JULY'2022
Positive 
Negative 
Neutral 
| PARAMETERS, EVENTS | IMPACT | REASON |
| Inflation (CPI - India) | |
Inflation slightly cooled-off at 7.01% in June' 2022 from 7.04% reached in May' 2022. Still remains above RBI's upper tolerance level of 6%. |
| Brent Crude | |
Brent crude prices slightly corrected by 4% In July' 2022 |
| Currency INR USD | |
INR depreciated by 0.3% in July' 2022. |
| GDP | |
GDP growth of India is reported at 8.7% for FY22, making India the fastest growing major economy. |
| FII Inflows | |
FIIs were Net-Buyers of Indian equities to the tune of ₹4,989 Cr in July' 2022. |
| DII Inflows | |
DIIs poured ₹10,546 Cr into Indian equities in July' 2022 |
| G-Sec Yield | |
Yield declined to 7.24% from 7.45% in July' 2022 end. |
| Tax Collection | |
Record GST collection of ₹ 1.48 Lakh Cr in July' 2022. |
| Global - Inflation | |
In USA, inflation is at 9.10% in July' 2022, highest reading in past 40 years. |
| EQUITY MARKETS | IMPACT | REASON |
| Valuations-PE | |
It stood at 20.73% in July' 2022, 26.41% off from peak of the market in Oct' 2021. |
| Valuations-PB | |
It stood at 4.12 in July' 2022, 11.02% off from peak of the market in Oct' 2021. |
| Valuations-Market cap to GDP Ratio | |
Current market cap to GDP ratio is at 101%. It is above its long-term average of 79% |
High Risk 
Moderate Risk 
Low Risk 
| RISK FOR EQUITIES | LEVEL OF RISK |
| Rising Oil prices & Commodity inflation | |
| Geopolitical tension | |
| FII's being a Net-Seller | |
| US FED - Tightening | |
| US FED - Interest rate hike | |
| RBI-Sucking out liquidity | |
| Current Valuations |  |
EVENTS, NATURE OF IMPACT & ANALYSIS
Rising Power Cost in Europe
Energy consumer prices are rising at an annual rate of ~40% in the Eurozone.
IMPACT: NEGATIVE
Remarks: Rise in energy cost at a 40% CAGR will have a severe impact on the power consumption in the future. It is mainly attributed to reduction in Russian Gas supplies. Disruption in industrial activity has already started. With the onset of winter months, we will see Euro households bearing the pain if “Price of power continues to increase and supply condition of Russia does not improve”.
Indian exports to the EuroZone are impacted because of lower consumption and disposable income, while imports are getting costlier from this zone into India because of higher power input costs.
Rise in Inflation Continues in the US
Consumer price index rose to 9.10% in June 2022 annually, 0.6% up from May 2022.
IMPACT: NEGATIVE
Remarks: Inflation in the US accelerated to a 4 decade high in June month which is a sign of price pressure establishment in the economy. Shelter, Food and Energy were key contributors to the rise in inflation.
The US FED raised the interest rate by 75 basis point for the second consecutive time to curb inflation - Biggest Hike Since 1994. The action raised the short-term FED rates to a range of 2.25% to 2.5%.
We are of the view that the FED is still behind the curve and more rate hikes are expected in near term but with a slower pace. Therefore, FIIs may continue to exit Indian equity markets due to favourable debt markets in the US.
Declining Housing Market – Indication of Recession
Consumer price index rose to 9.10% in June 2022 annually, 0.6% up from May 2022.
IMPACT: NEGATIVE
Remarks: Housing market is considered a key indicator of the economy. Generally, it goes for a toss when the economy is in recession or nearing to it. As the data shows, existing home sales dropped 5.4% in the US. It has been declining for the fifth consecutive month as the housing affordability fall continues.
Most of the indicators show that US is technically going through a recession now. This will impact Indian investments made in the US markets to hedge against country risks.
Q1 FY 2022-23 Result – Nifty PAT Up 12% YoY
Profit of 31 Companies out of Nifty 50 Companies, has risen 12% YoY so far.
IMPACT: NEUTRAL
Remarks: The Q1 result is out for 31 Nifty companies and the profit rose 12% YOY but below estimated profits of 24% YoY. The growth has been single-handedly driven by BFSI profits. Excluding Reliance and TATA Motors, Nifty profit has risen 9% YoY vs the expected 6%.
If we exclude BFSI sector, Profits would have declined by ~1% YOY. Major companies like Reliance and TATA Motors, have posted weaker than expected results, dragging the Nifty earnings.
Positive FII Inflows, finally!
FIIs were Net-Buyers of Indian equities to the tune of ₹4,989 Cr in July 2022.
IMPACT: POSITIVE
Remarks: FIIs turned net buyers of Indian equities in the month of July-2022 after 9 months of continuous outflow. From a long term point of view, we should see FII flows return to India given the higher earnings yield.
The positive inflows by FIIs in July month helped the benchmark equity index BSE SENSEX climb by over 8% during the month.
What you should do. And should not.
Remain invested in equity in this current volatile market scenario.
Continue your investment
systematically in the way of SIP & STP.
Create Cash NOWif you need money in the short term.
Do not go all-in into equities in this highly volatile period. Add money on market dips. But do it in multiple tranches.
Conclusion:
Please remember investing is mostly backing quality businesses run by quality managements that offer a runway for strong cash flow growth, earnings potential, and long-term prospects. Buying them at a “reasonable” price with an eye on the returns is important. Stay invested, stay disciplined and secure your returns. We have prepared a sound long term holistic financial plan for you based on your risk profile, defined your financial goals along with you… did an asset allocation (with contingency plans built in) with you. We believe we are in the best objective position to help navigate the vagaries of the market.
