5th month of continued high volatility for equities.
Most indices and sectors delivered negative returns.
Broad Market Indices: Nifty Next 50 (-2.4%) was the best performing index. Underperformers: Midcaps (-6.7%) and Smallcaps (-9.3%).
Best Performing: Metals (+9.5%) and Consumer Durables (+2.8%).
Defensive Sectors: IT (-3.6%), Pharma (-3.1%), FMCG (-3.4%) fell lower compared to higher beta sectors.
IPOs (-11.6%) was again the worst performing segment, down ~26% on 3 Month basis now.
Real Estate Developers (-9.1%), PSUs (-7.1%), Oil and Gas (-7.3%) were amongst the most impacted sectors.
Commodities as a basket outperformed broader indices. Mainly due to significant outperformance in Metals and also, due to continued outperformance of Power sector (-2.1%).
GLOBAL MARKETS
SUMMARY:
Equity:
Overall it has been a difficult month for global equities. During the first half of the month, there were concerns around the increased pace of expected rate hikes and the second half was all about risk off sentiment due to Russia’s invasion of Ukraine. Broadly, commodity exporting countries outperformed and importers underperformed.
Reports suggest that growth stocks continued to underperform value stocks like January 2022, however the extent of underperformance reduced this month. Globally (Ex Europe), technology and communication services sectors were the most impacted.
US: Has been a below average performing this month. Nasdaq (-4.5%) worst impacted, smallcaps outperformed and delivered positive returns. Reports suggest that US companies delivered earnings growth of 30% YoY versus expectations of 20% YoY.
European equities were amongst the most impacted as they rely substantially on Russian Exports. Consumer Discretionary and Financials were worst hit as rising energy prices built up economic pressures. Defensive sectors did relatively better but yet delivered negative returns.
Russian Equities plummeted and closed -30% of the month.
India: After a relatively better January, continued to underperform global peers given headwinds for global importers due to Russian war. FII outflows intensified.
Given stronger metal prices, commodity rich emerging markets like Mexico, South Africa, Peru outperformed.
Currencies:
Many currencies weakened versus the USD as money moved from economies with higher risk to safe havens.
Developed commodity currencies (CAD, NZD, AUD) and even commodity rich Latin Americans outperformed versus the USD as commodity prices appreciated.
Russian Ruble: Lost significant value against USD following sweeping sanctions from western nations and the cutoff of major regional banks from SWIFT.
