Market Update- January 2021

2020 will go down in history books as one of the most volatile years for equity investors. Investor sentiment swayed from extreme fear in the first quarter of 2020 and sharp corrections to an optimistic scenario towards the last quarter of 2020. While economic data continued to be challenging, benchmark equity indices almost doubled from their lows in a matter of just 9 months.

In December, Indian markets continued the momentum seen over the last few months with the Nifty being up ~8%. The uptrend was again fuelled by the strong foreign inflows of ~USD 7.3bn, a phenomenon that was witnessed across emerging markets.

The sharp rally in equities has led to apprehensions of its sustainability, particularly given the fact that challenges on the economic front still persist. Also the recent upsurge in commodities; industrial as well as agri, might lead to inflation and subsequent rise in interest rates. However, tailwinds are visible in the form of higher than expected earnings, positive news flow on Covid front and reopening of global economy, ample liquidity and move towards emerging markets from a global perspective. Corrections are expected, though they should be short and swift, with the cautious positioning and low equity allocation acting as a floor to any major correction. The year 2021 should be a positive year for Indian equities, with broader markets expected to do much better than the Nifty. Be positive!

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Market Update- November 2020

Global markets took a breather after a phenomenal rebound  seen since the lows of March 2020. A combination of caution  ahead of US Presidential elections and a sharp jump in Covid  positive cases in Europe and US, led to frayed nerves in equity  markets, with most witnessing healthy corrections. Indian  equity markets though outperformed, with Nifty50 gaining  3.5% for the month. The broader markets just about managed  to close in the green with minor gains for the month.

Markets are now looking forward to the festive season which  combined with pent up demand is likely to lift capacity  utilization. Q2FY21 results will be watched keenly for positive  cues on the much-anticipated recovery for India Inc. There is  no doubt that Q2 will witness sequentially higher growth  numbers. In general, Q2FY21 earnings for companies who  have reported so far have been meeting or higher than the  suppressed expectations.

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Market Update- October 2020

Indian markets were largely flat during September, with the Nifty 50 down a marginal 1.2% for the month. The multi-cap mutual fund related circular by market regulator, SEBI, did cause a huge initial surge in the broader markets. However, post regulator clarity, stocks cooled off and the BSE Mid-cap and BSE Small-cap 250 indices finally ended marginally higher at 0.3% and 3.1% MoM, respectively. Global markets also had a flattish to softer trend amidst bouts of large swings led by news flows related to US elections, Covid, USD movement and US stimulus package. Both FPIs and DIIs turned net sellers in equities to the extent of USD 587mn & USD 44mn respectively*.

The markets have seen a massive rally post the panic lows witnessed in March. After the initial surge in the bell weather blue chip large caps, lately the broader markets have also seen decent and aggressive participation. The gradual unlocking of the economy and the improving macroeconomic figures lend optimism. As mentioned earlier, we expect the September quarter corporate results to be better than expectations and that should lend support to the markets. At the same time, being selective is advocated as the strong rally has meant that there is over optimism in some areas. We move into a period of big events and that should lead to large swings and volatility. We would advocate any correction due to this to be an ideal investment scenario.

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