With consumer-oriented businesses as the past quarter is calling the best in history, Titan says their business has returned to pre-Covid levels. also talked about how things are looking for them. Has the consumer now come out of his shell? Are the markets likely to reassess some of the consumer dominated stocks?
I am an eternal optimist and we all generate wealth in the stock market by being generally optimistic. I don’t think India needs more proof that the consumer is back and businesses are recovering? I would go so far as to say that the animal spirits in the economy have gone wild and after many years of downturn then the financial crisis caused by IL&FS and the pandemic that put stock prices down for a few years. Now, everything has turned and spring has relaxed when it comes to corporate earnings, economic activity and stock prices.
So I think the next few quarters would be fantastic for the economy and for corporate earnings. This will attract a lot of equity investment from domestic and institutional investors. The little hiccups will keep coming. No bull market is without its share of risks and concerns and in our case, it’s about higher energy prices. What’s going on in China and the United States – all of those risk factors remain, but I expect our markets to navigate these risk factors quite safely. There will be a correction but we are in the middle of a great multi-year bull market.
Could rising energy prices impact India’s disposable income and macroeconomics given that we are an energy deficit country?
There will always be concerns and risk factors and I think at this point we are able to absorb higher energy prices given that we have seen crude oil prices this high there. has been around for many years and we have managed to manage this. This time around, if we are able to handle those challenges and the demand is good, companies are usually able to pass on the cost increases. Keep in mind that salary increases are also underway. So consumer incomes and disposable incomes are also increasing and so far the interest rates remain pretty much at the bottom of the scale and this should help us overcome these challenges.
Ultimately, there are cycles in energy prices and one would expect a correction there in terms of slowing consumption in China or the United States which may tip the market over. oil price on the negative side. I’m not that worried at this point, but the market will look at short term aberrations and correct and when it corrects 5%, 10% or even 15%. The investor should take advantage of these corrections to enter stocks that he missed earlier. While one can be a little cautious at these levels due to emerging risk factors and not invest new money, one can always be ready with the list of stocks and research the companies one wishes to buy when. corrections.
Should we look to digital platforms, technologies or businesses or should we look to economic value and truly cyclical stocks? They both have a valid point for cyclical bulls. The economy is coming back for computer bulls or digital bulls. What do you think is the most valid and the most sensible argument?
One of the qualities of a bull market is that there is sector rotation and it is a generalized bull market that we have seen in terms of a rise in stocks. The old economy is doing well, the new economy is doing well, stable businesses are doing pretty well as well. We have a whole range of script choices to invest in. If one creates a well-balanced portfolio that will contain platform companies i.e. new age companies and some of the old economy and commodity companies, it should work well. . One acts as a counterweight to the other.
You can’t see much in the future, but in two or three years how every sector and every company in the industry is going to form, but by creating a sector-diversified portfolio, you can achieve very good returns or one can invest in both sets of companies. This is also a good time to increase the number of stocks in the portfolio. There was a time before the pandemic when only 10 stocks were doing well, the markets were very tight and therefore investors were forced to focus and reduce the number of stocks in their portfolios.
Now we can expand and reduce portfolio risk by investing in new age companies, investing in companies that have unique business models, and then we have the whole IPO market. From the perspective of retail investors, especially small retail investors, they should not let the emerging opportunities in the IPO market slip away and this is a good way to start building a portfolio or adding diversity. within the existing stock. I am for both types of businesses and this diversity is something that is beneficial to the investor and not a cause for concern.