Do it yourself

The current results season (1QFY26) has been rather underwhelming so far. The market expectations for this quarter were already muted. The consensus estimates projected 1QFY26e Nifty50 revenue and profits to grow around 5% yoy, while the broader market earnings were expected to grow at a better 11-12% yoy rate. However, the results declared so far indicate an aggregate revenue growth less than even the nominal GDP growth of ~10%. Besides, the 1QFY26 season reflects a patchy recovery. Select large-cap and government-driven sectors (infrastructure, defense and PLI beneficiaries) have reported decent numbers and growth, while several small and midcap, IT, consumer and media companies have reported below expectation results. In their post results commentary, the management of IT and consumer companies in particular, have highlighted global and macro challenges they are facing, sounding cautious about near-term growth. Banking & Financial Services and IT Services are the most crit...

The weather has changed suddenly. What was dark and grim on Friday evening, became bright and pleasant on Monday morning. ·          India and Pakistan took several steps back from their respective aggressive positions over the weekend. The entire Indian leadership greeted the world on the Birth Anniversary of Lord Buddha, showing commitment to his doctrine of non-violence, tolerance and empathy. ·          The Indian Meteorological Department (IMD) assured that the south west monsoon is on track to enter Kerala coast five days before the scheduled date. ·          Japanese financial giant Sumitomo Mitsui Banking Corp. announced acquisition of 20% stake in Yes Bank, marking one of the most successful revivals of a troubled entity since acquisition of the government managed deal of Satyam Computers by Tech Mahindra. ·        ...

Little did Edward A. Murphy, Jr., an American aerospace engineer, realize that one of his design advice would become one of most popular epigrams and be termed Murphy’s Law. In the late 1940s, Murphys told his team that “If there are two or more ways to do something and one of those results in a catastrophe, then someone will do it that way.” This advice was later restated by Arthur Bloch in his book  Murphy's Law, and Other Reasons Why Things Go WRONG  as “Anything that can go wrong, will go wrong.” In 1997 Sebastian Junger wrote a creative account of the 1991 ill-fated fishing expedition of the boat Andrea Gail from Massachusetts. The boat was caught in a severe sea storm and all the six crew members were reported dead. The book, titled “The Perfect Storm”, was later adapted into a movie with the same title. ‘The Perfect Storm’ is one of the perfect examples of Murphy's law applying in real life situations. As of this morning, the Indian equity markets appear heading into a ...

Presently, the total market capitalization of the NSE is close to Rs415 trillion, almost the same as it was during the last week of May 2024. The benchmark indices like Nifty 50, Small Cap 100, Nifty 500, Bank Nifty etc. are also trading almost at the same levels as prevailed during the last week of May 2024. Decent returns for the last one-year The benchmark indices may be down 12-16% lower from their September 2024 highs; but they are still yielding a return of 6-9% for the one-year period. Average asset under management (AUM) of Equity/Growth mutual fund schemes at the end of May 2024 was appx Rs25 trillion. The six-month period from June to December 2024 saw a net inflow of Rs2.7 trillion in these schemes. For the month of December, the average AUM of these schemes was Rs 31 trillion. This implies over 11% net value gain in these schemes during the June-December 2024 period. For the full year 2024, the value gain in equity MFs is close to 22%. Most equity-oriented funds hav...

The benchmark Nifty50 scaled a new all-time high-level yesterday. Analyzing the current market trends, I get some signals that suggest that a significant correction (8% to 10%) in the benchmark Nifty50, though not imminent, is certainly on its way. I feel not imminent, because (i) the top stocks that could have caused an immediate slump are notably underperforming the Index, and (ii) a much deeper correction ought to occur first in the broader market indices that materially outperformed Nifty50 in the past one year. YTD2024, the benchmark Nifty50 has been supported mostly by the energy, healthcare, and auto sectors; while the heavyweight financials and consumers have massively underperformed. Though there are no significant triggers for a strong recovery in the financial and consumer sectors, a technical upmove cannot be ruled. This might result in a Nifty50 spurt before a correction sets in. It is pertinent to note that a correction in the outperforming energy (ex-Reliance), auto, and...

  For the stock markets, the 2023 rd   year of Christ is beginning on a cautious note. The global narrative is swinging between an orderly decline to a precipitous crash. With the last man standing Haruhiko Kuroda (BoJ Governor) falling this week, it is clear that the “crusade” against inflation will continue in 2023 - and money will be expensive and tighter. This is most likely to reflect in slower economic activities, and aggressive trade and currency conflicts. The developed markets that have thrived mostly on the steroids of cheap and easy money will show withdrawal symptoms which may include volatility, recession, protectionism, financial instability etc. The emerging markets largely dependent on exports to developed markets (commodity or merchandise) shall also suffer the collateral damage. However, the emerging market with strong domestic economies, stable fiscal conditions and stronger financial markets might find themselves in a position to take advantage of flight of...

  The benchmark indices in India are now trading at their highest ever levels. In fact, in the past one year, India (+9.6%) has been one of the best performing equity markets in the world, in line with the emerging market peers like Brazil (+8%), Russia (+9%), and Indonesia (+7.5%) etc. Only a few emerging markets like Venezuela (+107%), Argentina (108%), and Egypt (+15%) have done much better. For many Indian investors these statistics could be meaningless. To some it may actually be annoying as the performance of their individual portfolio may not be reflecting the benchmark performance. Regardless, largely the equity market returns have been reasonable, considering the challenging environment. It is therefore a moment to celebrate. Once the celebrations are over, it would be appropriate to ask ourselves “whether at ~18700, Nifty is adequately taking into account all the factors that may impact the corporate performance, risk appetite, liquidity and financial stability in 202...

In the past one month the benchmark Nifty50 index has gained over 7%. With these gains Nifty returns are now positive YTD2022 as well on a one year basis. In fact, the August 2022 Nifty Future expiry was the highest since October 2021 Future expiry of 17857. Even for Bank Nifty, the August 2022 Future Expiry was highest ever; since October Future expiry of 39508. Indian equities are now outperforming most major global markets on a one year basis. On one year bsis Nifty is now higher by ~6%.In this period, IT (-15%), Pharma (-8%) and Small Cap (-4%) are notable underperformers; while Energy (+39%), Media (+33%), Auto (+33%), PSU Banks (+30%), Realty (+21%) and Midcap (+14%) are notable outperformers. The ~7% gain in the past one month has been led by Metals (+13.5%), Private Banks (+9.9%) and Energy (+9.8%). Pharma (+2.3%) and FMCG (3.3%) have been notable underperformers. This strong market performance has occurred in spite of  – (i) below par 1QFY23 corporate performance; (i...