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.
"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 Geojit Financial Services.
"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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