India Nifty trades sideways, domestic inflows improve, 2Q profits expected to grow healthily (Goldman Sachs)
Goldman Sachs India weekly report showed that the Nifty index was basically flat last week despite fluctuations in oil prices.
Goldman Sachs India weekly report showed that the Nifty index was basically flat last week despite fluctuations in oil prices. In terms of capital, foreign capital continued to flow in, and domestic stock market capital inflows improved by 27% month-on-month in June, reaching US$3.1 billion per month. This is a core factor underpinning India's market valuations. Looking forward, market consensus expects 2Q earnings to achieve healthy growth, with the performance of the IT services and financial sectors being particularly critical. The current high valuation of the Indian market relies on the realization of earnings growth, so the upcoming earnings season is an important test of the legitimacy of its valuation. One-sentence conclusion: The Indian market has shown resilience under the impact of oil prices, and its abundant domestic liquidity is its solid backing. However, the next direction of the market will depend on whether the upcoming earnings data can support the current high valuation. Positives/negatives: Structural benefits to the Indian market, especially the financial, IT and industrial sectors. Short-term volatility may increase, depending on earnings results. Domestic institutional funds continue to flow in, and foreign capital inflows have improved, but these factors may have been reflected in valuations. Catalysts: 1) Core heavyweights such as HCL Tech, Reliance and HDFC Bank will release 1Q financial reports in the next two weeks; 2) The impact of monsoon rainfall on agriculture and the economy; 3) The persistence of foreign capital inflows.