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Success Mantra for Markets & Investments - Patience & Preservance

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"The market does not trade upon what everybody knows, but upon what those with the best information can foresee" – William Hamilton

Over last few days we saw friends observing Lent, Ramadan & Navratri. Today we are celebrating Ram Navami & couple of days later we will be celebrating Mahavir Jayanti. If something common can be drawn from all these is the most essential virtue of surviving and thriving in this world which is – Patience & Preservance. Be it observing fast during Navratri, Lent or Ramadan or life of Lord Ram or Lord Mahavir Jain – they all teaches us how patience & preservance penultimate in Nirvana.

We all are working to survive, thrive and ultimately achieve the financial freedom or Financial Nirvana. And to achieve this nirvana we are investing in market related investment products. While in the long run most market linked investments achieve their true value but in short term it’s market prices are determined by many forces, some of which are explained below.

Changing World Order – we have also indicated in past that world is migrating from bipolar to tripolar and now towards multipolar world order. Unstable Middle East (Syria, Yemen, and Iraq etc.), Russia-Ukraine war, Israel-Hamas conflict and now Iran-Israel row are nothing but a quest to establish itself as an authority for that region or the world. China has been seducing small and poor countries into its debt trap to force them to tow its line at global platforms. India too has been working to establish itself as a world leader but it has adopted a different strategy of helping nations in their times of need and making them friends.

Though very less likely, if any of the conflict necessitates third world war then it will definitely push most countries into recession. And at the same time it will also give rise to new powers who will be able to keep its soil away from conflict zone and have good natural, financial & human resources with large domestic markets. India is among those probable candidates.

Domestic Geo-Politics – India is into election. And this year many other prominent economies will also go into election most notably USA. In the absence of credible leader against Mr Modi there is good likelihood of him attaining the majority in the election. Unfortunate part that opposition parties of the day haven’t been able to read the changing India’s mind and are still repeating promise of old Indian politics of 70s, 80s.

In the event of current regime repeated – policies and reforms will continue and pace will also increase. If it happens otherwise then, policies and reforms will continue, albeit at a slower pace and with some tweaking. But India will keep growing at a decent pace for quite many years to come. Please remember it is the entrepreneur who takes risk and conducts business. Government only provides an environment to conduct business.

Changing Market Order – Like the world politics, market order is also changing. Till few years back foreign money was dictating terms in Indian markets as they were the largest investors with huge funds. Over a couple of years things have changed dramatically. Participation of domestic India in Indian stock markets has been increasing day by day and still a large potential is untapped. Also there is large foreign money waiting to enter Indian markets.

For long Indian markets were being ignored or given low weightage by large hedge and sovereign funds because of India’s low credit rating of BBB-. Influenced by growing acceptance (rather dominance) of India in world’s economical, geo-political matters, these funds have started casting aspersions on rating agencies’ rating methods. And will give less weightage to these ratings to invest in India.

Buoyancy & Concerns – Conflicts in geo-politics occurring quite often, some odd chances of social unrest domestically if the BJP wins with heavy majority and markets trading in pricey zone of over 25 PE, are the flip side of the markets. On the other hand availability of good road-rail-air network and world class IT & social infrastructure, well educated work force, improving regulations for ease of doing business, improving corporate profitability, robust banking system, large domestic market, now a well developed start-up eco system, controlled inflation, forecast of good monsoon etc. are some comforting factors that India will grow at much healthier growth rate.

After spectacular performance markets are down by over 3% from their peaks. How far the markets can go – up or down, it is anybody’s guess and not ours. What we believe at InvestmentMitra is there are more positives than concerns regarding growth in economy and markets are poised for big Bull Run. So start increasing your equity exposure with every correction. Gold is also looking good for about one to two years with central banks increasing physical gold reserves and prospects of lower interest rates. And even long term debt funds are also poised to give you double digit returns over next 3-5 years 

Please contact your InvestmentMitra to review your portfolio and assess if you need to make any changes in the same.

Wish you a happy festival season & Happy Investing!

Team InvestmentMitra

 

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