Moneycontrol Pro Panorama | Mantra for 2023: pragmatism

Representative image

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. 

As signs go, it’s an auspicious one. India’s Manufacturing Purchasing Managers Index (PMI) came in at 57.8 in December 2022, much higher than expectations and up solidly compared to November’s healthy figure of 55.7. Manas Chakravarty writes that this should erase doubts about pent-up demand or festival-related demand being the main causes behind the upswing in manufacturing. That this resilience is visible despite dull showing on the exports’ front is a sign of strength in the domestic economy.

Manufacturing momentum is expected to continue, as the underlying factors behind the momentum – strong demand, healthy order books and depletion in inventory — form a healthy mix. If PMI data appear at odds with the dullish index of industrial production, then it could be due to smaller firms likely having missed the recovery bus.

The PMI survey points to selling prices moving ahead of input cost inflation. While the optimists may point to this as good news for earnings, the naysayers may wonder if this will strengthen the case of the hawks on the RBI’s Monetary Policy Committee. After all, if a sharp rise in interest rates is not dulling demand or manufacturing activity – as evidenced by the PMI data — then there’s no need to really go easy on tightening.

But this is indeed good news for equity markets as many of the listed companies, especially those that populate the major indices, are among the organised and large players in their respective industries. If the uptrend continues, then it indeed augurs well for equity investors.

While the resilience in manufacturing and services -- PMI due later this week -- is a source of comfort, a much larger mix of factors that will play out in India and the world will determine how markets perform. Here’s the Financial Times’ ‘Business trends, risks and people to watch in 2023’ (free to read for Pro subscribers) that deals in global trends in sectors or areas such as energy, regulation and crypto. Adding to the mix is Manas Chakravarty’s piece on what could surprise investors in 2023.

The main takeaway from events of 2022 is to not take anything for granted, at least not in the short term. As data change, as new events occur and as assumptions are proved right or not, change your beliefs on how various asset classes could move. Pragmatism rather than dogmatism is the word for 2023.

Investing insights from our research team

Why this small finance bank can rerate further

Zee Entertainment: Slow recovery dampens potential

What else are we reading?

A wish-list for capital market regulation in 2023

The missing message for 2023 in the RBI’s Financial Stability Report

Markets are headed for consolidation at these levels

The Eastern Window: Are Chinese stocks poised for a recovery?

The Green Pivot: Clean power play — A bitter-sweet punch of three Ps

Chart of the Day: November 2022 core sector growth of 5.5 percent is merely a statistical illusion

Ending free foodgrain scheme looks difficult

Technical Picks: Bajaj Finance, Infosys, Castor seed, New India Assurance, Power Finance Corporation and USD-INR (These are published every trading day before markets open and can be read on the app).

Ravi AnanthanarayananMoneycontrol Pro