"We do think that the next three to six months might be challenging but for a long term investor who is able to take a five year plus view, this period presents a very good buying opportunity."
Inflation is a macroeconomic phenomenon of price increases that directly affects your finances and money. Not only does it limit your ability to spend, it also eats away your returns.
Trading and investing are different approaches, with their respective pros and cons. In this chapter, we will learn about them.
Anyone investing in the equity markets should not be swayed by short-term gains or losses. The long-term market returns should make up for the fact that the market has had a poor run in 2022 till now.
We have not yet seen actual earnings downgrades; we expect that to begin with the Q1FY23 results.
Today the excessive money printing, the supply chain disruptions, the resurgent demand and resultant inflation are risks that have all been priced in with the benefit of hindsight.
Commodity producers always do well in high inflation regimes. During recession, sectors catering to essential goods do well, said Vivek Sharma of Gulaq Commodity producers always do well in high inflation regimes. During recession, sectors catering to essential goods do well, said Vivek Sharma of Gulaq
Many new-age companies may delay their IPOs, and weaker companies may never become public. Axis Securities believes that they could get merged with stronger ones, if global liquidity taps dry up.
We expect FPI flows to become positive only after the global markets stabilize and crude price corrects to well under $100 a barrel. We expect FPI flows to become positive only after the global markets stabilize and crude price corrects to well under $100 a barrel.
Monetary policy looks likely to tighten more rapidly than the market can take, and this will be amplified by liquidity contraction through reserve ratio increases / central bank balance sheet run offs.
"Foreign institutional investors (FIIs) have been sellers in the Indian equity market for many months. We believe that FII flows have a direct linkage to the global sentiment, which currently looks a tad weak."
The pharma sector and the FMCG (consumer staples) sector would fare better in a recessionary environment, to an extent. However valuations in most of the FMCG companies, and in some of the pharma companies, may not offer much upside from present levels.
When comparing the current scenario to that in the past 4-5 years, the specialty sector is expensive now as stock prices have risen.
The renewable industry is expected to grow 4X in size by 2030 to 450-500 GW. We prefer solar on the renewables side and would like to wait for further valuation cool down in fossil fuel-based power companies.
"Impact of inflation for the next couple of quarters is discounted by the markets and any high inflation beyond that would affect earnings."
Some factors that give hope to investors are a normal monsoon and robust private sector capex in specific pockets, which may provide a fillip to the markets in the second half of 2022, according to Bhuskute
We see inflation peaking in the next 3 months. We are already seeing prices of some food and commodities cooling off.
According to Kaul, the Federal Reserve has stated its desire to engineer a soft landing, but given its determination to tame inflation, there could be a recession in the US.
"Long-term investors can use the dips in the market to buy high quality economy-facing stocks like capital goods, banking, telecom and export segments," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Foreign investors have been net sellers of Indian equities for more than eight months.
Reddy says he is positive on some of the large private sector banks as well as metal, pharma, quick service restaurant and EV segments Reddy says he is positive on some of the large private sector banks as well as metal, pharma, quick service restaurant and EV segments
RBI will raise rate of interest by another 1 percent in this ongoing FY 2022-23. Globally inflation is emerging as the biggest threat for global growth. Inflation in US almost at 40 years high, even in Europe now it is becoming alarming due to energy crisis.
The primary market requires buoyancy in the secondary market. Also, the experience of investors in the primary market in the last 12 months has not been good, says Kanawala, Senior EVP Head-Equity, Kotak Mahindra Life Insurance Company. Foreign investors have been net sellers of Indian equities for more than eight months.
"RBI#39;s message is clear - its focus has shifted from growth to controlling inflation. As a result, we are likely to see interest rates rising in the near term."
India continues to be an attractive investment destination with relatively better macros. Valuations have come down to attractive levels. The Indian investor continues to have faith in equities as an asset class, and is continuing their SIPs, which is acting as a support level to the market. "We believe that markets have done well so far in dealing with the known risk factors and any improvement in global macro factors will bring money into the markets."
In my view, RBI could front load the rate hike in the next few months, which will take the repo rate to 5 percent and then 5.15 percent, which is the level before the pandemic. This will lead to gradual reduction in liquidity surplus in the interbank market, increase in on ground interest rates and gradual reduction in inflation.
"A diversified portfolio allows you to create a 100 bagger portfolio in a much safer manner than a 100 bagger stock. Just for context, Peter Lynch had 1,400 stocks in his portfolio and beat Warren Buffett during 70s." "A diversified portfolio allows you to create a 100 bagger portfolio in a much safer manner than a 100 bagger stock. Just for context, Peter Lynch had 1,400 stocks in his portfolio and beat Warren Buffett during 70s." "A diversified portfolio allows you to create a 100 bagger portfolio in a much safer manner than a 100 bagger stock. Just for context, Peter Lynch had 1,400 stocks in his portfolio and beat Warren Buffett during 70s."
Relatively weaker participants might be moving to sidelines or even withdrawing from the markets. This is usually indicative of the beginning of the process of a market cycle completing its downward journey.
Despite the adverse macro-economic backdrop and global concerns on inflation, rates and quantitative tightening, one silver lining for India has been a very resilient corporate earnings delivery in both FY21 and FY22. Despite the adverse macro-economic backdrop and global concerns on inflation, rates and quantitative tightening, one silver lining for India has been a very resilient corporate earnings delivery in both FY21 and FY22.
With the onset of the pandemic, the whole world feared degrowth concerns and today it has shifted to inflation, this is the headline in every country. These things tend to get exaggerated on both sides.
