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Dear Reader,
The Panorama newsletter is sent to Moneycontrol Pro subscribers on market days. It offers easy access to stories published on Moneycontrol Pro and gives a little extra by setting out a context or an event or trend that investors should keep track of.
Finally, India’s services sector is finding its way back up after being laid low by the restrictions on mobility imposed in the wake of the second wave. August saw the IHS Markit India Services Purchasing Managers Index (PMI) come in at a robust 56.7, up from 45.4 in July. This was not surprising, but will reassure investors that the second wave’s effect is behind us.
A third wave could, of course, trip us, but the hope will be that it will be managed better. After all, even the second wave did not lead to as adverse an effect on the economy as the first wave did. Apart from managing the third wave better, the first line of defence is vaccinations. After some struggle, recent weeks have seen the pace step up to higher levels, crossing the 1 crore daily mark on a few occasions.
Our Herd Immunity Tracker update points out that at the current rate of vaccination, we could fully vaccinate our entire adult population by the end of December. While vaccination may not prevent another wave, a third or fourth, what it should be able to demonstrate is fewer incidences of severe disease, hospitalisation and deaths.
Meanwhile, the stock markets are looking at the brighter side of things and continue their upward march. That may bring a question to the minds of those investors who are sitting on substantial gains in their equity portfolio. This group could include those who have stood steady when the markets crashed in early 2020, those who added to their positions or those who made their debut in equity investing around that time.
The question, of course, is that eternal bother for equity investors: how do I protect the gains made in my portfolio? First, you have to assess the risk in the portfolio, of course. How? Ans: “Taking hedges at the portfolio levels requires us to know the risk in the portfolio as compared to the market. This can be calculated by taking the ‘Beta’ value of the stock and multiplying it with the weightage of the stock in the portfolio.” That done, how do you hedge against the risk? We try answering that by giving you some of the common hedging strategies that can be employed to protect your portfolio from a sudden decline in the broad market. Do read to know more.
Last, we leave you with a delightful column by economist and author Tim Harford in the Financial Times (free to read for Pro subscribers), prompted by his struggle with figuring out which was the parcel-tracking number from the several options available. He writes: “Why couldn’t these people design a less mind-boggling set of instructions? The answer, my friends, is “the curse of knowledge”. The phrase, coined by three behavioural economists, describes the difficulty a well-informed person has in fully appreciating the depth of someone else’s ignorance.”
Investing insights from our research team?
Weekly Tactical Pick | Karur Vysya Bank
Castrol India: A hard quarter, will the recovery be smooth?
Transport Corporation of India: Ready to capture the improving demand
What else are we reading today?
Cricket remains a sunrise industry in India, thanks to IPL
Chart of the Day | Global food prices deliver a nasty surprise
India goes in for oil palm push, raising green issues
Has US corporate profitability peaked? (republished from the FT)
Technical Picks: FSL, Max Financial Services, Pfizer and Ambuja Cement (These are published every trading day before markets open and can be read here and also on the app)
Ravi AnanthanarayananMoneycontrol Pro
