Hope springs again as 2013 starts off | india | Hindustan Times
Today in New Delhi, India
Feb 22, 2017-Wednesday
New Delhi
  • Humidity
  • Wind

Hope springs again as 2013 starts off

india Updated: Jan 07, 2013 22:28 IST
Dhirendra Kumar

Born out of a morass of negative portents, 2013 could well turn out to a positive surprise.

The year has begun with better prospects than one could have hoped for. The stock markets have zoomed up, being up by about 3% since Christmas.

Ostensibly, this is fallout of the avoidance of the so-called ‘fiscal cliff’ that the US was supposedly headed for.

However, there’s no mistaking the general cheer that pervades the mood of all those concerned with the markets.

Having at last been found correct after umpteen failed predictions of the Nifty hitting 6,000 and the Sensex 20,000, the talking heads are now making far more ambitious forecasts of where January 2014 will find the markets.

Although the news on the macro front is resolutely bad, with deficits of all kinds threatening to unhinge the economy, the optimists do have some points going for them.

The most interesting one is simply that enough is enough.

In other words, if the principle of reversion to mean exists at all, then now is the time for it to come and join the party.

Practically speaking, Indian investors have not made any meaningful, sustained returns from equity for 4 years now.

The retail investor is now hugely underinvested in equity compared to 2007. The IPO market has been moribund throughout this time while equity mutual funds have hardly grown.

This accounts for the two most popular routes of the small investor’s funds to flow into the stock markets.

On the other hand, there has been enough going on to keep people interested. Except for the first 18 months after the crash, investors have periodically had positive periods, especially those who look beyond the mainstream and avoid the disaster zones.

In the last one year, the median mid-cap fund is up 43% while the top quartile is up at least 48%. And given that mid-cap funds have highly diverse portfolios, this shows that selective stock picking yields rewards.

Across the economy, a diverse set of companies has defied the general gloom, and that augurs well for the year to come.