Moneycontrol Pro Panorama | Market musings: It's all in the price

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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.

If equities close on Friday at levels prevailing around noon, down around 1 percent over a day ago, the broad market will end the week in the red compared to Monday's close. That may disappoint some investors who would have wanted the good run to continue — step back to a month ago and the markets are flat. But, go back to three months ago and they are up even now by a solid 15 percent.

But the world is largely to blame for the nervousness visible among equity investors. We have been writing about this in recent weeks, how foreign inflows have fuelled this leg of the rally and therefore, when global markets turn shaky some impact is likely. The US S&P 500 has lost about 5 percent in the week so far while the Nasdaq is down by 5.8 percent. Indian markets have fared better, relatively speaking.

The underlying instability in the economy and financial markets will intensify in the coming months, writes Mohamed El-Erian, in today’s Financial Times selection. US inflation numbers spooked markets this week. The month-on-month increase was higher and core inflation broadened, triggering the ‘HFL’ moment. El-Erian lays out more realities that investors and policymakers will face in the coming months, but says the market turmoil is also a sign of investors giving more weight to these uncertainties in their asset allocation. There is, thankfully, good news too. Read to know more about El-Erian’s views and also what HFL is (free to read for Pro subscribers).

On the subject of inflation, all of us can claim to know it, for we experience it. Tim Harford, the economist, argues in the FT (free to read for Pro subscribers) for a distinction in defining inflation in the current context. There’s the Inflation World, where there’s too much money chasing goods and “everything’s getting expensive at the same rate”. The main risk here is that it acquires a life of its own. Then, there’s the Energy Crunch World, where energy costs have suffered a price shock. It’s different from Inflation World in several respects. But both require a different policy response, Harford writes in his Undercover Economist column.

India’s economy too is having to deal with stubborn inflation, which puts a question mark on the equity outlook, in addition to global headwinds, writes Ananya Roy in today's edition. But in our case, growth is still better, a recession is not on the horizon and corporate earnings are faring much better because of the K-shaped economic recovery. The main questions are: can the domestic economy pick up the slack introduced due to global factors and whether in relative terms, we can outpace the global economy. Read to know more.

Not everything is turning expensive, however. Aluminium prices have deflated from their peak levels of March 2022, falling by 40 percent. The energy crisis has led to closures. What does all this mean for Indian aluminium stocks? Should you be looking at them? Read our research team’s take to know more.

Investing insights from our research team

Weekly Tactical Pick | Mobility on the rise, this footwear brand has spring in its step

KEC International: Entering a new growth cycle

​Tracker

Monsoon Watch 2022 | Rainfall picks up in some of the deficit states

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Technical Picks: Hindustan Unilever, Hindalco, Astral, Bajaj Auto and Lead (These are published every trading day before markets open and can be read on the app).

Ravi AnanthanarayananMoneycontrol Pro