Bad news! BNP Paribas report is very negative regarding the stock market

BNP Paribas said on Wednesday that the stock market outlook for this year remains bleak as growth continues to slow and high-frequency indicators remain subdued. The France-headquartered brokerage believes that calendar year 2025 will be another year with single-digit returns. Due to rising US bond yields and strengthening US dollar, foreign portfolio investors (FPIs) are losing interest in expensive emerging markets (EMs) like India.

BNP Paribas expects the Nifty-50 index to reach 25,500 by the end of this year, which is an increase of 10 per cent from Wednesday’s closing price. Given the weak flow of capital inflows from FPIs, the brokerage firm believes that domestic institutional investors (DIIs) will remain important for the market and will also play a key role in absorbing the strong supply of new shares through initial public offerings (IPOs). .

“Domestic flows should be very strong to absorb all this yet,” said Kunal Vora, director and head of India equity research at BNP Paribas. Vora said that the continuously increasing supply of equities will be negative as the majority of domestic institutions will go into handling the supply.

The outlook for FPI investment inflows does not look very good as the US market is more attractive amid rising bond yields, possible policy changes and possible stimulus measures in China to revive its economy.

The report said that rising bond yields reduce the attractiveness of Indian markets for foreign investors. India’s dependence on FPI may have declined due to strong domestic investment inflows. But FPIs hold Indian equities worth $800 billion and their continued selling is a major risk.

Read Also:  Foreign insurance firms challenge in distribution

The brokerage has predicted that Nifty’s earnings growth for FY2025 will moderate to 4-5 per cent, as some major sectors (especially oil refining) may see pressure on earnings. Brokerages have favored largecaps as midcaps and smallcaps are trading at expensive valuations compared to their long-term averages.

On sectoral preferences, BNP Paribas says it prefers banking stocks as its FY26 earnings growth outlook is strong. There is no possibility of much increase in loan cost. BNP is also bullish on the IT services sector as the macro environment is more favorable than in the last two years. Improvement may also continue in telecommunication.

CRISIL, ICRA, S&P all three said, this business of India will be worth Rs 31 lakh crore in 5 years

Fitch Ratings report released, analysis of every sector till 2025 on Infra, Oil & Gas, Steel & Engineering, IT, Power

Leave a comment