Hello, the effect of gravity is now being seen on the stock market as well.
During COVID-19, central banks across the world announced stimulus packages for which additional liquidity flowed into the equity market.
In such a situation, the stock market around the world, especially the Indian market, went to its all-time high.
Many stocks gave almost double or even more returns in a span of just one year.
The effect of excess liquidity in the market was visible not only on stocks but everywhere.
Governments also printed a lot of money to support stimulus packages and economic recovery, and all this was an open invitation to inflation.
Inflation in the US is at its 40-year high.
Inflation is also increasing rapidly in the UK and India.
Commodity prices are also rising due to the Russia-Ukraine war and rising crude oil prices.
Expenses have increased so much that almost all central banks globally are increasing their interest rates.
When interest rates rise, there is less liquidity in the economy and lower public spending.
There is a brake on this rising inflation, but at the same time, we get to see its direct effect on the stock market as well.
There is a bearish trend in the stock markets around the world whether it is the American market or Indian.
In this market volatility, everyone is eagerly waiting for the market bottom to happen.
Markets have come from the elevator, but whether they will use the stairs to go back up or the lift, it is difficult to tell.
So let's see in today's video what the experts have to say about the market recovery.
Have the markets touched their bottom? Or is the bear market just the beginning?
As per Expert Opinions In today's video, we'll take you through the thoughts of the following experts.
Pankaj Tibrewal: Pankaj Tibrewal has more than 13 years of experience in the field of fund management.
Prior to joining Kotak AMC, he was the Principal of PNB Asset Management Company Pvt. Ltd.'s fund management team.
Ashwath Damodaran: A renowned Professor of Finance at New York University's Stern School of Business, who teaches core subjects such as Corporate Finance and Valuation.
Chamath Palihapitiya: A Canadian and American venture capitalist, engineer, and SPAC sponsor, as well as founder and CEO of Social Capital.
Marko Kolanovic: Marko Kolanovic is the Global Head of Macro Quantitative and Derivatives Research at JP Morgan.
So let's listen to the first clip of Pankaj Tibrewal.
Pankaj Tibrewal in this video that central banks had to intervene at some point to bring the inflation that is being seen today due to excess liquidity under control.
In fact, whenever central banks raise interest rates, it becomes costly for corporates to raise capital and reduce their investments.
This has had a negative impact on economic growth.
Therefore, according to Pankaj Tibrewal, there is a slowdown in growth at the global level.
And a few months from now, central banks will realize that growth has been sacrificed to keep inflation under check.
And in such a situation, the central banks will again focus on boosting growth and reducing unemployment.
And can be seen fast again in markets.
Pankaj's experience could provide relief to the growth-centric action investments of central banks by the end of the year.
Now listen to the second clip where Chamath Palihapitiya gives his views on the current bear market and what could be the reason for it.
As you heard in the clip, after the 2008 financial crisis, central bankers pumped a lot of cash to revive the economy.
And even during the COVID-19 pandemic, the central bank printed money to revive the economies.
The economic balance was shaken long ago because of this excess liquidity.
Therefore, according to Chamath, the markets are artificially driven by demand-supply, that is, inflated the prices of all assets with cheap money.
And now the Central Banks are getting the money out of the market if it is money.
And because of this monetary tightening, there is a huge improvement in the market.
He tells us that the excess money printed by governments is so high that it can take a long time for our economy to be sucked out of the economy and for the assets to become real value.
According to him, these reforms are a long-term phenomenon.
And it may still take another 18 months to touch the bottom.
This means that investors can see a lot of volatility in the coming time.
Now listen to the third clip where Professor Ashwath Damodaran gives his views on whether this improvement is temporary or long-term.
Professor Damodaran says that it is difficult to say whether this is a temporary downtrend or not.
But according to him, this time will not be as quick as 2020.
There is no inflation vaccine-like COVID that will quickly end the rising inflation.
We have been witnessing a slowdown in all asset classes since the beginning of 2022 and fear has taken over the growth.
2021 has been an extraordinary year for Stocks, Venture Capital, and IPOs, and Professor Damodaran expects risky capital to emerge from the markets, be it young non-profits or crypto.
Therefore, investors should revisit their strategy and not expect easy returns.
Now listen to the last clip where Marko Kolanovic has been telling his views that the global economy can recover by the end of the year and can be seen in the markets.
Marco says that the first 6 months of the year have been very difficult for investors.
There has been a lot of volatility in both the equity and bond markets.
And the high-risk and volatile environment has also led to heavy selling by investors.
If we go back in history, we have seen high energy prices and interest rates before.
Crude oil prices have previously gone up from $100-$115/barrel from 2010 to 2014.
If we talk about India's interest rates from the 10Y Govt. it saw the bond 7.4% yield in February 2019. And from there finally, the market bounced back.
If the war situation in Europe improves in the near future, food and energy prices may also come under control.
Marco is expecting that the volatility in the markets may decrease going forward and in such a situation, investors can again look at the equity markets.
Yes, there may be a slowdown in the coming months,
but if the Federal Reserve gives a favorable signal and consumer spending remains strong despite inflationary pressures,
then we can see a recovery in the markets towards the end of the year.
So this was today's four clips about Market Recovery.
But before we go, we want to share some interesting data with you.
According to a recent Forbes article, history tells us that whenever the market falls sharply into the bear market territory, it is equally fast.
As you can see in the graph, since 1945, the S&P 500 has faced bear markets several times.
If you look at the most recent bear market, the March 2020 crash was as intense as it was short.
The stock market showed a very strong recovery in working time.
If you look at the 'mega-meltdown' of the 2007-08 financial crisis in the chart released, the bear market was a prolonged one and took about 4-5 years to recover from it.
Historically, out of the last 5 bear markets, most of the bear markets did not extend for very long, as seen with the help of this chart.
Hope you found this video informative.
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