Its Rainbow Time, Finally!

The equity fever amongst investors in India is near its all-time high and trust me it’s contagious – the equity culture. Go to any town or any city and it is difficult to miss equity discussion with the BSE Sensex managing to close at all-time high levels on a closing basis. The previous all-time high closing for BSE Sensex was 61,758.63. This to my mind is the biggest moment of 2022 for equity investors because we all have endured huge bouts of volatility over the past so many months. It is indeed a moment to cherish. BSE Sensex is up by more than 6 per cent this year as compared to the loss of more than 20 percent in the MSCI Emerging Markets index. 

India’s outperformance relative to emerging market peers has come because of its economic and corporate earnings’ growth being more stable than those of the other emerging markets. Also, the confidence of domestic investors has helped cushion the Indian market earlier amidst a record foreign exodus sparked by the US Federal Reserve’s aggressive rate hikes. Domestic mutual funds remained net investors in Indian equities for the 20th straight month in October 2022. What has also helped the Indian equity market is the relentless plunge in China’s equity market because of various factors that spooked global funds. 

While they sold Chinese equities in October, Indian shares witnessed an inflow. Overall, foreigners have bought a net USD 2.5 billion of India stocks so far this quarter after selling up to USD 6 billion in the previous three months. Meanwhile, if you belong to that camp of investors who track superstar portfolios and try to mimic them, we have something interesting for you in the cover story of this issue. We have not only discussed the merits and demerits of following superstars’ portfolios but have also analysed the performances of some of the top-notch investors in India

I must also mention the important contribution of banks in pushing Nifty to all-time highs. Bank Nifty managed to close at an all-time high level as well, thus making investors richer in 2022. Naturally, in one of our sectoral reports this issue we have chosen to cover the banking sector in India. In another special story, we have discussed in detail the opportunities and challenges faced by the broking industry in India. Further, the global leaders at the G20 summit in Bali have once again strongly and emphatically urged Russia to end the aggression in Ukraine. An official end of the conflict will be a great bonus for global investors.

An interesting point to note is that the BSE Small-Cap index is down by nearly 7 per cent from its all-time highs. This means that investors choosing to remain invested in the broader markets may have underperformed in 2022 so far. Not to worry because the liquidity situation is comfortable and the positive momentum in markets may propel small-caps and Mid-Caps to higher planes sooner than later. With most negatives factored in, the only visible risk for the market remains poor earnings’ performance. So, keep a watch on that as you work towards building your investment corpus.