Markets in the Last Three Months
Volatility has hampered the Indian Equity markets in the last three months. Refer the Table below for the performance of indices:-
|Indices||Oct 1, 2015 to
Jan 21, 2016
|Jan 1, 2016 to
Jan 21, 2016
|CNX NIFTY MidCap Index||(-)7.94%||(-)11.00%|
|CNX NIFTY SmallCap Index||(-)8.75%||(-)15.3%|
Reasons for the Volatility
- Redemptions in FII Funds, ETFs, oil countries, equity investments, etc., worldwide. FIIs have pulled out INR 14,226 crores from the Indian equity market in last three months.
- China uncertainty of hard or soft landing.
- Oil prices have hurt sentiment.
- Momentum strategies of algorithmic traders have led to swings. Traders have built more shorts.
Is there a structural problem in India?
- India’s GDP growth is expected to be 5+%.
- A major portion of India’s GDP growth lies in service oriented sector which is insulated from global GDP cues.
- A large percentage of GDP growth is driven by need (Roti, kapda and makaan).
- There are no payment defaults noted worldwide which decreases the likeliness of another recession like 2008, Euro Sovereign Debt Crisis of 2009-10.
What has worked in the current market scenario?
A strong quarterly result overcomes all the negative sentiments of the market.
Example: INFOSYS, After the Infosys’s 3rd Quarter results (refer below table), the stock has gone up by ~4.1% while the NIFTY has fallen by ~3.9% in the same period. Thus, we can see the outperformance of around 8% by Infosys to Nifty after the results.
|Particulars||Q3- FY 16||Q3- FY 15|
|PAT Growth (YoY)||6.62%|
What is the solution to the pain?
As seen in the above example, a good set of quarterly numbers could be a positive catalyst for the share price performance. Below is the list of our recommended stocks with result dates. Also, we have attached the result expectations of our stocks.
|Company Name||Result Date|
Are there any multi-bagger opportunities in the market today?
If volatility continues for the next two-three months then we will be able to identify multi-baggers opportunities.