Bulls on the Charge!
While it appeared that the current highs were only meant for high-risk takers, the flurry of good news hitting the markets is an invitation for others to join in too. There are visible signs of a V-shaped recovery in the global economy. Interest rates are near all-time lows and the expansionary monetary policy and synchronous action across central banks is building a case for a sustainable recovery across the globe. The comfort and confidence provided by the emergence of vaccines claiming 94.5 per cent and 90 per cent effectiveness by Moderna and Pfizer is adding fuel to the global rally. As the tides have turned and hopes strengthened, it would be a good time to stay long on equity.
If you have not done that yet, you can still consider so while being cautious on leverage. In this market you need to manage risk well and predefine a portfolio strategy. The bulls are on a rampage and tons of money will be made. In fact, we may be in a multi-year bull market already. The government’s concern and actions in recent months have been extremely supportive of economic growth. This attitude was missing a year back and the change in attitude augurs well for equity investors. The privatisation of certain PSUs will also help the market mood in a positive way.
The earnings season this time around was particularly good, in the sense that most large companies provided an optimistic view on economic recovery. The quality of earnings will propel stock prices to inch higher. Our cover story analyses in depth this season’s earnings while importantly highlighting the sectoral performance in the latest quarter. Also, this issue is a ‘Banking Special’ edition that talks about the performance of banks, both private and public. We have analysed in detail the banking sector and have shared our outlook on banking stocks. We have also ranked banks based on a methodology and hope you find this interesting. Do share your feedback on the same.
The rising virus cases across Europe and the US could be a party-spoiler but it appears people have absorbed the worst sentiments while the markets have discounted the economic damage a rising surge can do and hence, the impact of the cases would become irrelevant in the near future.
With prices now touching highs, the challenge for equity investors will be to identify those set of stocks that still have the upside potential in them. Also, at this stage, many may get carried away and make the mistake of being short-term-focused and ignoring the long-term portfolio goals. The trick is to remain focused on long-term portfolio goals while being tactical whenever possible. We at DSIJ are deft at helping you do so. Stay tuned and remain invested: that’s the best thing one can do for oneself in this investment-friendly environment.
RAJESH V PADODE
Managing Director & Editor