Hold your Nerve

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 Hold your Nerve


The market has been undergoing a difficult time these days amid prolonged Russia Ukraine war and increasing US Bond Yield.  Everyone is skeptical about the future of equities under these conditions.  Inflation has been hovering around multi decade high levels.  The IMF in its recent report predicted a minimum one percentage cut in world GDP this year. Under these adverse conditions rebalancing has been happening and funds are being shifted from equities to bonds. As a result, we have been witnessing a massive sell off from FPI in our stock market.


However, in India we are not in such a bad situation though we do not remain decoupled with the rest of the world. Therefore, a fear factor persists in our market too.  This is a real testing time for us and let us see how our market reacts to these conditions.


Although no one can predict the short term trend, in the long run one thing is sure that we are not going to stop and soon again we will see an uptrend in our markets. We have been affected minimally owing to the Russia-Ukraine war except increase in petroleum rates owing to a phenomenal increase in the crude prices.  Rather opportunities have been opening up for exports for many products like food stuffs, metals, textiles etc. The companies related to these products are going to do well. We are buying Russian Oil at discount and in exchange there are many products which Russia will ask us to supply amid strict sanctions imposed by western countries. This is a blessing in disguise type situation for India.


We are least affected now with covid fear and are in the process of opening up.  Despite prevailing inflation there has been robust demand in Housing, Auto, Apparels and many other consumer goods.  Tourism industry has been witnessing one of the best times and travelers numbers are surpassing pre covid levels. You will observe fully packed bookings in Hotels for the next couple of months at major tourist destinations. Recently I came across a news report mentioning record marriages are going to happen this calendar year. Weddings in India are one of the most important factors for the economy as it gives big businesses and also provides ample work opportunities for many people.


The Indian Manufacturing Sector has been undergoing a massive capex programme. The results of these capex are likely to be seen in the near term and are going to show a decent increase in revenue and earnings of many companies. Good opportunities persist for core industries like Cement, Metals, Engineering Goods etc. 


India has been focusing big on sustainable and green energy and many big corporate houses like Ambanis and Adani group have shown their big intentions for the same.  Days are not far away when India is going to dominate and become one of the biggest hubs for alternate and green energy. 


Political stability is essential for the progress of any country and we are fortunate enough that despite diversities we are having a decent political stability in our country. The policies of the government are also supportive for growth. 


Conclusion:

We might see some pain in near term but our story is intact and we are going to outperform the rest of world for sure.  It is a time for grabbing the opportunities for wealth creation.  We cannot foresee the bottom so start infusing the funds now in a staggered manner and be a part of new and progressive India. 


-Rajendra Jhanwar   



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