Moneycontrol Pro Panorama | Heading towards capitulation? 

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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.

India is no exception to the global tumult in markets. Fears of recession, unbridled inflation and currency volatility have sent tremors across markets. Screens across exchanges are flashing red and bearish sentiment among investors is rising. In India, the benchmark Nifty50 tumbled by 5 percent in the last five trading sessions and is struggling to keep its head above the 17k mark. A falling rupee and earnings downgrades are adding to the global problems, challenging every small rise in stock prices and investor confidence.

The main question before investors therefore is whether this correction is a blip or whether it will turn into a free fall. This article takes the help of data points and frames the steep fall in the backdrop of two aspects- the strong 15 per cent rally in the three months prior to the fall and earnings downgrades that were brushed aside by the Street so far.

Further, “despite this week's correction, the Nifty still trades at a premium to its historic average valuation,” it says with most frontline stocks trading above valuations of pre-Covid levels. Meanwhile, unabated selling pressure across other markets is further fuelling bearish sentiment. Besides, the strong case for a 50 basis-point rate hike by the Reserve Bank of India's Monetary Policy Committee (meeting scheduled later this week) only adds to concerns of contracting liquidity and growth slowdown in the domestic economy.

That said, there is a silver lining in this large cloud of gloom. Market forces in commodities seem to indicate that the worst is behind us for oil and gas shortages, says Vijay L Bhambwani, in this article. Of course, the China factor, which remains uncertain is a critical factor that would determine commodity prices in the longer term.

While India Inc’s listed universe did mirror rising input cost pressures on company earnings, most managements hinted at improving supply situations and easing input prices in the second half of FY2023. If that comes true and the currency risk eases, then doomsday forecasters could make a U-turn. And earnings improvements may make valuations look reasonable.

In all this mayhem, the investor could do well by keeping macros in the background and staying focused on fundamentals of individual companies. Investment adviser Shyam Sekhar writes how investors can make the best of a falling market. 

Investing insights from our research team

Gabriel: A fundamentally strong company to buy for the long term

CMS Info systems: Why this stock should be in your portfolio

Tracker

Economic Recovery Tracker | Unemployment, consumer sentiments improve in rural areas but worsen in urban

What else are we reading?

India ups its stake in solar power play 

Policy challenges to the unfolding crisis in India’s external sector

India’s online gaming quandary

What is behind the SME IPO frenzy

The end is not in sight (republished from the FT)

Blocking aberrant promoters from insolvent companies is a challenging task

Technical Picks: RIL, Asian Paints, Infosys, PowerGrid and Guar Seeds (These are published every trading day before markets open and can be read on the app).

Vatsala KamatMoneycontrol Pro​