Here are some key stories from the week that went by, written exclusively for subscribers of Moneycontrol Pro
The week ended with investors wondering what to make of Moody’s surprise downgrade of India’s sovereign outlook, chiefly because of the risk that economic growth may remain weak for some time.
Markets had gained during the week but turned weak on November 8 after the Moody’s announcement. They closed only marginally higher than the previous week’s close.
The government put forward its defence against the downgrade, stating that India’s relative economic growth still makes it a leader. Ratings come and go and soon enough, attention will shift to other issues. There is a risk of other rating agencies revising their outlooks too.
Also, Moody’s later downgraded the outlook of debt issued by eight companies, following the sovereign outlook action. Apart from government-owned energy companies, they include two software companies – TCS and Infosys.
India’s real estate sector cheered a bit. There was good news for homebuyers who are in distress because of unfinished projects. The Cabinet approved a rescue package that will see a government-sponsored alternative investment fund step in to provide last-mile funding, to complete stuck real estate projects.
The opinion is divided on how much good this can do but it is, perhaps, the best chance that stranded home-buyers have of getting keys to their flats.
Another issue on which opinion is divided is India’s decision to stay out of the Regional Comprehensive Economic Partnership (RCEP) that was signed between the ASEAN and other countries, notably China.
India said that while many of its demands were accepted, there was still ground left to cover to protect its own domestic interests. Will this cost India dearly is a fear that free trade votaries fretted over, while those harbouring protective instincts for domestic industry sighed in relief.
The PMI data that came out this week did not bring much cheer. There was no recovery seen in the economy during the festival season.
Luck and surprises should have no role in investments but they do! We have two external analysts writing on this subject for you. One is a primer on what to make of surprises in the stock market that catch you unawares, earnings surprises being a common one.
Another is a market guru who tells us that many attribute their good fortune (or even bad) to luck but what if you could position yourself to benefit from luck. Don’t miss these pieces.
At Moneycontrol Pro, we had a string of articles analysing these events, distilling important insights and what they meant for you for your investment decisions. Here’s a look at some of them.
Why Moody’s cut its India credit rating outlook
Two years ago Moody’s had upgraded India to Baa2 with a stable outlook from Baa3, the lowest investment rating. The factors behind the downgrade in its outlook are nothing new. So what has shifted since then to change Moody’s outlook on India? Read here to know more.
Among the 16 nations, why did only India think the RCEP was a threat?
Why did India see the RCEP as a threat to its interests, while the other 15 nations did not? Surely the governments of the other 15 nations are equally bothered about their national interest? What is so different for India, compared to the other 15? The answer may lie in competitiveness or rather, the lack of it. Read here to know more.
What does the trend in real rural wage growth show?
A recovery in private consumption is essential for recovery and weak rural demand is the main factor holding it back. There’s hope that rural consumption will do better on the back of a good monsoon, better minimum support prices and income transfers to farmers. What does the latest data on rural wages show? Read more.
Are we at the cusp of a huge asset price bubble?
The Sensex reached record highs as did the S&P 500 and the Nasdaq recently. Risk appetite is back with a bang. Last week Fed Chairman Jerome Powell not only delivered a rate cut but also said, "I think we would need to see a really significant move up in inflation that is persistent before we would consider raising rates to address inflation concerns." Simply put: no inflation, no rate hike. What could go wrong? Read more.
The government’s real estate AIF plan is a good solution but the sector’s problems are tricky to resolve
The real estate sector is too big to fail, explaining why the government is wading into the forbidding swamp of stuck real estate projects to mount a rescue. On paper, the solution is so elegant it makes you wonder why it was not done earlier. But when you consider the various sides to the real estate mess, on execution the solution may not benefit all parties concerned. Read more.
Bank Nifty – Can the outperformance sustain?
The Bank Nifty has been a stellar outperformer in the past one year. This is contrary to the popular perception that banks are essentially a reflection of the macro environment and tend to mimic the performance of the latter. What explains this divergence and will it sustain? Read here for answers.
Yes Bank: Caught between the lure of new capital and drag of toxic assets
Yes Bank shareholders are standing at a crossroads. On the one hand, there is the lure of substantial capital commitment by marquee investors, while on the other, earnings quality is getting worse with mounting pressure from toxic assets and business contraction. How much more steam is left in the stock? Read more.
HDFC’s results shine during uncertain times, making it a buy
The housing finance segment is currently plagued with multiple issues including funding constraints, slower growth and stringent regulations. This makes investors ponder – is it worth considering HDFC, the largest housing finance company (HFC) at this juncture? The answer is definitely yes. Read here to know why.
Next week, the US-China trade war will dominate economic chatter as markets assess whether the two countries can indeed resolve their long-running dispute. Certainty on resolution will be a massive relief for investors globally.
Inflation data is due to be released next week and retail inflation is expected to step up a bit but still within the Reserve Bank’s comfort zone.
The last batch of earnings should be out next week and stay logged in to read more about them and markets, macro, sectors and more.More details are available in our Business in the Week Ahead Section, read it on the Moneycontrol Pro App.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.