Expected increase in state employee salaries, reduction in fuel prices (this would reduce the transport cost of individual and corporates) and expected reduction in electricity and gas prices would drive consumption. Further low interest rate environment and private sector friendly government would drive the corporate sector borrowings. However the consumption drive would not put great pressure on inflation as global commodity prices are easing off. We believe the government would continue to support the infrastructure growth in a more efficient manner and would strengthen the laws to create a level playing field for all the corporates. On this backdrop we forecast corporate earnings to grow 18% YoY in 2015E and thereby the broader market is trading on 12.6x 2015E earnings.
Download the Report