We are going through one of the worst health crises in a century which is taking a toll on the economy. Going ahead, what is the trajectory you see for the equity market and returns from equity?
Markets don’t like uncertainty and hence undergo a correction. At this point in time, it is difficult to estimate how much the corona virus infections would spread and by when we will return to business as usual. Most market participants are struggling to price in the impact on the earnings’ growth of companies. The uncertainty has led to fear and ultimately to a sharp selloff. Once the contagion rate (the pace of infection spreading) reduces and the recovery rate (patient discharges from hospitals) improves, investors will be able to forecast the end of the pandemic and price the companies with a much clearer view of the impact.
What explains the huge disconnect between the economy and the equity market that we are witnessing in present times?
Over a longer term, the large-cap indices of Nifty and Sensex will have a better correlation with earnings’ growth rather than GDP growth. Once the virus cases started rising in the country and the government decided to go for a lockdown, the earnings’ growth estimates of India Inc. were revised down sharply and the indices also responded with a sharp correction. While FY21 earnings are significantly impacted, we expect FY22 to show some recovery. The broader market, mainly the mid-cap and the small-cap space, is significantly lower than the December 2017 peak, reflecting a slowdown in the economy. Going forward, the market will adjust the timelines for economic recovery based on the news flow related to the virus vaccine.
Bu hikaye Dalal Street Investment Journal dergisinin May 25, 2020 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Giriş Yap
Bu hikaye Dalal Street Investment Journal dergisinin May 25, 2020 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Giriş Yap
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
