From mint · Srushti Vaidya,Ram Sahgal · · 1m 50s
Capex Intensifies as External Issues Ease
Private capital spending rises across sectors once global tensions drop.
In brief
Private capital spending rises across sectors once global tensions drop. Private sector capital expenditure will increase as external uncertainties decrease, according to Abakkus Asset's Sunil Singhania. Originally reported by mint.
Market Sentiment
Near-term market sentiment is weighed down by West Asia war, keeping oil prices, inflation concerns and bond yields elevated.
“West Asia war”
Nifty 50 Composition
Nifty 50 trading slightly below 10-year average valuation with heavy weight in IT services, consumer staples, oil & gas, and banking.
“Nifty 50 trading slightly below 10-year average valuation”
Nifty Growth Outlook
Nifty can deliver decent returns broadly in line with India's normal GDP growth but may struggle to generate very high growth.
“Nifty can deliver decent returns, broadly in line with India’s normal GDP growth”
Mid-Caps and Small-Caps
Mid-caps and small-caps represent India's future with higher growth potential in precision manufacturing, renewable energy, EVs, and defence.
“Mid-caps and small-caps will represent India's future”
FII Flows and Rupee
FII flows took a breather after $135 billion FCNR deposits led rupee to depreciate to 94.50 and now near 96.
“$135 billion FCNR deposits”
West Asia Conflict Impact
West Asia conflict keeps oil prices high, contributing to global inflation and bond yields.
“West Asia conflict keeps oil prices high”
Oil Price Stability
Oil prices could fall significantly if West Asia conflict resolves sooner rather than later.
“Oil prices could fall significantly”
Corporate Earnings Outlook
India's growth and corporate earnings outlook remain healthy despite weak monsoon.
“GDP growth and corporate profit growth remain reasonably strong”
Private Capex Activity
Private sector capex is picking up across autos, steel, aluminium, renewable energy and battery storage.
“Private sector capex is picking up across autos, steel, aluminium, renewable energy and battery storage”
Capex Intensification
Private capex intensity will increase significantly once external environment becomes clearer.
“Capex intensity could increase significantly”
Funding Cost Concerns
Sharp rise in cost of funds is the main concern for private capex but hasn't been observed yet.
“Sharp rise in cost of funds”
Valuation Concerns
Mid-caps and small-caps trading at high valuations due to theme-driven buying.
“Significant portion of mid- and small-cap basket in euphoric zone”
Long-Term Growth Potential
Some companies can grow faster than India's GDP with valuations justified for next three to four years.
“Companies can grow faster than India's GDP over the long term”
What to remember
Private sector capital expenditure will increase as external uncertainties decrease, according to Abakkus Asset's Sunil Singhania.
