Tag: nomura

Analysts at Nomura have cut its 2023 forecast for economic growth in India, as measured by the gross domestic product (GDP), to 4.7 percent from its earlier projection of 5.4 percent amid worries of recession picking up across the world in an inflationary environment as it expects growth to slow down over the next year. “We see rising medium-term growth headwinds from higher inflation, monetary policy tightening, dormant private capex growth and, most importantly, global growth slowdown,” Consequently, we lowered our 2023 GDP growth projection from 5.4% to 4.7%," the firm said in a note co-authored by Aurodeep Nandi and Sonal Varma. The Indian economy has been racing above its pre-pandemic level, led by a sharp recovery in the services sector, and supported by the lagged effects of easy financial conditions, a public capex push, and a rise in real bank credit growth and the improvement in growth has been broad-based across consumption, investment, industry and the external sector. Read more

Most brokerages, including Nomura, had downgraded Indian equities in October 2021. Heading into 2022, a change in policy stance by the US Federal Reserve (US Fed), inflation risk, and the new Covid variants are some of the risks that will impact the global economy and financial markets, including India, Nomura said. Despite these headwinds, Nomura expects Asian stocks to deliver double-digit returns by end-2022 (base case end-2022F MXASJ target is 925; around 18 percent higher from the current levels), driven largely by earnings growth and flat multiples from a low base. “Material declines for Asia stocks are unlikely, as we see several buffers this time (valuations, positioning, fundamentals). Peaking US inflation, and the bottoming out of growth and modest policy easing in China into Q1-2022 should provide relief for Asia stocks eventually,” Nomura said. Read more

A downgrade of Reliance Industries Ltd by Nomura Holdings Inc. analyst Anil Sharma’s team will pique investor interest for multiple reasons. Apart from the timing, with commodities hitting new records and Reliance’s earnings due on Friday, this move to slash billionaire Mukesh Ambani’s oil-to-tech conglomerate to neutral from buy may carry more weight with investors due to the analyst’s background. It’s also the broker’s first downgrade on the stock in many years, according to data compiled by Bloomberg. While the outlook for Reliance’s key businesses has continued to improve, the company’s valuations look expensive after a recent surge in its shares, Sharma and his associate Aditya Bansal wrote in a note dated Oct. 18. Shares have risen more than 30% from the end of July, compared with an 18% advance in the benchmark S&P BSE Sensex Index. Read more

Nomura has raised India’s gross domestic product (GDP) forecast for 2022 by 0.7 percentage points (pp) to 7.7 percent in spite of the second wave of Covid infections that brought the economic activity in most cities to a standstill in the past few months. The research and brokerage house has rejigged the forecasts for consumer price inflation (CPI) and current account deficit. “We raise our 2021 and 2022 current account (CA) deficit forecasts to 1.5 percent and 1.3 percent of GDP, respectively (from 1.1 percent and 0.8 percent), and CPI inflation to 5 percent and 5.3 percent (from 4.9 percent in both years). We also pencil-in an additional 25bp repo rate hike in Q3 2022,” according to a note of Nomura. The first flush of growth indicators for May, according to Nomura, suggest a significant hit to consumption and services, with the manufacturing and export sectors being more resilient. The overall impact, Varma and Nandi said, is turning out to be less than during the first wave Read more

Recent lockdown and mobility curbs in more Indian cities – have led to economists tweak their gross domestic growth (GDP) projections for fiscal 2021-22 (FY22). In a recent note, those at IHS Markit suggest that they expect the Indian economy (as measured by GDP) to grow at 9.6 percent in FY22. Maharashtra’s lockdown, it said, represents a significant dampener on growth, as the state accounts for 16 percent of the national GDP. “IHS Markit forecasts 9.6 percent real GDP growth in FY 2021, though the wider restrictions forecast above indicate that there is scope for further reductions in economic growth, as these measures would mean income and job losses for workers alongside significant output and revenue losses for firms, particularly in the services sector and the informal economy,” wrote Deepa Kumar, deputy head, Asia-Pacific, IHS Markit. Read more

Nomura has raised its rating on Indian equities to ‘overweight’ in its Asia ex-Japan portfolio. Nomura is now much less concerned about two of the central issues that plagued India – India’s limited fiscal space and vulnerability from Covid-19. The recent developments, it said, have surprised them. However, Nomura does caution that the execution of Budget and other policy proposals remains one of the key risks. “A number of recent positive developments in India lead us to change our stance to an Overweight (from Neutral) in our regional Asia-ex-Japan (AeJ) allocation. We view India as a counterweight to North Asia as a large liquid market that – despite its strong run recently – does provide a hedge in portfolios. We are modestly reallocating to India from Korea – although we remain Overweight on Korea (alongside China and Indonesia),” wrote Chetan Seth and Nirransh Jain of Nomura in a February 17 co-authored report. Read more

The Indian economy saw growth rebound through the second quarter of the ongoing fiscal with gross domestic product (GDP) contraction likely to have narrowed to -10.4% from the sharp -23.9% seen in the previous quarter, according to Nomura. The Nomura Monthly Activity Indicator, which takes into account high-frequency indicators from across sectors, improved to -8.6% year-on-year in September from -19.7% in August and a record low of -37.8% in June, “implying a swift GDP growth rebound”, the firm said in a report today. In the run-up to the festive season, aggregate demand recovered to 77% of normal in September against 71% recorded in the month earlier while aggregate supply picked up to 92% of normal in September against 86% in August, it said.