Wednesday, June 24, 2020

2020 Mid Year Review - YTD Market performance

market participants; while gold has also given decent return.
Greed begins to overwhelm fears
Despite a spate of terrible economic, political and geopolitical events, the greed has started to overwhelm the fears since the market made a panic bottom in March 2020. The midcap stocks have outperformed the benchmark indices, and the small caps have also started to catch up recently.
(i)    The benchmark Nifty is negative ~15% YTD (22 June 2020), whereas Midcap are down (-13%). Small cap index is down by 20%.
(ii)   Overall market breadth has turned marginally positive for the YTD.
(iii)  Foreign investors turned big sellers again after remaining net buyers in 2019. Domestic mutual funds bought more than the FPI selling. Net institutional flows have been thus positive YTD. However, in recent funds the net new flows into the equity mutual funds have slowed down.
(iv)   Pharma is the only sector that has returned positive yield YTD. Other defensive sectors like consumers, FMCG and IT have also outperformed the benchmark indices.
Global equities recovered but still yielding negative return; India average performer
Many developed markets staged a sharp recovery after March meltdown and recovered most of the losses. Developing markets have though struggled. India with -14% YTD return has been an average performer.
Despite all ominous news flow, China and Korea have been the best performing markets amongst the leading global markets.
Bonds rally as rates are lowered
Interest rates have trended down almost everywhere, leading to a smart rally in bonds. US benchmark yields have crashed from close to 2% in the beginning of year to about 0.7%. Indian benchmark yields also corrected to the lowest since 2009.
Gold and Bitcoin record smart recovery
Amidst the global uncertanties and rising risk, gold emerged as a safe heaven. The gold prices in USD terms have gained over 16% YTD to the highest level since 2009.
The cryptocurrency Bitcoin has gained 33% YTD, as the debate over continuation of USD as the only reserve currency for global trade intensified post Sino-US trade war.
USD Index weakens marginally, but INR weakens materially vs USD
A dovish Fed led to a marginally weaker USD, even though trade balance showed some improvement. However, despite significant CAD improvement, INR weakened materially against USD.
Crude oil recovers from unusual fall, but still materially lower YTD
WTI crude oil future witnessed heightened volatility in April, and crashed to negative territory. However, the entire loss has been recouped. YTD, the global crude oil prices are down by almost one third as the COVID-199 indiced lockdown has led to demand collapse.

 

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