Moneycontrol Pro Panorama | A pause for breath? 

The rumble in markets is not restricted to India and the pressure is visible across Asian markets.

Dear Reader,

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. 

While no one really knows why exactly markets go up or down – demand for and supply of shares is probably the most authentic answer there is — that does not stop anyone from trying. Today, the main market indices are down a bit, but after a week of a hefty rally, a pause for breath is not out of character for equities. It may also be a cycling of themes, as large caps have been doing well in recent days and therefore there's a slight pullback while today, mid and small caps are up.

(Don’t miss reading the MC Pro New Year Portfolio 2024, linked at the end of this newsletter)

On that subject, India Ratings put out a study that raises an amber flag on credit profiles of mid and small companies in FY24 and beyond. We plucked a few charts from that study that we found interesting to make our Chart of the Day. It chiefly considers how rising debt ratios and a deteriorating working capital profile could squeeze them harder than large companies. In turn, this means that for growth to sustain at higher levels (and to sustain valuations), they may need to borrow more which can strain their credit profiles. Or, it may lead to one more outcome, do read to know what.

But the rumble in markets is not restricted to India and the pressure is visible across Asian markets. The Bank of Japan may shift its stance from its ‘uber-easy’ policies and there is some nervousness on a US inflation gauge — the core personal consumption expenditure index — and if it will pour some cold water on the very optimistic rate cut assumptions being factored in 2024.

But even before that, the index’s release is parsed for clues, here’s a note of caution from Mohamed El-Erian, who has been a voice of reason in these years of ultra-loose monetary policy and accurately predicted the Fed’s misstep on assuming high inflation was transitory. In a booming market, few like cautionary messages, but it’s always good to test your optimism against these and see if the premise still holds. El-Erian main concern is, “The more the Fed gives in to investor expectations for sizeable and early rate cuts in 2024 — including getting closer to the six cuts priced in for next year — the more the markets will press for an even more dovish policy stance.” Read for more.

Even the flash PMIs are flashing an amber signal, writes Manas Chakravarty in today’s edition, asking investors to not take central banks’ pivots for granted. He cites five crucial points from the survey used to derive the flash PMI figures and writes, “These points do not seem to paint a scenario where the central bank should be in a hurry to signal rate cuts. Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said: “Looser financial conditions have helped boost demand, business activity and employment in the service sector, and have also helped lift future output expectations higher.”

While these are the considerations for a top-down approach to investing, look no further if you are on the hunt for some bright sparks to add to your portfolio. In recent days, we have told you about the performance of our 2023 new year portfolio and the 2024 investment themes that our research team has identified. Now comes the big reveal -- the MC Pro New Year portfolio for 2024, also exclusive for Pro subscribers, has been launched and 17 high-conviction picks have been distilled after a comprehensive exercise undertaken by our in-house, independent and talented research team. They have shown time and again the ability to outperform the market and the numbers show you don’t simply have to take our word for it.

Investing insights from our research team

Should investors consider the IPO of this micro-finance company?

Suraj Estate IPO: Apply for listing gains

Motisons Jewellers Ltd: Why you should avoid this IPO?

What else are we reading?

The Eastern Window: China’s stimulus move not enough to revive investor sentiment

Indian IT gets US lifeline, turns investor favourite 

Can exports break gridlock to push India into Goldilocks zone?

Indian pharma's growth expectations are trending downwards

Bankruptcies soar as high rates and end of COVID aid hit businesses hard (republished from the FT)

Mahua Moitra’s expulsion buries some key rivalries in Bengal, at least temporarily

Democracy and climate politics are set to collide next year

The daily expiry: Profiting from volatility is done & dusted

Hong Kong bankers’ uneasy dance with property tycoons 

Personal Finance

Explained: How Systematic Withdrawal Plans help you earn a steady retirement income

Tech and Startups

Merger with Sony gets delayed as Zee seeks more time, listing likely in Mar-Apr

Technical Picks: Adani Power, Piramal Enterprises, Zomato, HDFC Life Insurance, USD-INR and Natural gas (These are published every trading day before markets open and can be read on the app).

Ravi AnanthanarayananMoneycontrol Pro