Will we carry forward the market exuberance in the new Samvat as well?
For any bull run to sustain, three things are needed — sentiments, money and fundamentals. Sentiments are positive as the economy has opened up and active cases have come down thanks to vaccination; the money flow is fairly strong and there is a little bit of selling by foreign portfolio investors in recent times.
Overall domestic institutional investors, retail investors, and foreign portfolio investors will be buyers of Indian equities in the long term. The market is well supported by money but the most important thing for India is fundamentals. Corporate profitability has improved significantly thanks to cost cuts, productivity increase, interest rate reduction and debt reduction. Over the next 18 to 24 months, operating leverage is coming in. So there will undoubtedly be corrections in the market, but every correction will provide a good opportunity to invest in the Indian equity market for a long term investor.
The number of new entrants to the equity markets is unprecedented. How are you reading this? Are you excited for the times to come and what advice would you give to people who perhaps have not seen such a big crash?
For all new entrants, I have three requests; be a long term investor rather than a trader. India is a long-term growth story. Participate in this by becoming a long term investor. Invest in quality and do not buy kachra (crap stocks). History has shown that when you buy quality even at higher valuation, your holding period will enable you to make money but if you buy crap, then there is no hope. So buy quality portfolios, stay invested for a longer term.
The third and the most important thing is asset allocation. Please do not invest looking at the past performance. In last 18 months, the equity market has delivered great returns. Over the next three years the return will not be as good but it will still be better than many other asset classes. So invest with a proper asset allocation between debt, equity, real estate, commodities, offshore assets so that overall you continue to outperform inflation.
