Analysis of Current Equity Market Status and Investment Strategies

This report provides a detailed analysis of the current equity market, examining its status, risk and reward strategies, and the impact of volatility. It explores defensive strategies, the sustainability of high-yield equity shares, and various investment sectors. The report also compares active versus passive management approaches, offering insights into market returns and the implementation of investment strategies. The conclusion emphasizes the volatile nature of the equity market and the importance of diversified investment portfolios, including mutual funds, bonds, and ETFs, tailored to individual risk tolerance. The report covers themes including balancing risk and reward, upward trends in a volatile environment, defensive strategies, high yields and sustainability, demand-driven sectors, and active versus passive management.

Running head : CURRENT EQUITY MARKET STATUS
Current equity market status
Name of the student
Name of the university
Author’s note

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Executive summary:
The above case study depicts overall situation of current equity market along with the
risk and reward strategy followed. The study also depicts the upward trend of equity
shares at the time of volatility existence in share market. The study also indicated the
current market performance of equity share along with the different sectors one investor
could look to invest in. However it is up to the investor how much risk he wants to bear
and according to that the portfolio manager can construct his portfolio. Lastly the study
concluded with the kind of investment the investor wants to have followed by a suitable
conclusion.

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Table of Contents
Introduction:...............................................................................................................................3
Balancing risk and reward strategy:...........................................................................................3
Volatility global equity market:.................................................................................................4
Sustainability of high yield equity shares:.................................................................................6
Current invesment sectors in equity market:..............................................................................6
Active versus passive management:...........................................................................................7
Market returns:.......................................................................................................................8
Implementation of strategies:.................................................................................................8
Conclusion:................................................................................................................................8
References..................................................................................................................................9

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Introduction:
The following topic analyses the current status of equity market in the country
followed by the balance between risk and return strategy. The topic also describes the
situation at the time when the equity market is volatile and along with the after effect of the
situation. Apart form that the topic also discusses the following aspects like how to cope up
with the situation of volatility in equity share, how the equity market performs during the
time of high yield and how they manage to maintain sustainability. Similarly the topic
discusses on what are the possible sectors an investor can invest in the along with analysis on
the amount of return the investor can get out of it. Finally the topic discusses about the
management strategy of equity market on whether they use active management strategy or
passive management strategy to maintain the share valuation in the stock market along with a
suitable conclusion on the topic.
Balancing risk and reward strategy:
Maintaining balance between risk and reward is the main priority of the investor. If any
portfolio gives a good return on investment to the investor then it is considered as reward.
From the above table it is seen that the equity market has taken a hit in 2018. According to
the status thee has been a major drawback in the major fundamental activities. Apart from
that the changes in the growth position of the equity. However defensive positioning in the
long term investment can drag the investors behind. Due to tough financial condition the risks

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in the portfolio has been increased in the investment. From the above chart it is seen that the
in December 2018 there has been a slow growth in the shares, while in the year 2017 the
market in US was quite upward trending. If recession increased there is more increase in risk
in the market. However the risk can occur due to these circumstances which are as follows-
1. Change in recessions: According to the reports published in the US stock market, change
in recessions are likely to occur within the year 2021 by 50%. Rise in the financial
vulnerable such as exercise leverage could cut the market reruns of the share. However
there has been no change in the household finances and corporate debt. Due to the
recession factor some stocks will rise giving investor opportunity to book profit.
Therefore it is highly required that there should be balance between risk and reward
strategies hence he investors must need to sell the existing shares to book profit. Apart
from that the changes in geopolitics can also be measured as a risk factor, hence in order
to maintain balance in investment there should be balance maintained between risk and
reward.
Volatility in global equity market:
Stock market volatility is one of the mostly unused concepts of recent days. Volatility
is referred to as the simple price change in the securities expense over a given period of time.
If the price is stable the securities have low volatility, similarly high price in share make high
volatility on the share market. The volatility in share market globally affects the current
market structure of the company and also the company performance. In United States there
are different market indicators like S&P VIX, Dow Jones, S&P 500 and NASDAQ100. As
per the current status of the US market it is seen that the share price of S&P VIX was $14.68,
similarly FOR Dow Jones it is $26, for S&P500 index the share price is $2.18. Lastly for
NASDAQ 100 it is $7.35. Due to the market volatility it is seen that the Brexit issue and
clash between America and china have affected the global equity market heavily. Due to that

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on yearly basis the market value of S&P 500 is running in negative. Hence the stock price of
this index basis is very low. Other than that the rest of the index basis are running in positive.
Which indicates that there is volatility in current equity market condition of US? Since US
stock exchange is a globally recognized trading platform hence volatility in the US stock
market will affect the global share market heavily. However this condition is expected to stay
until and unless these above issues are not solved. For example the financial crisis in 2008
had a huge effect in the financial conditions of the global equity market. During that time the
share prices of several bug companies fall drastically. It made the financial condition unstable
and the US stock market was badly affected by the downfall.
From the above table it is seen that the stock market for the period of jun17 to jun18
for one year has been contunuisusly volatile. In the above table it is seen that the equity
market value of all the shares in US has been €6900. After that perood of time the share proce
has cntinuiusly decreased. Again in the year september, october, november and december.
The causes of increase in share prices during that period of time could be good performance,
omplocation if government trade , new business acquisition . Similarly there is a sharp
downfall unthe next three months (Oikonomou et al., 2014). In the month if may,2018 the

