It is not only because of this that the effect of volatility gets limited over a long time period, but more so because the Indian economy wasadjusted and its corporate growth Key has great prospects, a stable-strong government and policies, and a much better position on the global stage (exports as a percentage of GDP at a seven-year high). In addition, we are seeing strong tax collections, improvement in savings rate and improvement in the books of Indian companies. Due to all this, the rate of investment and expenditure also improves and the growth rate of the economy’s growth rate also. Capacity utilization has reached 75 per cent after a gap of about five years, due to which we see the ground for improvement in capital expenditure in the middle-period.
< h2 style="text-align: justify;">Economic recession or slowdown will be less in developed countries
Now it can be debated whether the effect of recession or slowdown, especially in developed countries, will be less or will be widespread, or inflation will be stable or for some time. But there has been a reduction in the prices of commodities and energy (the share of energy imports is up to 4 percent of GDP), which is a matter of some relief. We cannot confidently say that margin pressure has eased, but we can say that things are moving in the right direction, at least in terms of commodity consumption.
However, there are many such risksim, which we have to keep in mind. First, the uncertain geopolitical scenario is going to be a long-term issue of continuity of the lie chain. Second, the transition from an environment of low interest rates and easy liquidity of almost a decade now to a climate of high interest rates and tight liquidity. Inflation due to the first riskim is a concern not only for India but for the whole world and we have seen that central banks are trying to curb it with strict monetary policies.
< h2 style="text-align: justify;">Economic Status of India
In India, we are getting early signs of some more problems – forex reserves are declining, trade deficit is high and rupee is very weak. Inflation has remained high and has been above the Reserve Bank’s comfortable level of 6% for the past three quarters. We have performed better than many other countries and our growth rate is also very good, but the economy was that this divergence or excellent performance does not necessarily mean that the markets are not linked to each other, even if the performance How much increaseor be it. Hence it cannot be ruled out that in the short term our markets will also move along with other markets.
Which sexters are showing signs of strength?
Every fund manager in a fund house follows the method of investment as per the mandate of his product. Similarly, we generally have a positive outlook for the financethird, industrial and consumer-discretionary (led by&zwj&auto) segment. The financethird segment (especially banks) are now in a situation where demand and off-take of credit is increasing and at the same time the books of the banks have improved, the bank has good capital. ConsYour Discretionary Secter We are positive for some segments like auto which are now seeing improvement after a period of slowdown. Many good things have happened in these – prices of raw materials have come down, supply chain problems have come down and companies have launched new products especially on electric/hybrid platforms. Huh. We are positive about this sexter, but going forward we will rely only on select stocks and adopt a more bottom-up approach.
Given that in recent times this segmentter the market Compared to better performance. Talking about the industrial sector, it will benefit from favorable policies like emphasis on foreignisation, Make in India/ProductsTension LinkD InvestmentTement SKim. India is creating an environment for ManUfacCharging and a competitivecompetitive cost structure will help India to develop its ManUfacCharing strength. Also, at the global level, there has been a high dependence on China for charing, but this may change due to recent geopolitical developments. India is taking steps to take advantage of this potential change.
When the debate is about value and growth, we prefer the Growth at Reasonable Price (GARP) path, which is the medium of growth at reasonable prices. It is a simple yet effective investment principle and has been tested time and again. When we invest in stocks for growth, it is equally important to see whator the price we pay for growth. GARP strikes a balance between these two principles of investment and hence you get the benefit of both. The market oscillates between the two sides of optimism and pessimism – in which we see a price increase as well as being too cautious about the price. GARP helps us avoid getting caught in the trap of overpricing and valueu.
India’s performance better than global indices
The valuations of our shares are not in range, possibly due to the expected gains in earnings. India has outperformed most of the global indices, but firstly – good growth in corporate earnings in the last two years and expected to perform well in the next two years and secondly – RBI and government Due to the proper macroeconomic management by India, India stood amidst ups and downs and panic around the world.
But there are many such risksm from which India has not completely escaped. We cannot rule out periodic declines or comparatively poor performance in the markets. But even if such situations do come, they will be for a short period and will be of a transitory nature. We can assume that the Indian market is a strong long-term investment option that can drive growth. The easing of the high inflation environment (due to the higher base), moderation in energy prices and strong earnings growth in corporate earnings are key indicators for the Indian market. The risks from global developments and geopolitical actions remain yet we believe India is in a better position.
(The author is Srinivasa Rao Ravuri, CIO, PGIM India Mutual Fund. Published views are his personal. Please take the opinion of your investment advisor before investing.)