Please find below the 5 charts that tell interesting stories on Markets and Investing.

 

1) Stocks are looking for rally after the end of Fed hiking cycle:

 

Historically, stocks have generally rallied following the end of Fed tightening cycles.

 

The average 1 year return after the last fed hike is ~15% in USD.

 

We think that US Fed is done with the rate hiking in current cycle and we will start seeing rate cuts this year.

 

Bullish on equity in the coming years.

 

 

2) FIIs are expected to come back to India soon:

 

India’s premium over emerging markets has gone now.

 

India was trading at a 90% premium to its emerging market peers six months ago.

 

A 10% correction in Indian stocks and a sharp rally in EM peers have reduced this premium.

 

 

3) Indian Equity Markets are expensive on a standalone basis:

 

PE Ratio, Shiller PE Ratio or Earnings yield to Bond yield spread all are showing overvaluation of Indian Equities.

 

According to us, Indian equity is overvalued by approx 10%.

 

Markets are not cheap but are at a good level to stay invested.

 

We expect Indian equity to go up and PE multiple expansion to happen this year due to expected decline in interest rates, FIIs coming back, debt fund taxation and decent earnings growth.

 

 

4) Stock Market is a game where win probability is very high:

 

It is a game where your win probability goes up as you play it for long.

 

On a monthly basis, the historical win rate is around 63%.

 

The win rate goes to 76% in 1 year, 88% in 5 years and 100% in 15 years.

 

Have confidence in equity for wealth creation if your time horizon is long.

 

 

5) Indian Govt is doing fantastic work on construction of National Highways:

 

1) Highways have doubled in the last 9 years.

 

2) Previously, doubling happened in 16 years and 23 years respectively.

 

This will give huge momentum to internal trade of India, opportunities & wealth creation.

 

 

Read more similar articles in our blog – https://alphacapital.in/blog/

 

Best Regards

 

Dr. Mukesh Jindal CFA, CFP, CAIA, Ph.D.

 

Alpha Research