'The medium-term view has turned cautious'

The medium-term view has turned cautious due to valuations moving higher, while the long-term view on equity remains positive.

- SANKARAN NAREN

Market outlook

The liquidity support unleashed by global central banks, coupled with very low cost of capital in most parts of the world, has played a big role in ensuring that equity markets remain resilient. As a result, the medium-term view has turned cautious due to valuations moving higher, while the long-term view on equity remains positive.

The four legs of economic growth, i.e., private consumption, government consumption, private investment and net exports are preparing to catch up, each at a different pace. Exports and government consumption will need to lead the pack and create a growth bridge till private investment and consumption recover from the impact of the pandemic. The economy is on the verge of capex recovery led by government policy and expenditure push, which will give impetus to private capex and consumption demand by creating employment. Owing to these factors, we expect business cycle to improve further.