Two out, third shaky. We believe (1) the ‘yield’ story (multiple expansion) is largely done with global central banks unlikely to cut short-term rates further; in fact, global bond yields have started to harden and (2) the ‘cost’ story (margin expansion story) is also over; commodity prices have rebounded and are stable now. The third driver of domestic volume growth may come into play but its impact on stock prices is far more muted compared to that from (1) multiple re-rating and (2) higher profitability.
Two Out, Third Shaky
There is limited scope for re-rating for large parts of the Indian market opines Kotak Institutional Equities
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