InvestorQ : How do you see the outlook for the Nifty in 2021, if the liquidity flows reduce?
Anamika Sodhani made post

How do you see the outlook for the Nifty in 2021, if the liquidity flows reduce?

Answer
image
Angel dcosta answered.
6 months ago
Follow

Let me add that much of the flow that came into India in 2020 were because of too much money sloshing around. While that may taper in the year 2021, there are two stories that will still play out. Firstly, there is an attempt to participate in the growth story in Indian recovery. Secondly, equity is the only asset class that is giving genuinely good returns.

Apart from the GDP turnaround from -23.6% to -7.5% in 2020, one key reason for the FPI enthusiasm was also the sharp recovery in corporate bottom lines in Sep-20 quarter. Sales revenues were marginally lower but net profits grew 140% on aggressive cost controls. There has also been optimism with respect to the reforms process and pump priming.

But there is also a sense of inevitability about equities. Let me explain. Today, 20% of debt by governments gives negative returns. Fund managers still need to make money work hard. Hence, high growth markets like India are an obvious choice. So, debt yields are low, gold is pricey and real estate is dicey. That leaves equities as the one feasible answer.

0 Views