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Teji Mandi: Three things investors should know on January 20, 2021

04:54 PM Jan 20, 2021 | Teji Mandi

An unwanted roadblock :

Crude prices had rebound sharply from the pandemic lows and now they are near to pre-covid levels. Now, they are set to rise further with Saudi Arabia announcing an output cut.

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Saudi, the largest member of OPEC, will take voluntary production cut of 1 million barrels per day in February and March. India is the third-biggest oil importer country. Hence, this decision will have a direct negative impact on us.

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Saudi's decision will further increase the cost of petrol-diesel. It will directly impact the common men in India. Fuel prices were off the roof even when crude prices were at the bottom. This was due to the extra surcharges levied by the government to make up for the loss of revenue.

Fuel prices continue to make new highs every day and we don't see the government reducing the taxes. Now, with global crude prices touching pre-covid levels, fuel cost would rise further in the coming months.

Also Read: Teji Mandi: Channel check helps to understand the latest trends in durable space

FPIs buys in ICICI Bank :

ICICI Bank has erased the mild correction of last week. The stock has regained the lost ground during this week. The majority of brokers and analysts are bullish on this stock. And, it has emerged as the most preferred stock from the banking sector.

Even the foreign portfolio investors (FPIs) have increased their shareholding in the stock. Their shareholding has increased to 47.43% in December from 45.66% in the last quarter.

ICICI Bank has the strongest digital presence across the banking sector in India. It has played the current cycle better than the previous one and its asset quality has managed to hold well. Apart from this strong fundamental reason, the stock continues to trade at discount to HDFC Bank. Hence, most investors are bullish on the future outlook of the stock.

Also Read: FPIs invest Rs 8,381 crore in five trading sessions of November

Indian market among the brightest globally:

The Indian equity market has emerged as one of the high performing global markets in the previous decade.

A Motilal Oswal report suggests that India delivered the third-highest returns among key global markets in constant currency terms. It was preceded by the US and Japan.

India-Nifty delivered 9% return during 2010-20. The US-S&P 500 and Japan delivered 12% and 10% returns during the same period. Hongkong's HSCEI was the worst performer with -2% returns.

In dollar terms though, the Indian market was at the fifth position; preceded by the US, Japan, Taiwan and South Korea - in the last decade.

India's current economy is ~USD 2.6 trillion. It could have been higher if not for the pandemic. We are the fifth-largest economy currently and estimated to overtake Japan as the third-largest economy by 2030.

In this context, India's long-term growth story presents huge potential. We have every reason to believe that Nifty will continue to feature among the top-performing markets of the world in the next decade as well.

Also Read: Teji Mandi: Fiscal policy and its merits - this budget season, it's going to be the center of attention

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