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 continue to do well across the globe. The Sensex rallied over 3 per cent last month and has outperformed its emerging market peers on a longer-term basis by a significant margin. Though its developed market peers did better over the last month, the S&P500 continues to outperform on a long term basis.
After rallying sharply in February, the 10 year G-sec yield has corrected in the last month. In the new financial year, we will like see government start spending more and the remonetisation process taper off. This could lead to a further drop in yields.
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 fell below 50 in the beginning of this month, it seems to be moving up again and is back in the 50-55 range. 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 all major currencies. This is a reflection of the confidence in the Indian economy and a positive economic outlook going forward given that the BJP won a decisive mandate in the UP elections and the fact that the GST Bill is likely to roll out early by July 1st.
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.