A stable Government at the Centre post-general elections is expected to bring cheers to the equity market in the next 12 months with experts expecting strong returns from this asset class, according to a survey.
Investment professionals foresee strong returns in equities during the next 12 months on the back of a stable new Government. Nearly 70 per cent of participants expect stocks to be the best asset class, offering maximum returns in the next one year, said the survey conducted by Indian Association of Investment Professionals (IAIP) and CFA Institute.
Participants predicted that equity would significantly outperform other asset classes such as fixed income, gold, commodities and real estate.
Over 88 per cent of those polled see a stable NDA-led Government and over 61 per cent expect the new ruling coalition to initiate policies that would boost growth and also launch major policy reforms.
However, the participants do not expect a major turnaround in economic growth, pegging India's gross domestic product (GDP) between 5-6 per cent and inflation (CPI) between 7-8 percent for the new fiscal.
"The survey results reiterate the strong sentiments of the Indian investment professionals towards equities based on some strong Government policies.
"Apart from key economic variable such as GDP growth, inflation, the expectations are high on the strengthening of the rupee which has further boosted growth expectations in the future," Morgan Stanley Executive Director Jayesh Gandhi said.
As per the survey, commodities are losing flavor with both gold and oil expected to see a declining trend. Gold has been steadily losing its appeal and is expected to decline further in FY15.
The rupee is expected to strengthen in the new fiscal and appreciate from the current level of 60 against US dollar by March 31, 2015, it said.
Over 75% of those polled expect the rupee to trade below 62 against dollar and over 42 % expect the Indian currency to go below 60 by March 31, 2015.