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According to the global brokerage, following are the factors that may work in favour or against Indian equity market:
Strong macro stability evident in a positive BoP and backed by a Central Bank that is committed to keeping real rates positive.
A bullish steepening of yield curve, which is at post-2010 highs – the yield curve correlates positively with stocks.
A low and falling beta, which augurs well in a weak global equity market environment as we have seen over the past few weeks.
India’s growth is likely accelerating relative to EM. Our work shows that corporate confidence is at a multiyear high and profits are likely to mean revert from below trend.
Strong domestic flows, currently averaging around US$2-2.5 billion a month, which we believe are in a structural uptrend.
Weaker FPI positioning, now at 2011 levels.