It’s said that pictures say more than a thousand words. The enclosed 1.064 version of “What We Are Seeing” will bring to you few charts and pictorial research.
January began on a positive note as India approved emergency use of two Covid-19 vaccines, the UK government announced a US$6.2 bn support package, US President announced US$1.9tn Covid-19 relief plan and Mr Joe Biden took over as new President of USA. Towards the second half of the month, global markets corrected sharply, partly due to concerns over new strains of the Covid-19 virus and fresh lock downs and general profit booking. Indian markets corrected bit more as apprehensions over new taxes in the upcoming budget started to do the rounds. The BSE-30 and Nifty-50 indices closed January down 3.1% and 2.5% for the month. The BSE Midcap index gained 0.8% while the BSE Smallcap250 index was up 0.7%.
With most challenges turning around positively, the most important question in the minds of investors and prospective investors is valuations. With Sensex at 50,000 and Nifty at 15,000, what should we do? Yes, markets are at an all-time high and stocks are not exactly cheap. However, given the possibility of sharp improvement in earnings for the next few years on the back of expansionist government policies, sharply improving demand, low interest rates and ample liquidity; there is room for decent returns from equity markets from a medium to long term perspective. After years, we are witnessing big earnings upgrades and more importantly these upgrades are across sectors and company sizes.
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