Russia launches attack on armed forces Ukraine And this incident has shaken the whole world. Indian markets have not been untouched by this and have witnessed massive sell-offs. This is a time when the patience and discipline of investors will be tested. The markets are volatile and will likely remain so for some time, but that shouldn’t deter a serious investor. The underlying reason for the long stay on India (in the form of investments) remains strong.
Reasons why one should not panic and walk long on India –
-Balance sheet stronger than ever: India’s corporate health is strongest in a long time – all sectors have seen deleveraging and increased cash reserves. As a result corporate confidence is high.
Promoters are optimistic about business prospects: This reflects the increasing promoter holding in Nifty 500 over time, which has increased from 32% to 45% in the past decade. Interestingly, post covid, promoters have increased stake by ~3%
-The private capital spending cycle is making a comeback
Public capital expenditure is still strong, even with incentives given by the government in the recent Union Budget. The Budget has created a good cycle, which we expect will drive a multi-year growth cycle by (1) sustaining the economic recovery through demand-side measures and (2) focusing on supply-side reforms to kick-start the investment cycle. With a view to start-up and encourage private sector participation 3) Announce gains towards domestic production and manufacturing, especially in emerging sectors like clean energy, etc., which are critical for India’s medium-term growth prospects Is.
-China Plus One strategy helping drive demand in specific regions
PLI scheme is a big game changer encouraging and supporting domestic production
Green energy transition for India is opening up a new investment opportunity for investors
– May result in going in and out of investments based on undue reliance on recent performance excessive trade and the following performance result. It is time to revisit the basics, have faith in India’s long-term potential and stay invested in that.
(Neetasha Shankar is Head of PRS Equity Research at Yes Securities)
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