In the quarter ending March 2020, the stock markets saw a free fall and, in the process, wiped out about 40 per cent of the equity market investor's wealth. The stock market, seen as a leading indicator of the economy, sensed that the pandemic-induced lockdown will cause a disruption in economic activity. This will have a significant influence on the economic growth of not just India, but also the entire world. To minimise the adverse impact of such a drastic slowdown in economic activity, the Reserve Bank of India and other central banks across the world flooded the system with liquidity, cut policy rates and thus decreased the cost of borrowing wherever possible so as to empower people to spend more. In truth, the tale of rate cuts in India has been pre-pandemic. When we look at the repo rates since 2018, we can observe that they have taken a downward trajectory.
As interest rates fell, individuals who invested in long-term bonds or funds that held the bulk of long-term bonds benefited on a mark-to-market basis. This can be seen in the table (Median returns (%) of debt fund category from August 2018 to May 2020) where we see most of the long duration-dedicated funds generating returns in double digits.
That said, economic recovery has made substantial headway in the recent year. As we reach the year 2022, it appears to be a true post-pandemic world with active cases dropping dramatically across the country and economic activity fast catching up to the pre-pandemic level. The side-effect of lockdown, huge stimulus and V-shaped recovery in economy is leading to higher inflation. This is posing the RBI a new difficulty in managing inflation, which was 6.07 per cent as of February 2022 – somewhat higher than the RBI's target range of 4-6 per cent.
This story is from the {{IssueName}} edition of {{MagazineName}}.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the {{IssueName}} edition of {{MagazineName}}.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
How To Invest In An Ageing Bull Market
Bull rallies (periods when stock prices rise) and bear declines (periods when stock prices fall) are natural parts of stock market cycles, but they don't follow a fixed timeline.
Should You Entrust All Your Money To A Single AMC?
If you are a market participant, you have probably heard the quote 'don't put all your eggs in one basket', which suggests diversification. Investors often focus on diversifying across categories like large-cap, mid-cap and small-cap, but they may unintentionally overlook diversification across different AMCs. The question arises: is AMC-wise diversification really necessary? Rakesh Deshmukh takes a closer look at this scenario
Wild Swings Engulf Global Equities
U.S. stock markets experienced significant volatility. An early-week rally pushed the markets to new highs, but this momentum faded, primarily due to weaknesses in the tech sector. The major indices had a mixed finish with, S&P 500 and Nasdaq closed lower, while the Dow recorded a notable gain.
U.S. Elections and China's Economy Hamper Commodities
Commodity markets experienced selling pressure in the last fortnight, driven by uncertainties surrounding the upcoming U.S. presidential elections, concerns about the Chinese economy, and increased agricultural production in Brazil.
Wealth Building For Retirement Through Mutual Funds
Retirement is one of the most crucial and lifechanging phases. It marks a period where maintaining your lifestyle becomes paramount even though your regular income stops.
Mastering Investment with Information Ratio
Information Ratio helps in navigating the complexities of the investment landscape by assessing an active fund manager's performance. And though it has its limitations, it remains an essential part of the finance industry. The article explains what Information Ratio is and how investors can use it as another tool
Plan To Be Financially Independent
Each of us aspires to be financially independent as it ensures having enough resources to be self-sufficient and control our finances.
❝Technology is the new game-changer"
With a new breed of young investors entering the financial markets, it is the use of technology that is increasingly playing a major role in how investments are done and tracked. Anand Radhakrishnan, Managing Director, Sundaram Mutual Fund, shares his opinion about how this factor is turning into a significant tool and how it will shape the strategies of his company
What If Donald Trumps?
The potential election of Donald Trump as president in the U.S. carries significant implications for the Indian equity market. It could lead to changes in the global trade dynamics, in particular affecting the Indian IT sector while also raising inflation levels and leading to yet another revision in the visa programme for Indians who want to work in the US. The article takes a closer look at what may lie in store
Sectoral Gains Make A Mark
Benchmark indices continued their uptrend, reaching new record highs, although the pace has slowed as the broader markets faced selling pressures
