The Quarter That Was
The July-September Quarter of FY2020-21 has seen significant pickup in economic activity globally and in India. Continuing into October and November there has been an improvement in India’s economic activity indicators partly driven by the festive season.
Broad economic indicators such as Manufacturing PMI, Electricity demand, goods movement by Railways, Gross GST collections, have all improved. Other indicators like retail e-transactions show that consumption across the country is increasing. Passenger vehicle sales and tractor sales showed significant growth. Covid-19 unlocking has happened and while 2nd and 3rd waves may come, the ‘expectations’ about the worst are discounted.
Markets turned bullish in October and November touching an all-time high. Nifty 50 TRI index rose from 15268.2 to 16227.1, an increase of 12.38% (time period from end August 2020 to 21-Nov-2020). Total Returns Index captures dividends as well. Large midcap TRI of top 250 companies rose from 7324.2 to 8223.6 i.e. 12.3% growth. The Jama Wealth Equity model portfolio grew by 12.85% in the same period. Our cumulative performance since inception (22-Aug-2019 to 21 Nov 2020) has been 52.56% vs Nifty TRI at 21.21% and Nifty Large-Midcap TRI at 23.97%
Outlook: With the growth, core inflation is inching up; food inflation has been higher given the incessant rains that battered many parts of the country. Interest rates are stable and likely to remain so. This augurs well for the NBFC and housing sector, paints etc and consumption in general. Post moratorium truth on BFSI NPAs will be clearer by January. With this and the markets at all time highs, we are retaining cash allocation at 20%. As the adage goes, investing is more about patience and controlling our emotions.