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The Panorama newsletter is sent to Moneycontrol Pro subscribers on market days. It offers easy access to stories published on Moneycontrol Pro and gives a little extra by setting out a context or an event or trend that investors should keep track of.
Stock markets in India rose on Tuesday in the first half of trading, tracking gains in Japan and US equity futures. Even so, investors should not see it as a return to normalcy. The weaker than expected US job market report and interest rate hike by Bank of Japan have triggered fears about steeper slowdown in two of the world’s major economies (US and Japan). A slowing US economy and tighter financial conditions raise risks to medium-term growth outlook of Asia, warn economists at Nomura.
In the process, financial asset prices will begin to move in tandem with the economic realities, a phenomenon known as pro-cyclicality, writes Vijay Bhambwani in his column for Moneycontrol Pro. This marks a transition from the COVID era's liquidity-driven boom in financial asset prices. “The two phases by themselves are not the problem. It’s the transition that is painful,” explains Bhambwani.
Of course, global economic indicators are yet to reflect changing market dynamics. However, signs of an economic slowdown are increasingly visible. A Wall Street Journal report points to a pullback in consumer spending in US and in China too, another major economy.
A slowdown in China, Japan and economic headwinds in the US can pose risks to corporate earnings, especially for companies with global linkages. “Even our conservative estimates may have downside risks, as exports and commodity-oriented sectors contribute to 35 percent of FY2025E net profits of the Nifty-50 index,” warn analysts at Kotak Institutional Equities.
As such, current market valuations provide no comfort for investors. Indian stock markets are trading at premium valuations to major countries across the globe, as illustrated by our Chart of the Day. The country’s market capitalisation to gross domestic product (GDP) ratio, dubbed the Buffett indicator, is at its highest level and implies expensive valuations.
That said, steep correction in the stock market also opens up bottom-fishing opportunities for investors. Madhuchanda Dey, head of our research team, points out one such sector in her piece today. You can read about it here.
Investing insights from our research team
Airtel Q1 FY25: Africa continues to impact performance
FirstCry: Should investors subscribe to this IPO?
Unicommerce eSolutions IPO: Tapping the e-commerce potential
Marico: Encouraging guidance, premium products remain in focus
Divi’s Lab: Growth visibility for custom synthesis
Tracker
What else are we reading?
Bangladesh’s Awami-BNP binary trap once again brings the country to the brink
Japan triggers a tsunami in the market, but is it powerful enough to continue?
Why is bank credit growth slowing down?
Quota Judgement: Reforming reservation will not be an easy task
The IEA’s divisive mission to decide the future of oil (republished from the FT) International Day of World’s Indigenous People: Why India should not ape the west in celebrating it?
Strengthening IP Securitisation in India: Legal reforms and financing innovations needed
MC Explains: Reforms in the Waqf — challenges, schemes, and calls for accountability
When Donald Harris, father of Kamala Harris, contributed to India’s economic policy debates
Technical Picks: Vedanta, NMDC, Marico, and Zomato (These are published every trading day before markets open and can be read on the app).
R Sree Ram
Moneycontrol Pro
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