We look at returns of various asset classes such as equity, debt, gold, crude oil and the Indian rupee in our latest monthly market summary.
Equities continue to outperform across the globe. All major indices continued to their positive performance in the month of April. This is on the back of double digit performance over the last year across nearly all markets, as can be seen in the chart above. Both the Sensex as well S&P 500 continue to outperform their peers on a long term basis. While these returns are great, it is difficult to tell how much longer this rally will continue, given the expensive valuations of Indian stocks as well as for the US stock market.
The 10 year G-sec yield has been steadily been moving up in the past few months. From a low of roughly 6.2 per cent post demonetisation in November, the yield has now moved up almost to 7 per cent. With the RBI turning more hawkish in the last policy meet, the interest rates may be at an inflection point. It would be prudent to now keep an eye on inflation trends and the strongly appreciating Rupee to try to gauge the macro trend.
Gold continues to trade in the 1200-1400 dollars per ounce range. A strong move of gold outside of this range would give a better indication of its long term trend.
Oil has traded roughly in the 50-55 dollars per barrel range since the beginning of the year. While the commodity has fallen below 50 toward the end of April, it would need to fall much further for there to be a significant change in trend. Because of our large dependance on oil imports, it is hugely beneficial if oil continues to remain in this range or even corrects to lower levels.
The Rupee continues to show strength against the US Dollar, with it falling below 65 in the last month. However the Rupee has also weakened against the British pound and the Euro, possibly on Brexit related concerns in the market.
Rishad is the founder of Kairos Capital. He started his career with Standard Chartered Wealth Management and has extensive experience in markets, particularly in terms of mutual funds and stocks.