Chennai: Despite the sudden disruption of economic activity and flight of capital towards safe havens at the onset of the crisis, it is remarkable that we are ending the year with a flourish across risk assets, said Motilal Oswal Private Wealth Management.
In a report, it said, this development wouldn’t have been possible without global Central Banks resorting to a synchronised unprecedented liquidity overdrive and slashing interest rates to historic lows, ensuring availability of easy money. With capital markets having discounted macroeconomic recovery well in advance, microeconomic fundamentals are now back to fore.
For domestic equity markets, the Q2FY20 domestic earnings season saw a bumper harvest with the majority of companies beating estimates.
Cost optimisation during the lockdown phase has been one of the main reasons for the growth in profits apart from demand recovery. Managements across sectors are talking about continued recovery in the upcoming quarter due to the festive season and pent up demand.
Earnings growth over the last few years has remained subdued on account of structural reforms such as GST, IBC and RERA. The Corporate Tax cut announced last year has been followed up with recent reforms such as the Essential Commodities Act to boost farm income, and Production linked incentives (PLI) for various sectors to boost domestic manufacturing.
Gold should continue to remain part of portfolio allocation, predominantly as a hedge against heightened volatility.
As we enter a new normal, this is as appropriate a time as ever to revisit your investment charter and asset allocation and ensure that portfolios are well-positioned in line with your financial goals, the company said.