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Mid-year market performance review: Good, Bad & Ugly

The global market has seen one of its not-so-promising beginnings to a year. We’ve reached the halfway mark of 2022, with many investors feeling a little anxious about what they can expect to see in the coming few months. But is everything all gloomy, or is there hope for a brighter future? Is this the time to stay away, or is it the opportune time to enter the market?

Let’s read an honest review and start with the bad news first-

The Ugly

Indian stocks have posted their worst half-yearly performance since the COVID-19 pandemic first hit the markets in 2020. The BSE Sensex and Nifty50 have both fallen a net total of more than 13% over the last six months, wherein the BSE Sensex closed below 55,000, and the Nifty50 closed below 16,300 for the week ended July 1. Wall Street saw its worst first six months since 1970. Nasdaq and S&P were down by over 30% and 20%, respectively, at the halfway point this year and entered a bear market.

Here are some highlights of the season -

● Some of the S&P 500’s worst performers include Netflix and Etsy. Netflix, which saw its share price skyrocket during the pandemic, is now down by 70%. And Etsy, an online marketplace for art and craft from artisans, is down almost 65%. Tesla saw a 36% tumble, while Meta stocks plunged by more than 50%.

● In India too, one of the most significant declines was seen in the information technology (IT) stocks, which otherwise show much higher growth. The metal sector also showed a relatively poor performance. The impact on newly listed companies was intense. The CSE IPO index plummeted by 29% due to the poor performance of new-age companies.

● However, even bonds, usually the more reliable part of an investor’s portfolio, saw one of their worse performances this year. Investment-grade bonds were down almost 11.3% for the first half of 2022.

● Bitcoin, which was nearly at $69,000 in November 2021, sank to below $20,000 in June 2022.

What led to such a sharp decline in the market?

The volatility in the market has been heavily influenced by inflation and rising interest rates. Soaring inflation rates in India and around the world have resulted in many central banks raising interest rates. Concerns about inflation and aggressive tightening by central banks coupled together have led to an effect on growth, valuations, and sentiments of buyers and investors.

Geopolitical conditions have also negatively impacted the market. The COVID-19 pandemic has continued to disrupt operations in China. Global supply chains continue to be clogged due to fresh lockdowns there. Russia’s invasion of Ukraine has also disturbed the global market.

The Bad

According to Morgan Stanley, a developed market recession is likely to weigh in on Asia’s growth outlook, but the impact is likely to be relatively shallow.

In India, the trend of foreign investment is likely to be an impor