• Last year, biggest reform has happened in the banking sector – banking recapitalisation whereby the government should be able to provide additional capital to public sector banks. As corporate India is in deleveraging cycle and domestic demand is expected to increase the capacity utilization levels. Overall, it should enable the credit cycle to pickup
• On the global front, synchronised recovery has happened across developed and emerging markets where the global growth is looking fairly good. US implementing tax cuts should the economy do better and provide stimulus to the economy. China aims to achieve on sustainable growth over long-term while our outlook for global economy continues to remain benign
• With respect to the macro flows, CY 2017 was very good for domestic inflows. Close to Rs 8,500 crores of money (on the back of strong support from mutual funds) is expected to be invested every month in the capital markets going forward, enhancing its liquidity
• There are visible signs of a turnaround in corporate earnings where Q3FY18 earnings were better than expected. In our view, FY19 earnings growth should be 20% led by sectors such as banking & financial services (corporate banks - recapitalisation & private sector retail banks), telecom (consolidation and price stability would benefit the market leaders), auto & auto ancillaries (drived by domestic consumption) and the whole consumer discretionary space