The markets are rising due to liquidity. Historically, foreign investors have not bought PSUs, but PSU shares are increasing. What's going on?
There is also a lot of interest from domestic workers. Local non-institutional funds go to PSUs as special cases and this may be the main reason. UPMs have not performed well for more than 10 years, and it is expected that there will be special cases of UPMs, either due to divestment as in the case of BPCL or other measures.
Second, there have been reissues in certain sectors such as banking. To a large extent, the sentences have been implemented, so the cleanup of the last five or six years is finally paying off. There have been mergers and a lot of action is being taken on the banking side and we are seeing a small reboot of PSU banks. They still control the large share of the banking market in terms of loans and deposits. As the economy recovers, banks are the first way to play that and we are seeing it. In March 2009 we saw that the sectors that really took off with the market downturn were banking and financial services. Durable consumer goods, industrial and energy. Also this time, these sectors have led the rotation that began in November. The markets may have seen the economy at its worst. Flows are being manipulated, fundamentals playability is improving, and momentum continues.
It's a bar of iron in terms of thrust that players get right. Globally, we saw the IPOs for Airbnb and DoorDash last week. The BURGER KING® menu in India shows that momentum continues, but overall there is also a turnover. Cyclical businesses like minerals and real estate started to do well. Industries have performed well and the capital goods index returned to its highest levels in January. The market is clearly in a position to recover next year.
Which side of the plate are you on?
Both of them. He loves playing both of them so the momentum continues as there is still a lot of power left. If you look at the Nasdaq market value relative to the type of sales, the listed companies are 4.3 times. Initial public offerings in the US this year have been 29 times, and Airbnb and DoorDash are notable highlights. In the heyday of dot-coms, sales were 50 times the list that was happening. So overall, in many benchmarks there is a recovery game for the coming year and momentum stocks will continue to benefit.
Of course, there are problems with FAANG's shares. Facebook's antitrust case has started and Google's case is already running. But on the other hand, Disney provides guidelines that they will have 300 million subscribers to their live streaming service in the next three years. I think that is the kind of growth that is taking place in the moment and therefore you cannot walk away from them.
But now there are very strong arguments about the return of the leagues and they should be played. Therefore, real estate, cement, industries, and capital assets must also be considered. Some of the money comes out of momentum and enters these cyclical cycles.
There are rumors surrounding Cipla about the solution of anticancer drugs. It was a hot streak for some of these major pharmaceutical companies, but this clearly started a new round of buying.
The news on drugs was very good. Overall, it was a top performance segment. She is struggling now in terms of evaluation. But there is enough momentum here.
Consumer goods stocks have returned in recent days. What pattern is the market likely to follow in the future? Which path should one take? Global companies, information technology, pharmaceuticals and national recovery sectors like banks, defeating low-value names like ITC or primary support units or sticking to classic defense tools like consumers?
The consumer movement is the march to catch up. It hasn't been a Levers or ITC performance this year, and it's finally started catching up over the last four or five weeks. Bata did an amazing job reopening the business. But in terms of the screening arrangement, I would suggest first that private sector banking banks start with stories of corporate transformation that will be the first point of contact, then PSU banks. The third will be industries. I think there is a lot of momentum in this direction. The room will be concrete. Fifth, chemicals remain. Some growth is coming, especially with PLI and all these things to come. The replacement trade will play there.
IT, Medicines are long-term investments that you hold in your portfolio. They may not do very well next year, but generally they have enough drivers. The global FAANG rally may continue for a few more quarters. Well, keep up the momentum of pharmaceutical IT, but less so. So that's going to be the important thing: banks, finance, industrial companies. Within that look at the primary support units. A great metal height was achieved. Of course, steel prices continue to rise. Iron ore prices continue to rise. Copper remains high and, as suppliers in the industrial recovery, will continue to perform well, but valuations have risen.
The other thing to think about is cars and car accessories. The car numbers in China are truly amazing. 23.5 million is the expected figure for this year. China will really lead the automotive markets globally, and all the players who benefit from this need to be closely scrutinized. In the end, the cars will catch up, but for now, valuations have risen much more in October and November and we are seeing a slight correction. But by the middle of next year, the cars should be performing well. Therefore, auto can be considered as a complement.
Should double profitability be expected in 2021?
Hopefully it touches the wood. Sure, we should look. It was an underperforming market. We had a catch-up rally. This momentum should help early next year and many forecasts on the budget focus on infrastructure spending should be beneficial to the economy. It is to be hoped that there will be further liberalization on the fiscal side. All of these factors, and the continuation of the $ 300 billion monthly intervention by central banks, maintain liquidity. The dollar is expected to weaken. The carry trades are very strong. The carry trade is done in dollars. The Australian dollar reached its highest level in two to three years.
With the kind of flows China is experiencing, the yuan is expected to hit six yuan next year. India will benefit from these huge trends of dollar weakness, increased fiscal stimulus in the US, search for yield and carry trade, as well as the stability that India provides on the global stage. China and Korea will get a decent share of foreign inflows next year and this should keep markets high.
Are any of these new listings from last year (Rossari Biotech, Route Mobile, Happiest Minds, and Burger King) worth the investment?
The big question is how long the momentum lasts, and we may have a year or two to catch up. There is still plenty of cash that will continue to push the meters. Looking at the QSR segment, we saw that growth has been achieved. Overall, these QSR players have a chain share of 9% of 47%. So in terms of the total addressable market, capturing market share is where the growth is. But it's the growth that really drives the market.
On a very basic basis, you stick with tried and tested multinational and consumer goods companies, pharmacies, and IT companies that have very strong returns, core earnings, and a secure portfolio. But in terms of momentum portfolio, QSR will see some momentum next year as well. On the exponential growth and the transition from disorganized to regulated that will happen over time and then hit recovery as it arises. As hotels, cinemas and restaurants start to open and offices start to fill up again, much of that volume will also start to come back.
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