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share prirces of stock exchanges was alltime high and later it decreased again (Peltomäki and
Äijö, 2015). However the defencive strategies lies in proper investing on stocks with high
dividend, investing more on blue chip shares and lastly good stocks with large share prices
can be the key strategies of volatile shares.
Sustainability of high yield equity shares:
Every investor tries to invest in those securities which have high yield value and the
give maximum amount of return from the securities. The share prices of big multinational
companies always maintain a high share value and are expected to be traded in the long term
perspectives. The share prices of those companies does not usually fall down drasically and
the investors always like to construct their portfolios with those shares which provide high
security and maximum amount of return form investment.Equity shares of a company always
holds better positions as oer the company perspectives. The company always preffer to
provide dividends to the equity shareholder and lastly if something is left upon, it is given to
the preference shareholders. Similarly the investors also construct their portfolios with shares
of good companies that are expcted to be stable for a longer period of time. good shares can
give high amount of return as well as good amount of profit, apart for the big multinational
companies the share prices of governemnt undertaken banks or companies also provide good
amount of dividend out of the equity shares. However the it is importsnt for the investors to
be construct their portfolio in such a manner where if there is a downfall in the share price of
any company, the other compnies share prices can help him to survive and book good amout
of profit from the investment. The sustainability of the equity shares market is dependent
upon how the shares are performing and how the investors are getting profitble from their
portfolio.

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Current invesment sectors in equity market:
An investor being rational can invest in those sheres which are high profitable and
provide more retun on investment in the financial year (Greenwood and Scharfstein, 2013).
Therefore it is the duty of the investor to assess all the terms and conditions of the market
before investing on the shares. The investor before investing in any company must check the
performance of the company by analysing the current market status (Almumani, 2014).
Hence the portfolios should be constructed in such a way that the investor can maximize their
return in investment. The risk averseness of the investors totally depend on the amount of
money they invest in buying a particular share. In order to diversify the risk the investor can
segregate the investment into different sectors and choose those shares which are giving good
returns. There are different sectors available in equity share market like agriculture,
information technology, cement, airlines, healthcare and hospitality. Hence it is important for
the investor to invest in different secotors all together to identify what are the sectors that are
currently performing well. The share market is fully based on predictions and volatility. The
recommendation for investor is only to invest in these companies who are still being traded in
the market rather than those which have been removed from the stock exchange list (Wang et
al., 2017). For example the sectors which always perform well are pharmaceuticals, steels,
automobile and real estate (Burch and Lawrence 2013). Therefore the investor must
construct his portfolio with the shares falls under these sectors in ordre to get good amount of
return from the market. Hence the investors of US can look to invest in these sectors as they are
highly growing and diversified.
Active versus passive management:
Abundant liquidity from loose monitory policy condition has been pulled up during the
process of the large and liquid stocks. Hence the passive funding’s claims to be setting he
prices while the active funding’s are long term and they are traded in permanent. Though

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currently the market conditions are changing. As per the reports of bank of America half of
the large cap equity funds have performed well. During the first quarter of the year 2018, the
stocks were outperformed by 57% which indicated high growth for the financial year. The
performance of the passive investing strategies are only good in case of bull market with no
long term returns in the last 35 years. Though it is seen that the active managers trade well in
the falling market. Hence a recent study showed that the actively managed stock performed
well than the large cap index in the bearish market. Though there are disparity of returns and
hence there is good opportunity for the actively traded managers to make money as well as
there is also an opportunity for the bad active managers to lose money. Therefore in case of
weak markets the fund managers find it tough to adjust shares in the portfolios. Therefore the
situation on which kind of management policy will be effective for 2018 will depends upon
the performance of the investors in different marker situations.
Conclusion:
The above study can be concluded by stating that the equity market is very much
volatile in nature. There are always ups and down in the market. Hence it is the investors’
decision on where he wants to invest. The focus of investors will be to segregate the
investment into different sectors. Apart from investor could choose to invest in mutual funds,
bonds, ETF. Investor can construct the portfolio according to the risk he can bear. Also the
equity market can perform well in high yield and maintain sustainability. Lastly the portfolio
manager of US must focus on dealing in active or passive management

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References
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Almumani, M.A., 2014. Determinants of equity share prices of the listed banks in Amman
stock exchange: Quantitative approach. International Journal of Business and Social
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Bolton, P. and Samama, F., 2013. Loyalty‐shares: Rewarding long‐term investors. Journal of
Applied Corporate Finance, 25(3), pp.86-97.
Burch, D. and Lawrence, G., 2013. Financialization in agri-food supply chains: private equity
and the transformation of the retail sector. Agriculture and human values, 30(2), pp.247-258.
Cremers, M., Ferreira, M.A., Matos, P. and Starks, L., 2016. Indexing and active fund
management: International evidence. Journal of Financial Economics, 120(3), pp.539-560.

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Greenwood, R. and Scharfstein, D., 2013. The growth of finance. Journal of Economic
Perspectives, 27(2), pp.3-28.
Mensi, W., Hammoudeh, S. and Kang, S.H., 2015. Precious metals, cereal, oil and stock
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Wang, C., Dang, Y., Waxman, S., Xia, X., Weinreb, R.N. and Loewen, N.A., 2017. Angle
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