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Oct 05, 2012, 10.35 AM IST
Brokerage house Morgan Stanley tries to offer an explanation on why shares are rallying despite the weak macro-economic environment.
Indian equities have been on a tear despite there being no visible improvement in macro-economic indicators and corporate earnings growth. The 30-share Sensex is up 23% since the start of this calendar, defying worsening industrial output, slowing GDP, out-of-control inflation, widening fiscal deficit and a growing subsidy bill. Foreign institutional investors have already pumped in around USD 16 billion so far this year, even as a sovereign rating downgrade looms large. So what could explain the craze for stocks in such a depressing environment? Most importantly, should you be buying shares when the economy seems to be headed downhill? Brokerage house Morgan Stanley tries to find the method to the madness:
(Excerpts from Morgan Stanley's strategy note)
Bad macro does not mean bad earnings and vice-versa
Positioning and sentiment among other factors play a role
What's priced in is crucial to market behaviour
Markets can be and are relative
Markets are concerned about delta
Markets can be influenced by dispersion
May 23 2013, 16:33
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May 23 2013, 09:33
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