Parody of Indian Stock Markets: Expectations vs Reality
The grip of Covid-19 tightens on the Indian economy. It has pushed the entire economic infrastructure in a downward spiral. The stock markets are volatile, while the major sectors are showing a downward trend, and layoffs are increasing.
Bringing the economy back on the track and combating the disease is the need of the hour. The Central government on its part has introduced a slew of measures to maintain liquidity levels in the market. Although the situation is alarming, there are certain positive elements (especially in the stock market) that can be leveraged for a better future.
Firstly, the markets are volatile and have not collapsed completely. Such fluctuations indicate that investors have not completely lost hope. Thus, investors should be optimistic and start building up portfolios. The markets would get back on track sooner or later. Thus, channelizing finds through an apt PMS (Portfolio Management System) would not only optimize the investments in the short term but would also make the investments reap high profits in the long-run.
Secondly, recession or economic slowdown is always temporary. It is not the first time the markets are affected by a recession. As a matter of fact, such scenarios are seen approximately every 10 years. Investors need to understand this. It’s pertinent for them to take calculated risks and not place there trust on the ‘discretionary decision making’, that is rampant in the stock market ecosystem. Investment strategies should be free of any human biases. The scenario is conducive for channelizing investments through technology-driven platforms that take calculated risks and optimizes the output.
Thirdly, the GoI (Government of India) and the RBI are working tirelessly to cushion the economy. The measures implemented by the government bodies are pro-growth and pro-investors. The emphasis on the Indian manufacturing sector would ultimately result in the development of a self-sufficient Indian economy. It might not be long before we witness the arrival of indigenously developed manufacturing powerhouses. On the other hand, the Governments move to check the Chinese takeovers of loss-making Indian firms also safeguards the Indian economy. It’s possibly a blessing in disguise for investors willing to participate in the growth of Start-ups which have the potential to be the market leaders of the future.
Fourthly, the increasing market confidence in PMS. Over the years, PMS has become the first choice of investors. It is perhaps the most versatile investment vehicle for a meaningful, benchmark based, bottom-up stock picking. This inherent flexibility of the investment tool has made it the vehicle of choice for investors, who aim for customized portfolios. The industry has shown a strong growth trajectory of 18% CAGR (Compound Annual Growth Rate) between January 2014 to January 2019, with AUM (Assets Under Management) increasing from Rs.6.04 lakh crore to Rs.13.70 lakh crore.
In totality, the investors should view the grim situation with optimism and take calculated risks. This would keep their investments healthy and simultaneously keep strengthen the Indian economy. The negatives of the market can only be converted into positives by tactful, logical, and rationally compartmentalized investing.