Market outlook: Large caps seen continuing their outperformance next year
Live MintIndia’s largest stocks are likely to be winners again in 2020, after propelling the benchmark equity index to its fourth straight annual gain. “Investor focus is unlikely to shift soon from the few high-quality names which continue to steadily grow faster than the economy,” said Dipen Sheth, Mumbai-based head of institutional research at HDFC Securities Ltd. “The foreign flows, too, favor top players.” Economic growth slowed to a more than six-year low of 4.5% in the July-September quarter. However, only three companies have accounted for 65% of all of the advance: Reliance Industries Ltd, ICICI Bank Ltd. and HDFC Bank Ltd. “We expect narrow market performance to continue, as economic uncertainty continues to push funds into the ‘safe’ stocks, resulting in higher market concentration,” said Neelkanth Mishra, a Mumbai-based analyst at Credit Suisse. “Global flows are likely to be supportive as well,” Mishra said “A significant part of foreign portfolio investment holdings in India appears to be longer term in nature or benchmarked.” Earnings Recovery Earnings growth for India Inc. is another factor seen support stocks in the new year. “We see it as one of the top three Asian markets for earnings growth next year.” Moe said he expects profit growth to expand to 16% in 2020 from 12% this year.