There would have been very few takers if one were to be told that the market won’t rise even 10 percent in two years from the day NDA was elected to power. But as heartbreaking as it could be, promise of acche din fizzled out soon atleast for the market from May 16, 2014 to May 16, 2016.
In the one year-period, from May 16 2014 the Sensex gained 15 percent while the Nifty climbed 16 percent. However, the indices fell off the cliff soon as Modi’s magic began to dwindle after a year BJP formed government with Narendra Modi as the Prime Minister. From May 18, 2015 (May 16 was a Friday) to May 16, 2016 the market gave negative returns to investors. In that one-year period, Sensex lost 7 percent while Nifty fell 6 percent.
But, had one got little more patience and held on to stocks returns were healthy in the year after (of course not so good as in year-ago). From May 16, 2014 to May 16, 2016 the Sensex jumped 6 percent while the Nifty gained 9 percent at closing.
However, things are not so bad as it seems to be compared to global peers especially in the emerging market basket. In the emerging market space, while MSCI EM was down 22 percent, India was the third best performing market, after China and Japan in the period.
“We were only hoping so much would happen but I have sort of realised that things are not in isolation. You have got to look at two factors. If you look at something like the FTSE World Index that is a very good benchmark of global markets as a whole, it has developed markets, developing markets, everything, which is down about 4.4 percent. So, the big picture is that global markets have had a negative two year kind of thing,” Atul Suri, Trader, Rare Enterprises says in an interview.
Also brokerage house HSBC India has upgraded its rating on the Indian market to ‘neutral’ from ‘underweight’, saying valuation premium to Asia has declined and is now approaching a 10-year average premium. “The hype is almost gone,” says the HSBC note, adding, “High-frequency indicators suggests the earnings environment might improve, although earnings expectations remain too optimistic.”
So, where is the moolah?
In midcaps ofcourse. Though midcap index gave only 5 percent returns between May 18,2015 to May 16, 2016 the index jumped 37 percent between 2014-2015. Not only that, the midcap index surged by a whopping 44 percent in the period May 16, 2014 to May 16, 2016.
According to a RBI survey, there was a moderate increase in optimism for production, order books, financial situation and salary for Q4 2015-16 as compared with Q3 2015-16. However sentiments on other indicators including exports, imports, employments, profit margin and overall business situation deteriorated.
The outlook on business sentiments shows moderate optimism for Q1, 2016-17. The Business Expectation Index (BEI) dipped from 114.2 (for Q4 2015-16) to 110.9 (for Q1:2016-17) as per RBI data.
(Data inputs by Ritesh Presswala)
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