Do it yourself

Year 2020 has been a very eventful year so far ( see here ). In past six months many events have taken place which will have long term repercussions. In that sense these six months could be compared to the period between May 1990 and December 1990 ( see here ). While long term implications of these events will unfold over many year to follow; in the immediate term we have seen the global economy slipping into one of the worst recessions since the great depression of 1930s ( see here ). The corporate earnings have been greatly impacted in 4QFY20 and 1QFY21 by the COVID-19 induced lockdown; and the visibility of next few quarters is also clouded. The earnings estimates for FY21 and FY22 have been significantly moderated accordingly. The performance of stock markets however appears materially diverging from the economic and corporate performance. A sharp outperformance of midcap stocks, especially those with relatively poor earnings stability and outlook has raised concerns abo...

As I mentioned yesterday ( see here ), the stock markets have shown commendable resilience to the COVID-19 induced lockdown, the economies around the world have unfortunately not been so defiant. The global economy is witnessing its worst economic collapse since the great depression of 1930. Unlike 2008-09 meltdown, this time the Indian economy is no exception to the global trend and is witnessing the worst ever slowdown in the history of post independence period. In past 40yrs, since FY80, when Indian economy declined by 5.2%, we have not seen any year of negative growth. Economic growth collapses, long term growth curve shift downward The economic growth in India has been declining structurally since the global financial crisis (GFC) of 2008-09. For couple of year, monetary and fiscal stimulus given by the extant government to mitigate the impact of global crisis supported the growth. However, post FY13, the growth trajectory never looked like retracing to pre GFC le...