Big spread between India vs US 10 year rate curve. US is
0.25% vs India at 6.117%
Longer term rates have yet to come down meaningfully. Shorter duration rates have come down materially. Orange line is for Aug 2020 vs the blue line of Jan 2020.
Returns across different credit curves, from Govt Securities to AA and below ratings, across different time horizons.
The growth projections across different economies. COVID has impacted across the board.
Govt spending Year on Year has increased across the board except for China. This is as high as 129% for US. This is not supported by increasing Govt revenues which have declined materially.
Tech stocks have been the driver of the market rally, with Tech now comprising over 30% weight in Markets. The chart shows how different sectors behaved for last many years.
We have already seen in the news pages that India's #GDP growth has contracted by -23.9%. The contraction is across all sectors in India as can be seen in the table to the right.
The market consensus expects that there could be a sharp recovery from here over next 3 quarters. As per the source in the chart, the growth rate for Q1 2021 next year is expected to be materially higher from here on.
The manufacturing economic PMI data shows sign of recovery. Up at 52 in Aug vs 46 in July 2020.
Agriculture has been relatively not impacted. Good rainfall has aided the growth here. This is also reflected in healthy Tractor sales data.
Monsoon in 2020 (Dark blue) vs 2019. Clearly good rains across the board in India. This is also reflected in very encouraging Kharif sowing.
Compared to the initial months of lockdown, Economic Indictators for July & August 2020 are looking better. This would point to gradual recovery with each passing month owing to lifting of lockdown in a stage by stage manner.
#GST is a good proxy of an economic progress. GST collections in August are now ~86% of pre-Covid levels.
A more detailed look represented by Nomura India Business Index > the recovery is at a slow pace in August 2020.
The valuation gap between S&P500 vs rest of the world is quite apparent now. Only time will tell if the funds would flow to Emerging Economies to take opportunity of the valuations.
India is getting good FII inflows relative to other emerging economies.
A snapshot of all the variables in one table is v helpful. Capacity utilisations are all time low, Credit growth is not picking up, NIFTY returns are not healthy and GDP is degrowing in August - most of this is on expected lines and hopefully things will improve from here.
On Bond rates, a very sharp reduction in interest rates across all geographies, with negative rates in Euro zone. I don't recollect if this was ever there ! Clearly these are all the measures which the Govts are trying to get their economies back on track.
The stock market returns across Large, Mid & Small Caps is below. In last 1 month, the max returns came from Mid & Small Caps. Large Cap returns across all time durations are now +. Small & Mid have yet to show more returns to make returns + for 3 yr durations.
This is more clearly evident in the chart below where recent market move is more driven in Mid & Small Caps post June 2020.
The driver of the returns are primarily driven from Pharma sector which has been in limelight in 2020, followed by IT. FMCG has been relatively flat. Worse hit hv been Banking, Financials & Reality. A sector to watch out is Auto - which forms a major part of manufacturing
Valuations are now no longer as low as they were in Mar & April.
Indian equities are now above long term averages.
At Price to Book valuation, it is also evident that the recent market run up has resulted in markets being now 'reasonable' valued.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
If you are a NRI who hasnt filed returns in India for years & who hasn't linked PAN with Adhaar, then please by 31 March 2022 do atleast one of the two tasks :
Please RT for further share this thread
1. If you have an Adhaar, you must link it to your PAN. You can check the PAN Adhaar link status via the easy link below. It works via a desktop pan.utiitsl.com/panaadhaarlink…
2. You may have an inhibition on not linking your PAN with Adhaar. There isnt much happening via the linking. All of your key info is already with the Govt. Your biometrics are with them already via Adhaar. What else could you hide. Hence I recommend strongly to link
Having data scientist is a common thing for all data centric businesses. You will be killed if you dont have it. I won't just run behind HDFC Life because for this fact. On the contrary, their tech sucks ! Ask their sales teams. They don't even hv a decent proposal capture app.
To know about tech, learn from any of the ICICI group companies. Miles ahead. Compared to ICICI Pru, HDFC Life is in stone age. Marcellus may say channel checks, but I am a part of the channel and their customer too. If Tech is the reason, then they got it wrong.
When it comes to investing in Life insurance companies, I don't always see the point. Their major part of the product is sulking investment portfolios of traditional and ULIPs. No sane investor would invest in them. Their agents won't love to sell Term Covers, which is the core
A dividend policy of a Company is a vital piece of info which should be considered for an investment decision. Generally a Co in high growth path would like to retain max earnings into the business to fund it's expansion plans. This sounds reasonable provided growth can be seen
If a Co doesn't have much of an expansion requirement or churns free cashflow in excess of its expansion, it should distribute the surplus to the shareholders. This is again okay, provided, one is not investing in a Co which has sub par growth and no future capex
A Co may retain its earning to bail it out of debts or excessive working capital needs. A not so happy situation to be in. This could at times be confused with high growth requirements & needs to be studied by lifting the lid of the can. Nothing much can be done here and
Tale of two PMS managers. First is one of the largest in India and avoids punter giri. Good stocks and strong track records. It didn't buy Reliance earlier citing Aggressive Accounting. Bought it in May post International stake sales. Perhaps, will help to align to benchmarks.
Another one is a recent entrant and its founder enjoys immense respect. Sticks to quality. By its Investment process, I believe that it won't buy Reliance till the business is a compounder and it gets free cashflow. Cites it's recent underperformance to not holding Reliance.
Hard to say if the recent entrant will succumb to the pressure of buying Reliance (like the first PMS). Fund manager job is hard. If they stick to their process, the investors would strangle them for recent underperformance. If they go to beat the benchmark, inv will challenge..
wonderful conversation with a person who had surprisingly not seen any financial news related to markets since Jan 2020. He was too busy with his work. He looked into his portfolio and couldnt believe the yo-yo it went through.
Q. If he knew, what would have been his action ?
A few more conversations which are worth pondering on. No reactions needed. 2. An individual despite of many requests and reasonings, redeemed all his funds and stopped sips in March end. You can guess what he would be going through now ?
3. An individual heard the rationale and on 23 March (sheer luck and no skill involved), topped his Investments by a whopping 20+L in a day. You can guess what he would feeling today !