DSP Mutual fund’s monthly report is always full of interesting charts and insights.
Here are some of the highlights :
India’s High Frequency Indicators Are Robust
GST Collections at all time highs
Toll Collections (including Fastag)
Business sentiment (Till December) was extremely positive
Valuations Indicators Are Mixed
India’s premium over other EM peers waning slowly as other stocks rally and we consolidate
US Corporate Profitability Set To Shrink As Growth Slows
- The US equity market has been in an extended phase of correction and consolidation. This is largely a result of corporate profitability being dragged lower by slowing growth. This means US equities are likely to remain in a grinding consolidation for some time as valuations keep correcting and growth slows further.
Supply Chains Have Normalized
- A composite indicator of world container freight rates, shipping freight, and the backlog of orders at major manufacturers has eased. The index, which peaked in mid-2021 but remained excessively high for the whole of 2022, is now at levels like the pre-covid phase.
Indian IT Stocks Are Now Cheaper Than Nasdaq, But Above Historical Average
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Nasdaq 100 Index is down 28% from its most recent peak, while Nifty IT Index is down 22%. The 1-year forward price-to- earnings multiple for Nasdaq has shrunk from 35 at its peak to 25 now, while for Nifty IT the multiple is down from 37 to 23.
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Both indices were exceptional performers in the post-COVID global technology rally.The impending slowdown in advanced economies & ultra-high valuations leave room for this sector to undergo further consolidation.