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Prabhudas Lilladher Report
Nifty moved up by ~20% to 18250 post our anti consensus call on July 13. Global markets too have recovered as commodities cooled off on fears of tepid demand, rising interest rates and recession impacting demand in Europe and USA.
However India is amongst best performing markets globally due to strong domestic demand, robust festival season, waned Covid impact and expectations of a prolonged capex cycle.
Cost pressures are abating as most agri commodities (led by palmoil), crude, metals etc. have seen meaningful correction from the peak.
High frequency indicators like GST collection, peak power demand, recovery in air travel, sales of apparel, quick service restaurant, passenger vehicle, commercial vehicle, housing, capital goods and improving capacity utilisation are positive.
Rural demand has failed to pick up due to high inflation but strong Rabi crop, declining inflation and likely increase in rural spending ahead of 2024 elections will revive rural demand from Q4 FY23/Q1 FY24.
Urban discretionary spends remain strong and indicate strong benefit due to economic revival and demographic dividend in coming few years. We remain positive and suggest accumulating fundamentally strong companies in uncertain times.
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