How have the different asset classes fared in 2022 so far?
Risk aversion sentiment has gripped the psyche of investors who have spared no asset class so far in 2022.
Not just stocks, but investors across most asset classes, including cryptocurrencies and metals, have seen negative returns on their investment.
A cryptocurrency sell-off, for example, wiped over $200 billion in wealth from the market in just 24 hours. While Bitcoin plunged 10% to its lowest level since December 2020, Ethereum fell as much as 16% on Thursday May 12.
So far in 2022, Ethereum has cracked 45%.
Meanwhile, among equities, U.S. indices fell the most as fears of a steeper rate hike coupled with a recession plague markets.
At home, Indian benchmarks seem to have done relatively better so far.
Bond markets, on the other hand, saw the yield on India’s 10-year G-Sec rise from 6.01% a year ago to 7.25% today. Meanwhile, retail inflation jumped to an 8-year high of 7.8% in April.
Analysts say these negative returns were largely triggered by panic selling by new investors who exited in droves amid rising interest rates, inflation concerns and geopolitics. .
Going forward, analysts expect equity markets to rally towards the end of the year as these new investors return.
That said, the short-term texture of the overall market remains weak despite intermittent rebounds.
According to Anand James of Geojit Financial Services, there is a low probability of a breach below 15,671. The pullback rally may lead the Nifty to 16,220 and consolidation at 15,945 – 16,090 is key, he says.
It looks like there is a slim chance of a full panic-driven collapse or breach below 15,671. The reaction rally that could ensue has room for upside to 16,220 .
However, consolidation in the 15,945-16,090 region is key to setting the course for a vertical rise towards the 200-DMA at 17,251.
In the coming week, investors will focus on LIC’s likely listing on exchanges on May 17. India’s largest insurance company has set its issue price at Rs 949 per share.
That aside, primary markets will remain buzzing with initial public offerings from Paradeep Phosphates and Ethos.
Finally, the final leg of the March quarter results will see over 400 companies announce their quarterly newsletter this week. Among the most important are Bharat Forge, Bharti Airtel, DLF and ITC.