2014 ENDS IN THE GREEN - HOPE IS THE ETERNAL PARTNER OF 2015!
By Ruma Dubey
2014 calendar year for the stock market has ended and thankfully, it ended in the green and with one of the biggest gains since 2009. Yet, it’s a gain and not a loss. The last time the market had ended in red was in 2008 and then in 2011, when sentiments were at rock bottom.
And ending 2014 in the green, the market has continued with its sense of optimism which we saw ever since the new Govt was voted to power. Notwithstanding global economic uncertainty at the moment, the Indian markets have decided to concentrate on ‘local’ facts which currently look better than most other parts of the world. No doubt currently sentiments are extremely positive and expectations are high that the Govt will welcome the New Year with some big bang, bold, reforms. And that in turn means that 2015 most certainly, from today’s vantage viewpoint, looks very optimistic. Now that’s a good note to end a year on!
Three things make a market – earnings, valuation and sentiments. Yes, earnings were not great in Q2FY15 and things do not look very good for Q3FY15. Yet, the markets is taking this as a legacy of the past and to some extent, has already discounted expected poor and lukewarm performances.
Sentiments? Well, it is much better today than what we began the year with. Looking ahead into 2015, it is only expected to get better, what with many sops expected to be announced. RBI is sure to bring down interest rates in 2016, not in Feb but surely after end of fiscal FY15. And that is bound to perk up the industry and sentiments.
And that leaves us with valuations. This has become a moving target. Most of the A-grade stocks or blue chips as we call them and quality mid-cap stocks have run way ahead of their fundamental valuations. But analysts say that today, that benchmark alone will not do. With value of rupee going down – we are able to buy lesser things with the same Rs.100. This in turn means that stocks too cannot be valued only on the basis on PE. Yet, what is certain is that some stocks which are at over 100 PE, will give you lesser returns compared to a mid-cap or small cap quality stock. So you will get your value for money only in these mid/small cap stocks.
A good year makes us anticipate the New Year, with hope that it will bring in good cheer. So keep the cheer and keep the hopes up. Take a look at the table given. Statistics never lies and what we see is that every year, despite the circumstances, ends in the green. And the first day of every New Year, always opens higher. 2014 ended better and let’s keep the hope alive that 2015 will end on a historic high.