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Mumbai: Value stocks could extend their dominance over growth on Dalal Street if one goes by historical data of their performances in times of high inflation and rising interest rates, according to analysts. Value refers to beaten-down shares, whose prices do not reflect their prospects. In growth themes, investors buy companies which grow faster than the market irrespective of their valuations. Examples of growth stocks have been , , and among many others.

Data show the value index outperformed the growth index during rising inflation and rates, while it has largely declined in periods of falling 10-year bond yields. Value stocks are seeing a reversal of fortunes with central banks looking to tighten interest rates to contain inflation.

Soaring Inflation, Rising Yields may Buoy Value StocksET Bureau

“Value stocks should perform well, supported by the moderate valuation, healthy cash flows, and stable business cycle, which is a challenge for growth stocks during a high-interest rates and inflation cycle,” said Vinod Nair, head of research at .

“The valuation of growth stocks subsides in relation with the economic slowdown, catalysed by the increasing operational and financial costs of business and lowering turnover and market liquidity.”


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