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31 Jul
2020

Return in Australia Market

Category:ACADEMICIAN

SOLUTION AT Australian Expert Writers

Analysis of Australian Market Australian Index dropped by 22.84% CSL however has a positive return of 25.05% against the market sentimentsand all other industry peers Reasons: A) Biotechnology Company, engaged in research and development which is thekey in pandemic (Foley et al., 2020) B) Very Strong Fundamentals and financially very strong company C) Good asset quality and very strong financial statement which makes thecompany unaffected to small changes in industry D) Engaged in supply of essential commodities and therefore a key player inthe pandemic timesUnderperforming of Shares Australian Index dropped by 22.84% Almost all the shares underperformed amongst the top 5 companies in termsof market capitalization. Principal reasons for the same are : Lack of financial capabilities of the investors to continue investing Lack of liquidity in the markets thereby forcing the investors to withdrawinvestments (Salisu et al., 2020). Poor business situations and global recession leading to multiple reduction ininvestments all across Lack of confidence in the market and the expectations of future returns arepoor. Hence the investors choose to withdraw money from the marketsUnderperform or overperform the indexmarket Considering the changes and the patterns of the returns, there are cumulativeperformances of the stocks. As per the analysis, there are positive skew of thestock returns which occurs and then there are stocks which tend to lose 100%.The positive return for the stock is above 100%. Hence, the analysis of thedata includes the importance of the diversification which leads to thereduction in the variance of the portfolio returns. Hence, the skeweddistribution helps in discussing about the active managers to keep up with theindex (Baur et al., 2020).Mean Return in Indian MarketParticulars PerformanceIndian Sensex -22.22%RELIANCE.NS -14.58%TCS.NS -18.66%HDFCBANK.NS -24.77%HDFCLIFE.NS -23.15%HINDUNILVR.NS 19.21%Analysis of Indian Market Indian Sensex dropped by 22.22% Hindustan Unilever however has a positive return of 19.21%against the market sentiments and all other industry peers Reasons: A) Engaged in the FMCG Business which takes care of day to dayessentials and the demand for their products never reducedduring the lockdown in India B) The company ventured into the sanitization products and thatindeed led to ensuring higher profitability and products for theenterprise, thereby ensuring that higher sales for the company(Gulati, 2020). All the other shares like Reliance, TCS, HDFC, HDFC Life hasdropped. The reason being the lack of investor confidence inthese shares and the overall slowdown in the market andeconomy. The investors chose to reduce the investment from theoverall marketsShare Data for Australia MarketParticulars St Dev Weight Return Portfolio ReturnCSL.AX 2.65% 0.20 25.05% 5.01%CBA.AX 2.71% 0.20 -19.91% -3.98%BHP.AX 2.51% 0.20 -15.73% -3.15%WBC.AX 2.71% 0.20 -39.82% -7.96%NAB.AX 2.75% 0.20 -37.16% -7.43%Mean Return -17.51%Standard Deviation -3.34%Beta2.19Share Data for Indian MarketParticulars St Dev Weight ReturnPortfolioReturnRELIANCE.NS 2.98% 0.20 -14.58% -2.92%TCS.NS 2.53% 0.20 -18.66% -3.73%HDFCBANK.NS 2.51% 0.20 -24.77% -4.95%HDFCLIFE.NS 3.25% 0.20 -23.15% -4.63%HINDUNILVR.NS 2.25% 0.20 19.21% 3.84%Mean Return -12.39%Correlation Coefficient -58.83%Beta 4.75Portfolio for Investment – IndianCompanies The overall market structure in India is very positive and theyhave shown strong market sentiments in the stock market The shareholders have strong positive expectations on the marketand they have expectations for higher return in the market The financial flow of money has been very positive all across.Even when all the share price reduced, the company couldmanage to earn positive results, thereby ensuring proper andhigher results for the overall investment The overall investment in the companies have generated positivenet worth for the company (Papadamou et al., 2020) The overall risk factor for the company has been positive andthere is lower chances of investment to reduceAustralia Bond Market Overall positive marketsin respect of bonds areconsidered The interest rates havenot fallen considerablyand hence the returnshave been positive forthe marketIndian Bond Market Overall negativemarkets in respect ofbonds are considered The interest rates havefallen considerably Market sentiments donot indicate positiveinvestment climate Overall lack ofinvestmentReferences Foley, S., Kwan, A., Philip, R., & Ødegaard, B. A. (2020). Contagious Margin Calls: How Covid-19threatened global stock market liquidity. Available at SSRN 3646431. Papadamou, S., Fassas, A., Kenourgios, D., & Dimitriou, D. (2020). Direct and Indirect Effects ofCOVID-19 Pandemic on Implied Stock Market Volatility: Evidence from Panel Data Analysis. Salisu, A. A., & Vo, X. V. (2020). Predicting stock returns in the presence of COVID-19 pandemic: Therole of health news. International Review of Financial Analysis, 101546. Baur, D. G., & Trench, A. (2020). COVID-19 Infection of Australian Companies. Available at SSRN3609110. Gulati, M. (2020). The value of voluntary COVID-19 securities disclosure—zero?. Capital Markets LawJournal.
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