The market is poised for A STRONG BULL PHASE primarily because of HIGHLY DISCOUNTED PRICES in terms of valuations are NOW SUPPORTED WITH IMPROVING MACRO ECONOMY as a result of IMF AGREEMENT announced on 26.05.2022 expect to recover the economy. The following are the KEY REASONS
High level of ECONOMIC SUPPORT and ASSISTANCE by G7 countries [Canada, France, Germany, Italy, Japan, the UK and the United States] with INDIA
IMF during the mission completed during May 9-24 on the economic program in which they agreed to support with lending arrangement.
With IMF agreement, CSE can expect FOREIGN BUYING triggered by improved country rating by agencies
Inconsistancy in energy Supply and Power Cuts TO EASE with RAIN & IMF agreement
The overall LOW MARKET PE stands around 6x which is a 50%< discount from historical high levels in last January 2022 [Market PE was 14x]
Negative INTEREST RATE in T Bills [Official inflation by CBSL 34% - T Bill rate 24% = -10% | As per Steve Hanke Inflation 131% - T Bill rate 24% = -107% ]
Stock market is the ONLY INVESTMENT to BEAT NEGATIVE INTEREST RATE to date. The recent market recovery is more than 240% p.a. from ASI low of 6900 to 8300
Inflated earnings giving high DIVIDENDS and some stocks DY is above 10%
Therefore, it is likely that positive sentiment would enble bull pressure on FUNDAMENTALLY STRONG STOCKS. Specifically selected counters may be on high interest [USD EARNING COMPANIES having overseas exposure] since there is a chance that high taxes may come up on LOCAL COMPANIES.
Note - NOT a BUY/SELL or HOLD RECOMMENDATION. Do your own research before making any decision.