Global Markets Today - Good, Bad or Ugly? India, US, European - Check out Edelweiss highlights
Indian economy after stagnating in August, bounced back in September. In India, domestic-oriented stocks are now catching up with global-oriented names as the economy is unlocking.
Edelweiss highlights Global PMI, retail / car sales, money supply trends are holding up the market. Indian economy after stagnating in August, bounced back in September. In India, domestic-oriented stocks are now catching up with global-oriented names as the economy is unlocking.
Global recovery - Delay in U.S. stimulus, Europe’s second wave posing risks:
Global PMI, retail/car sales, money supply trends are holding up the global market. But, U.S. personal incomes are slowing (amid delay in stimulus) and the job market is still quite weak. Europe is seeing a second wave of infections and fresh pockets of lockdowns. Thus, the global economy could hit a soft patch in the near-term. That said, Edelweiss remains constructive from medium-term.
Global food prices - Of La Nina, China floods and global stocks:
La Nina weather conditions developing in the Pacific and recent China floods are raising concerns on global food prices. Historically, the effect of La Nina on agri prices depends on its intensity/duration and the level of global food stocks, which are elevated today. Yet, if China crop damage is large, it could push global prices higher in the near term. So far, no fresh spike is seen in China’s food inflation. China’s agri imports growth too is within the historical range.
India - Super September after an average August:
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After stagnating in August, economic activity bounced back in September. Exports led the way with GST collections and PMI manufacturing also moving in the expansion zone, although capex is still lagging. Besides normalisation, pent-up demand may also be at play. That said, India’s fiscal push is among the weakest and it is among the few countries to see growth downgrade in IMF’s latest forecasts.
Global markets - Risk-on sentiments ebbing:
The 7% USD depreciation since mid-May lifted risk sentiments with EMs / cyclicals outperforming DMs / defensives. Rising uncertainties have led to moderation in these trends of late. While the near-term outlook is hazy, Edelweiss expects risk-on sentiments to continue from a medium-term perspective.
Indian markets - Leaders are again outperforming:
The 10% outperformance by laggards relative to leaders since May seems to be stalling. Also, domestic-oriented stocks are now catching up with global-oriented names as the economy is unlocking. Indian banks have underperformed headline indices by much larger margin compared to global peers. However, in view of stronger balance sheets owing to capital raise, easy liquidity and attractive valuations, Edelweiss has recently upgraded Indian Banks to Neutral.
(Authored by Rahul Kamdar)
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