The world is in shock as Russia launches armed forces on Ukraine. Due to the recent crisis, Indian markets are witnessing a massive selloff.
However, despite the market on a rocky mountain, serious market investors should not deter.
Furthermore, Nitasha Shankar from Yes Securities says the constant movement of investments would likely result in excessive trading and poor performance results.
Why serious market investors should not deter
Head PRS Equity Research Yes Securities Nitasha Shankar says, “This is a time when investors will be tested for their patience and discipline. Markets are choppy and will probably remain this way for some time, but that should not deter a serious investor.”
Furthermore, market analysts and experts say the correction was long overdue. Serious investors could buy quality stocks from a long-term perspective.
Tradingo Founder Parth Nyati says, “We are seeing the first meaningful correction in the market after a strong performance in 2021. A correction was due where geopolitical tension has become an excuse for this correction. Inflation and rising interest rates are the major concerns for equity markets and geopolitical tension is increasing the risk of inflation as energy prices are rising.”
Nitasha lists the reasons why serious market investors should not deter
- Balance sheets stronger than ever: India’s corporate health is the strongest in a long time – deleveraging has been seen across sectors and cash reserves have surged. As a result, corporate confidence is high.
- Promoters are optimistic about the business potential: This reflects in the increasing promoter holding in NIFTY 500 over time, increasing from 32% to 45% over the last decade. Interestingly, post-Covid, promoters have increased stake by 3%.
- The private capex cycle is making a comeback.
- Public capex still strong with the Government giving an impetus even in the recent Union Budget. The budget has put in place a virtuous cycle that we expect would drive a multiyear growth cycle by focusing on
- Sustaining economic recovery through demand-side measures and
- Supply-side reforms with the objective of kick-starting the investment cycle and encouraging private sector participation
- Announcing benefits directed towards domestic production and manufacturing especially in emerging sectors lie clean energy, etc., which is critical for India’s medium-term growth prospects.
- China plus one strategy is helping drive demand in specific sectors.
- PLI scheme is a big game-changer that is encouraging and supporting domestic production.
- The green energy transition for India is opening up a whole new investment opportunity for the investors.
- Moving in and out of investments based on undue reliance on recent performance is likely to result in excessive trading and inferior performance results. This is the time to revisit the basics, have confidence in the long-term potential of India and remain invested in the same.
Chief Strategist at Geojit Financial Services V K Vijayakumar says, “It, though highly valued, is a sector whose prospects are steadily improving. There are instances of promoters buying stocks of IT companies. This is an indication of better-than-expected results from the sector. Investors can use sharp market corrections to slowly accumulate high quality stocks in IT.”