Veteran Analysts Believe That Smallcaps Will Continue To Beat Largecaps in Returns
Many of the veteran analysts believe that the bull run in global and Indian markets remains intact, but expects domestic stocks to underperform global peers by a bit. Consider an example that if you get 10-12 percent returns for global equities this year, then traders will be up 8 percent. Analysts are bullish on domestic smallcap stocks. However, the Sensex has returned 12-12.5 percent ever since 2014.
It is observed that the smallcap stocks have climbed 45 percent compounded annually during the period. Analysts also explained that this kind of return divergence has never happened in the history of India. They continue to believe that divergence will persist. Right now, our country is not in a bear market. The analysts also went on saying that this is just that relatively India will probably lag EMs and will lag global equities.
At present, it is observed that the commodity-backed emerging markets will do much better than non-commodity Ems. On the other hand, it is seen that the US dollar will get weaken ahead. Some analysts also confirmed that a strong cycle is ahead for EMs. Analysts prefer to divides EMs into commodity markets and technology markets like South Korea, Taiwan and to an extent China. However, in both the cases, India, unfortunately, is underrepresented according to experts.
Currently, analysts are of the view that the commodity-centric markets will be rocking in future. It is the view of analysts since February 2016. When you look at few commodity markets such as Brazil then you find that the market is up 80 percent in dollar terms. In future, there are higher expectations from Russia too. However, now even tech markets are doing well. Make a note that the commodities and tech are the two big drivers of large-cap performances across the world.
Analysts also stated that India is the only major market that is growing at a tepid rate of 5-5.5 percent as per some old series. When you look at Brazilian or Russian growth rates, then you will notice that they have all been revised upwards.
Veteran analysts and investors are also bullish on crude oil and they believe that it is the best commodity trade at present. In global crude oil prices, a 20-50 percent rise cannot be ruled out in next few years. Because of high oil prices, bond yield rates are already surging.