{"id":28484,"date":"2024-02-07T12:34:25","date_gmt":"2024-02-07T07:04:25","guid":{"rendered":"https:\/\/kuvera.in\/blog\/?p=28484"},"modified":"2024-02-13T13:11:26","modified_gmt":"2024-02-13T07:41:26","slug":"aditya-birla-sun-life-mutual-2024-outlook-report","status":"publish","type":"post","link":"https:\/\/kuvera.in\/blog\/aditya-birla-sun-life-mutual-2024-outlook-report\/","title":{"rendered":"Aditya Birla Sun Life Mutual 2024 Outlook Report"},"content":{"rendered":"

Stronger for Longer<\/b>.\u00a0<\/span>That\u2019s @abslmf\u2019s Annual Outlook for CY2024.\u00a0<\/span><\/p>\n

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Here\u2019s a quick look at the headlines.<\/span><\/p>\n

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Just in case you missed it, check out @Kuvera_In\u2019s insights from investors –\u00a0 <\/span>India Rising | 2023 Review and 2024 Outlook<\/b>.<\/span><\/p>\n

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Download: <\/span>https:\/\/kuvera.in\/IndiaRising_2024Outlook<\/span><\/a><\/p>\n

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Global economic growth exceeded expectations. In India, it was investments, not consumption, that primarily fueled this progress.<\/span><\/p>\n

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A look at the distribution of S&P BSE Sensex returns over the years<\/span><\/p>\n

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The breadth of Indian equity markets increased even as large-caps increased their share of the total profit pool.<\/span><\/p>\n

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Amidst the market rally in a low-volatile environment, just remaining invested in the market gave ~25% return.<\/span><\/p>\n

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Remember, <\/b>time in the market<\/i><\/b> is more important than <\/b>timing the market.<\/i><\/b><\/p>\n

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China PPI has generally led US inflation and is signaling further slowdown, the report says.\u00a0<\/span><\/p>\n

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Money supply is normalizing; major Central Banks\u2019 balance sheets contracting.<\/span><\/p>\n

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Wage growth remains high but is moderating due to a robust rebound in labor supply.<\/span><\/p>\n

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Improved US financial conditions are expected to positively impact growth in the upcoming year.<\/span><\/p>\n

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Consumption growth has normalised and is anticipated to further decelerate in the upcoming year.<\/span><\/p>\n

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Expectations of six interest rate cuts in the upcoming year pose risks to bond prices, exacerbated by substantial issuances.<\/span><\/p>\n

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India’s growth is expected to remain strong at 7% YoY for FY24 and 6.5% YoY for FY25E, driven by investments, government capex, housing sector revival, & improved consumption from previous lows.<\/span><\/p>\n

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The growth composition of FY24-25E is expected to be like FY04-08 period with industry from the supply side and GFCF from the demand side being the key driver of growth.<\/span><\/p>\n

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\u2018<\/span>@abslmf <\/span>expects steady fiscal consolidation by the government on the back of strong tax collections & reduction in revenue expenditure and fiscal deficit declining to 5.4% in FY25E.\u00a0<\/span><\/p>\n

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Uptick in the housing cycle is a big positive for the economy. The decline in gross fixed capital formation since the early 2010s was led by the housing sector & we are witnessing long-term revival for the same.<\/span><\/p>\n

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Private corporate investment is rebounding, seen in rising orders for capital goods & ongoing project implementation, with high capacity utilization signaling an imminent uptick in capex.<\/span><\/p>\n

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The growth trend since the onset of Covid shows stark divergence between consumption & investment, with investment growth significantly moving above pre-Covid, aided by strong government push, but consumption remains lagging.<\/span><\/p>\n

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Expecting lower inflation, it’s forecasted to ease from 5.45% in FY24E to 4.6% in FY25, driven by a food-price surge in FY24 that’s expected to subside, aligning with lower core inflation at around 4%. This sets the stage for policy normalization.\u00a0<\/span><\/p>\n

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Nifty earnings growth is expected to be ~15% in FY25E driven by sectors such as banking, auto, industrials, infrastructure, cement, and real estate.<\/span><\/p>\n

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Amidst market consolidation and earnings revisions, large-cap valuations remain reasonable.<\/span><\/p>\n

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While large cap returns have been driven largely by earnings growth, a large part of the returns for midcap, smallcap & microcap segments have been driven by a re-rating in the valuation multiple.<\/span><\/p>\n

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While there is a structural positive outlook for mid & small caps in the medium to long term, short-term volatility may arise in this segment due to valuation catch-up & relative valuation comfort in large caps.<\/span><\/p>\n

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Over a 3-year period, Value has outperformed Growth, but this trend may shift as interest rates are expected to decrease in 2024.\u00a0<\/span><\/p>\n

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Value has surpassed Quality over a 3-yr period, but this may change as investor sentiment improves & they shift away from Value stocks.<\/span><\/p>\n

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Private capex has started picking up and the capex cycle is turning broad-based<\/span><\/p>\n

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Economic formalization and wage growth boost: A surge in disposable incomes has driven higher discretionary consumption.\u00a0<\/span><\/p>\n

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Although Private Banks have consistently gained share over PSU Banks, easy wins may be over and incremental profits will be linked to economic growth.\u00a0<\/span><\/p>\n

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@abslmf<\/span>‘s Asset Class Expected Return for CY24<\/span><\/p>\n

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Equity ? 10-15%<\/b><\/p>\n

Fixed Income ? 8 \u2013 9%<\/b><\/p>\n

Gold ? 5-10%<\/b><\/p>\n

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Prefer largecaps in equities, aiming for median equity allocation. For CY24, expect solid fixed income returns. Diversify and tactically boost fixed income.<\/span><\/p>\n

Those were the highlights of @abslmf\u2019s 2024 Outlook.<\/span><\/p>\n

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Interested in how we think about the markets?<\/strong><\/p>\n

Read more: Zen And The Art Of Investing<\/a><\/p>\n

Watch here:<\/strong> Investing through various economic and market cycles<\/p>\n

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