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.
We have changed the indices that we show for global equity returns. Earlier we showed the returns of the Sensex, S&P500, MSCI Emerging Markets, the Nikkei, the FTSE and EURO STOXX 50 to try to show global equity returns. We believe it is simpler and more representative to show returns for the Sensex for the Indian markets, MSCI EM for emerging markets and the combination of S&P500 and MSCI EAFE to represent developed market returns.
As we can see from the chart above, equities have done well across the globe in the last year. While the Sensex has done well, it is not as good as its emerging market peers. This is likely due to the fact that the rest of the economies are commodity based and we have seen commodities rally sharply. That being said, both the US and Indian markets have given high returns consistently for a period of 3 years underlying the strength of their respective economies.
The Indian G-sec had started to move up since our last Market Summary post in November. It has remained in a range in January. We will probably see more movement post RBI policy on the 8th of February. As mentioned in our year end post, we are now likely towards the end of the rate cut cycle and direction of rates going forward will likely be determined by macros.
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.
After collapsing to levels near 25 dollars per barrel, oil prices roughly doubled in 2016 and are now above 50 dollars a barrel. It traded roughly in the 50-55 dollars per barrel range in the last month. It is important to take note of this because oil forms such a large part of our import bill. If oil prices continue to rise, it could affect our trade and fiscal balance and cause inflation to pick up.
We can clearly see global trends reflecting in the movement of the Indian Rupee in January. The Dollar has weakened against most currencies on the “Trump-effect”. While the rupee has appreciated against the Dollar, it has depreciated against other major currencies.
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.