The Indian equity market is headed for good times in 2012, underpinned by the expectations of monetary easing by the Reserve Bank of India (RBI) coupled with steps likely to be taken by the government for fiscal consolidation, Deutsche Bank said in a report.
Besides, government's perceived urgency in addressing policy issues, expectations of better earnings by corporate houses and an increasing global risk appetite will beef up the prospects of the equity market in the country, it added.
The report, however, noted that spike in oil prices due to geopolitical tensions remained the key area of concern for the markets.
"The month of March will be critical in setting a direction for Indian equity markets for the rest of the year as three key events namely state election results, RBI policy meeting and the Union Budget, will have a strong bearing on market sentiment and policy landscape," Head of Research of Deutsche Bank's India equity research team, Abhay Laijawala told reporters here.
Referring to Budget expectations, the report said that the Budget would be guided by fiscal consolidation through subsidy rationalisation, withdrawal of fiscal stimulus among others.
