Mumbai, December 27: Equity is expected to be neutral with moderate return expectations as growth would slow down, says a report called ‘India Outlook 2020’ by Credit Suisse Wealth Management India. As per the firm, the hopes for major reforms are likely to engage investors interest high in Indian equities. Further the report also noted that a subdued but a positive global economic growth in 2020 as well as financial market returns to be generally lower than in 2019 would be seen. “Privatisation of Public Sector Undertakings (PSUs), easing of labor laws, rationalisation of individual taxes, changes in dividend distribution and capital gain taxes could keep investors’ interest high. Given lower overall inflation (except for food), return expectation for all asset classes should be moderate,” says Analyst at Credit Suisse Wealth Management India. As per the research, the firm maintains a positive view on global equities as an asset class especially with a preference for emerging market equities.
Having said that, India is also attracting more Foreign Direct Investments (FDIs) which would lead to more stability in INR if the trend persists, unless China devalues its currency in case of an escalation in the trade war. “In this environment of slower growth with deteriorating consumption and a weakening investment outlook, we prefer companies with a solid balance sheet, which are investing in capacity and gaining market share locally as well as globally.” That said, in 2020 the markets will witness a pocket of growth rather than board-based growth, hence as for the investors it is recommended to concentrate portfolios across large caps and quality mid-caps, with high growth visibility. “We continue to like private banks, chemical companies, IT and Non-Banking Financial Companies (NBFCs). Consumption is a structural growth theme in India and we continue to like stocks that are impacted by urbanisation, though growth has been slower than anticipated,” pointed out the report.