Fund Manager Speaks

Market Overview – June 2021

Global Stock Markets

Global equity markets continued to generate positive returns for the quarter as vaccination pace accelerated in most developed economies. Additionally, governments of most developed countries continued to ease COVID related mobility restrictions and activity levels picked up. This has resulted in global trade volumes showing a V-shaped bounce back and stimulus measures resulting in improved purchasing power for consumers with consumer spending already exceeding pre-COVID levels in USA.

The key risk to global growth recovery could emanate from potential re-acceleration in COVID cases leading to disruptions in coming quarters. Also, US Federal Reserve indicated that interest rate hikes could be sooner than expected due to rising inflation.

Indian Economy

RBI in its latest reports stated that “The tapering of 2nd COVID wave along with aggressive vaccination push have brightened the near-term growth prospects for the Indian economy and GDP growth for Q1’22 was estimated at 22.7%”.

Indian Stock Markets

India stock markets marched to new lifetime highs with the benchmark (NIFTY 50) crossing 16,000 mark in 1st week of August. The rally was driven by strong positive inflows, good earnings season and positive developments on the vaccine front alongwith steady decline in cases which boosted confidence in economic recovery.

Vishal ShahMarket Overview – June 2021
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Market Overview – December 2020

Indian Economy

RBI in its December policy meeting upgraded India’s GDP forecast and expects economy to shrink 7.5% this fiscal vs earlier forecast of 9.5% contraction as the economy is recuperating faster than anticipated. Further, even the IMF upgraded its forecast for GDP growth in FY22 (8.8% growth earlier to 11.5% growth) making it the only key nation to record a double-digit growth and reclaim the status of world’s fastest growing major economy.

Additionally, RBI expects growth to be in positive trajectory for Oct-Dec 2020 period and predicts a V-shaped recovery in FY21 driven by rollout of vaccine. Also, since mid-September, India has done well to flatten the curve of Covid-19 cases. The number of active cases had fallen to 1.5 lakh from a peak of 10 lakh cases in September.

Vishal ShahMarket Overview – December 2020
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Market Overview – September 2020

Sharp contraction in GDP; Upgrade soon?

FY21 is half done and the macro data available till now shows the hits to the economy because of the coronavirus pandemic. However, there are signs of revival. After the country’s economy contracted by a record 23.9% in April-June quarter, contraction for Q2’21 is expected to be around 8.6% as projected by RBI.

However, recent data suggests brightening prospects for October and if this upturn sustains, the Indian economy may return to growth in October-December quarter, thereby making a case for GDP upgrades soon.

Global Stock Markets

Despite the pandemic, the global stock markets (especially the US market) continue to be on steroids driven mainly by excess liquidity, positive sentiment post Joe Biden’s victory and also recent announcement by Pfizer and Moderna on positive vaccine update.

Vishal ShahMarket Overview – September 2020
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Market Overview – June 2020

Sharp contraction in GDP

June quarter GDP contraction was quite serious across the globe on account of ‘Stay at Home’ strategy adopted by most governments. India was amongst the worst hit with 23.9% contraction in GDP. Unfortunately, the population density and the sheer size of population resulted in India having the 2nd highest cases in the world after USA.

However, with economies gradually opening up, recent data suggest stability is coming back in various sectors of the economy with many of the auto majors showing Y-o-Y growth in August, construction activity now coming back to almost pre-COVID level, credit card spends witnessing Y-o-Y growth as per August month data, rural dependent sectors showing higher growth month-on-month on the back of better monsoon and higher farm incomes.

Global Stock Markets

Despite the pandemic, the global stock markets (especially the US market) continue to be on steroids driven mainly by excess liquidity as well as lack of investment opportunities.

Vishal ShahMarket Overview – June 2020
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Market Overview – March 2020 Quarter

The year 2020 has been more than what we bargained for. From a pandemic called COVID-19 hitting almost the entire world, to the hardships caused by the lockdown to several businesses, to border tensions, and fears of a slump in corporate profitability, to cancellation and/or postponement of major sporting and social events, this has been quite a year so far.

The stock market in India has seen quite a roller-coaster ride. The S&P BSE Sensitive Index had fallen from a high of 42,273.9 in January 2020 to 25,638.9 in March 2020 (a fall of over 39%). This has been one of the sharpest falls in India’s stock market ever. However, the Index has staged a decent recovery, and at the end of June 2020, has risen to 34,915.8, which is a rise of 36% from the bottom of the year.

Vishal ShahMarket Overview – March 2020 Quarter
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