Equity may beat fixed income in the medium term

The equity indices have rallied worldwide since the bottom which formed in the last week of March. Indian indices have done better compared with global indices in this period (March to October 2020). For example, between 23 March (when the markets bottomed) and 27 October, the Nifty 50 TRI was up nearly 58%, while the MSCI EM (USD) index was up just over 52%. What explains this performance, when the GDP shrank nearly 24% in the first quarter of FY21, and is expected to shrink for the rest of the year, though at a much slower pace.

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