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Moneycontrol Pro Panorama | View from atop the 60K peak

In today’s edition of Moneycontrol Pro Panorama: Misuse of police, bright spots on recovery radar, the metal blues, green code for startups, politics behind freebie politics and more

August 18, 2022 / 04:41 PM IST
The BSE Sensex opened above 60,000. (Representative image)

The BSE Sensex opened above 60,000. (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.

After some volatility, India’s equity markets are on a roll. Today, the BSE Sensex opened above the 60,000 milestone that it crossed on Wednesday. However, it has been a rather wobbly ride back up to this level, after the Sensex fell from its all-time high of 62,245 scaled in October last year. You may recall that the Russia-Ukraine war that broke out in February spoilt the party for equities across the globe. So, how do markets look this time around from atop the 60k levels?

With geopolitical risks staring at us and policymakers foretelling a slowdown in developed economies that could spill over to other regions, is this level sustainable?

In the Bank of America global fund managers’ survey for August 2022, 90 percent of investors say the global economy will face stagflation in the next 12 months. Stagflation is below trend growth and above-trend inflation. This is higher than forecast in June, where 83 percent of fund managers pointed to stagflation. That said, by now investors know that the economy is not the stock market. Manas Chakravarty in this article looks at possible reasons why markets are rallying in spite of uncertainties and pessimism on various fronts, including on near-term earnings and relatively high stock valuations.

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To be sure, global economies are battling high food inflation, surging energy costs, hawkish central bank policies and slowing demand. The minutes of the July 26-27 Federal Open Market Committee meeting clearly states that the members saw “little evidence” of US inflation pressures easing soon. This implies that rate increases would continue, albeit at a slower pace than envisaged earlier.

Meanwhile, the situation in Europe and China is giving jitters to the metals sector. Metal prices are already down from highs. Now, there is news of some smelters in these regions downing shutters due to extraneous factors such as an energy crisis. Meanwhile, there is uncertainty on how the property market crisis in China could spill over to impact the world.

Equity markets aren’t worried though. With most commodity prices, including crude, showing weakness, at least for the near term, investors seem to draw inspiration from saying “the worst is behind us". This interesting read from FT (available specially for MC Pro subscribers) says how quant funds are fuelling a sharp rally in US stocks. Investors who rely on technicals are winding down bearish bets.

Cut to Indian equities, the recent rally is riding on the back of the powerful greenbacks. FIIs, who were net sellers since the peak inflow levels of October 2021, are back to buying Indian equities. Of course, corporate earnings for the June quarter displayed a strain in profitability due to high input costs in the past few months. But that’s discounted by investors, given that commodity prices are cooling off and management commentary assures a better second half in FY2023.

Read here to know if this is the start of a new bull run!

Investing insights from our research team

Safari – Taking off in style

Apex Frozen Foods Q1: Impressive quarter on all parameters

HEG: Traction in European demand key watch in the near term

What else are we reading?

Economic Recovery Tracker | Consumer sentiment shines, energy use softens

Police vs Police: Growing confrontations between the police of different states

Apollo Tyres does a tough balancing act between cost cuts and price hikes

Startup Street: Clean energy -- new vistas for entrepreneurs, but with high stakes

Can privatisation crowd out net real investment?

The reinvention of Goldman Sachs: What has David Solomon achieved? (republished from the FT)

Salman Rushdie attack’s roots lie in British India, not Iran

Freebie Politics | Is AAP deflecting attention from its failures?

Technical Picks: Indian Hume PipeHero MotoCorpTata SteelUSD-INRSterling Tools and Gold mini (These are published every trading day before markets open and can be read on the app)

Vatsala KamatMoneycontrol Pro
Vatsala Kamat
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