Reflationary expectations have hurt both the equity and bond markets globally. How much do they bother you? Do you think they can puncture the economic recovery and/or cause a sharp market correction in the near to medium term? While an increase in global yields could be a risk, we believe that overall bond yields would remain within the tolerance threshold, only if US 10-yr bond yield to 2 per cent levels could impact the FPI flows and high P/E multiples for growth stocks. Our view on domestic yield is benign given the surplus systemic liquidity, use of tools like higher open-market operations, etc., by the RBI. The key thesis for market outlook from current levels is earnings growth over the next three years, which we believe is broadly intact. We expect more than 20 per cent CAGR in earnings for the three-year period from FY20 to FY23. Our confidence in the earnings trajecto
This article was originally published on March 16, 2021.
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