26 Jul 2022
Something deadly that could be beneficial for you? Seems like an oxymoron, right? Well, not quite.
The narrative in global financial markets is currently moving between hyper-inflation, a slowdown in growth and high interest rates. This has resulted in investors, especially in equities, turning risk-averse.
India, in fact, has seen outflows of $28 bln from foreign institutional investors since the start of 2022*. More than two-thirds of emerging market funds are also currently underweight on India, said Pankaj Tibrewal, fund manager for equities at Kotak Mahindra Mutual Fund.
These headwinds, though, are likely to be transient, and India has something that can help it over the long run.
A cocktail of three factors.
“…100 crore bank accounts, 100 crore Aadhars and 100 crore mobile connections are a deadly cocktail,” Tibrewal said.
A combination of these three factors will significantly speed up the time taken to implement reforms, he said. This is a structural change that India has seen post COVID.
Apart from this, what could be beneficial for India are the opportunities arising from supply chain disruptions, and the rising costs of energy for Eastern Europe.
Global companies are exploring value chains in the manufacturing sector and would look at switch to countries like India. “We have already started to see supply chain diversions in favor of Indian manufacturers,” Tibrewal said.
He said that investors must continue to remain disciplined in their asset allocation, and try to spend time in the market rather than timing the market.
*Source: NSDL. Data as of 28th June 2022
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