AKG Weekly Charts - Issue #50
Welcome to the 50th edition of #AKGweeklycharts. Many thanks to those who have stayed in this journey we take every Monday!
Glad to inform that I am now a SEBI registered Research Analyst. Join us on twitter here as we kickstart our new journey!
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This newsletter is a weekly selection of 10 charts hand-picked across internet which pertains to our investment strategy.
The charts focus on various forces and factors that influence our Investment outlook and brings an updated insight and perspective.
[1] MPC of the RBI, in an unscheduled meeting last week, decided to hike the policy repo rate by an unconventional 40bps to 4.4%. The 10yr yield is now at Pre-pandemic level. Timing was a surprise, but not the action as CPI was running above RBI tolerance band for many months.
[2] US equities have been down only 7-8% but the broader market chaos specially tech decline has put the equity sentiment indicator right along side previous crisis in financial markets including GFC (2009), Greece crisis (2011), Covid crisis (2020) etc.
[3] Investors have NOT preferred the conventional safe havens like gold, Silver, CHF, UST etc. in the past one year and the EM currencies have not sold out the way these used be in past instances of extreme risk aversion. This time it's different in so many ways for the financial markets.
[4] Some gut wrenching declines in many tech stocks in US. Larger question is are they still investible? Most of them will not have positive cash flows for many years ahead and the mean reversion to elevated valuations looks unlikely.
[5] Higher cost of carry, tighter margins and slower growth should kill the inflationary expectations in no time; particularly when most of the commodity demand could actually be speculative or in anticipation of future demand assuming the present tightness in supply to continue. So far Commodity index has mimicked the rise in Dollar index.
[6] Trend of GNPA, CAR & loan growth over last 20yrs in banks indicate dilution free growth over the next 2-3yrs. Source : RBI, MOSL
Disc : We remain invested in financials and have an Overweight stance in stocks recommended by us in this sector.
[7] Should be no surprise then to see that corporate sentiment has plunged and EPS at risk. Tighter financial conditions hits stocks directly in terms of liquidity, but also indirectly in terms of the economic/earnings pulse.
h/t @Callum_Thomas
[8] The centre of the Covid outbreak appears to be moving to Beijing where the Chaoyang district ordered another round of mass testing along with a stop to construction work and office closures. De facto lockdown in Beijing, look at the subway usage for the last 7 days.
Conclusion : It will be extremely difficult to get the supply chains back up again and running!
[9] As per BoFA global research, Public market valuation still > last round private market valuation for all companies (ex-paytm). The data includes all deals as reported by Bloomberg till 29th April, 2022
[10] Retail investor holdings in the NSE listed universe is now at 58-qtr high of 9.7% as of Dec-2021. Retail, along with domestic instiutions have been supporting markets in aggressive FII outflows over last 7m. Pain for retail is a norm now, not counter indicator like it used to be few years ago.
Hope you enjoy reading this edition!
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This newsletter is for information purposes only. In this material, Amit Kumar Gupta (SEBI registered Research Analyst, INH100009327) has used information that is publicly available and is believed to be from reliable sources. While utmost care has been exercised, the author does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers, before acting on any information herein should make their own investigation & seek appropriate professional advice. Any sector(s)/ stock(s)/ issuer(s) mentioned do not constitute any recommendation and the RA may or may not have any future position in these. All opinions/ figures/ charts/ graphs are as on date of publishing (or as at mentioned date) and are subject to change without notice. Any logos used may be trademarks™ or registered® trademarks of their respective holders, our usage does not imply any affiliation with or endorsement by them. Past performance may or may not be sustained in the future and should not be used as a basis for comparison to infer any investment ideas.