AKG Weekly Charts - Issue #83
This newsletter is a weekly selection of 10 charts hand-picked across the internet which pertains to our investment strategy and bring an updated insight and perspective.
We have published a review of the financial markets in 2022 and an investment outlook and strategy for 2023. You can read it here and watch the session with ET markets here
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[1] More than rate hikes, liquidity tightening across four main major central banks will be a key driver of equity valuations in the coming months. While the Fed pivot clearly hasn’t happened yet, the market is a forward-looking mechanism and will be a key event in H12023.
[2] Most of the investment industry accepted in their own wisdom that it would be easier to convince investors to weather the storm instead of developing a different approach that actually minimizes the impact of them. No one wants to miss the best performing days of the stock market. Interestingly enough, the historical data (atleast in US) demonstrates that avoiding the worst days has a profoundly positive impact on returns. [h/t Blue square wealth]
[3] European gas now <€70/MWh while German 1y future drops <€200/MWh as energy crisis abates and mild temperatures persist across the region. German regulator is ‘very optimistic’ as shortage is unlikely. Last week, fertilizer and other agri-products stock prices were up 5-20% across Europe.
[4] Yields matter for equities: the value of the global equity market is heavily influenced by the path for real and nominal yields. As the popular saying goes, Bond market dictates what the central bank does.
[5] 2023 will be 1st of 21st century without general or presidential election in any G7 country. A (temporary) pause is likely in election campaigns & leadership transitions, so leaders will be able to spend more of their time addressing current economic challenges.
[6] Indian Banking system liquidity has declined significantly in FY23. Festive season and the expectation of sequential improvement in economic growth have increase transactional demand for cash. Government spending, which boosts liquidity in the market, has been slower than expected despite robust tax collections.
[7] 40 Indian corporates raised ~59000 crore through main board IPOs in CY2022, half of the ~118000 crore (all-time high) mobilised by 63 IPOs in 2021. The returns have been mostly muted post listing as well. Interestingly, the scenario is quite the opposite in SME IPOs where big gains post listing have been observed.
[8] India’s non-life insurance penetration (premium as % of GDP) is lower than the global average. India continues to be an underpenetrated insurance market with non-life insurance penetration of 1.0% in 2021, as compared to the global average of 4.1%
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[9] As per brokerage estimates, topline farm income likely grew by 13-15% in FY22 and FY23 and steady growth of ~8.5-9% may sustain in FY24. Our farm income index accounts for ~60% of total agriculture & allied sector output!
[10] Corporates have gradually passed on the rise in input costs or are in the process of completing the input price pass-on to consumers. This trend is likely to support corporate earnings in FY24. This will ease earnings pressure and make Indian equities more attractive [h/t DSP Netra]
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Hope you enjoyed reading this edition!
Till the next time, have a great week ahead!
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Disclaimer:
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.