There is an apparent disconnect between market action in the past four weeks or so and the fundamentals. Stock markets in most major economies have seen a recovery — the Nifty has gone up by over 10 per cent, for instance, during this period. Yet, the prognosis is not cheering. Based on the corporate results of Q1 (April-June), there have been more earnings downgrades than upgrades to the stocks constituting the broad NSE500. The consensus forecasts for the large companies in the Nifty 50 are also down. The rupee remains under pressure, while the Reserve Bank of India (RBI) has hiked the policy rate and is expected to push it up further. Globally, the Ukraine war drags on, affecting global supply chains, triggering volatility in commodity prices. China has gone into repeated lockdowns this year, cutting growth rates to multi-decade lows. The US and the EU are suffering from high inflation and the world’s two biggest central banks have instituted tighter monetary policy and hiked policy rates. The global growth forecast is also being revised downwards.
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