trends show that India offers higher returns compared to other emerging markets.