New Delhi: Neelkanth Mishra of Credit Suisse says for the Indian markets the technical indicators like the % of BSE500 members trading above 50DMA point to an oversold market and investor sentiment as per Neelkanth is overwhelmingly negative. The key questions for the investors as per Neelkanth is 1) Can this point to an inflection? They overall find that even in the last 5 years with low risk-free rates, markets bottomed only 2-3 weeks after this signal and were weak 12-Months later. Adding about the markets he said with Covid-related monetary and fiscal measures being withdrawn especially in the US, they compare sector returns to the 26% rise in extant 12 Month Forward GDP since 1-Jan-2020.
In term of ‘Higher EPS has to drive BSE100 returns, as 12 Month Forward Price/Earnings is now lower, in terms financials, materials and telecom have seen EPS growth exceed nominal GDP; returns in industrials, energy and IT have been P/E led, among others helped by Reliance/Adani group stocks. He also believes A-PAC earnings are at risk with metals most exposed & India’s growth should hold up as it gained the least from surge in global goods export.
Yesterday (June 20 ,2022) Indian Markets (Nifty) opened positive tracking global cues and held onto the gains throughout the day & the highlight of session was crash in mid and small cap stocks. The current calendar year of 2022 has turned out to be a challenging year for investors as benchmark BSE Sensex and Nifty 50 indices have gone down >15% which comes after a >20% rally in the front-line indices in 2021. BSE Small Cap has been down >13% Month to Date so far in June with a decline of >30% from an all-time high. In June 2022, small cap stocks like Dhani Services Ltd & RBL Bank have fallen greater than 30% each