YES Securities sees corporates' topline growing 17% in FY17, Nifty hitting 9000 by June 2016

Indian equity markets cannot be insulated from the global markets uncertainty as the US and China, the two leading world economies, will continue to lead the sentiment, said Kapil Bali, executive director & CEO at YES Securities, a wholly-owned brokerage subsidiary of private sector lender YES Bank. The current correction in emerging markets, including in India, is the result of sell-off across the world equities, with lingering economic woes in China - the world’s growth engine which single-handedly supported global economy during turbulent times over the last few years - dampening the sentiment. [caption id=“attachment_2430178” align=“alignleft” width=“380”] Kapil Bali, Executive Director & CEO, YES Securities[/caption] “However, with cooling off happening in China and US economy showing early signs of revival, things may improve in the near-to-medium term, and emerging markets will be soon back on investors’ radar,” said Bali. According to Bali, the US Fed may refrain from increasing interest rates in its mid-September meeting, as the current environment may not be that conducive given the faltering Chinese economy and its decision to devalue its currency which set off a currency war across the emerging and developed economies. “Early US rate hike may further lead to panic situation across the global markets, which may not be good in the current juncture given the bleak global economic scenario,” he said. On the domestic front, Bali said deficient monsoon has been a great cause of concern and the sluggish rural consumption growth could further take a hit, which may further put pressure on the companies that have over the last few years built scale in the burgeoning rural markets. However, he expects the RBI governor to cut repo rate by 25 basis points in its September 29 policy meet, helping growth momentum to sustain as a higher interest rate regime has been a dampener at a time when the government is making strong efforts to boost domestic and global investments in the country. Further, Bali said domestic corporate earnings have been witnessing some signs of green shoots and he expects aggregate topline to grow 10-12 percent in the current fiscal (2015-16) end. Amid hopes of improving economy and benign commodity prices, he sees aggregate topline of Indian companies rising 16-17 percent in 2016-17. Even though key share benchmark indices have struggled in last few months on the back of weak global market sentiment and FII fund exodus, Bali sees the benchmark Nifty hitting 9,000-mark by middle of June 2016 and breaching 10,000 in the next 6-8 months. Sooner or later, Bali expects the government and other parties to reach a consensus on passing the goods and services tax (GST), a key reform that analysts and economists expect will add 1-2 percent to the country’s GDP. With the government steadily increasing its spending on infrastructure, YES Securities’ Bali is bullish on companies linked to the road sector, while maintaining a caution on commodities due to sluggish global prices. On the banking front, Bali says PSU banking shares will take another 2-3 quarters to stabilise as NPA woes are still deep-rooted.