Motilal Oswal Asset Management Company Ltd. (MOAMC) is a public limited company incorporated under the Companies Act, 1956 on November 14, 2008, having its Registered Office at 10th Floor, Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai - 400025.
Motilal Oswal Asset Management Company Ltd. has been appointed as the Investment Manager to Motilal Oswal Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated May 21, 2009, executed between Motilal Oswal Trustee Company Ltd. and Motilal Oswal Asset Management Company Ltd.
Close

Keep the Faith

Blog Blog Details
  • January 18, 2019
  • Akhil chaturvedi|
  • Head-Sales And Distribution
Akhil Chaturvedi


So, the assembly elections are over in the 5 states and the results are out, there was consensus that Rajasthan would not re-elect the ruling government and other two states namely MP and Chhattisgarh would see BJP winning back but what is the actual outcome? – BJP loses all three large states. Fear of markets going down because of election results was keeping investors cautious and on sidelines, but the theory was un-founded because markets are actually up post-election results. We have to understand markets and elections outcomes are difficult to predict and usually they tend to outsmart us. We must understand investing for long term in equities is all about holding on to companies which deliver superior earnings growth through outstanding business models run by great managements in long run. Quality coupled with longevity of earnings is of prime importance in order to build wealth. Yes, at best try and buy more when markets are down and less when markets are high – but keep buying at all times as long you have investible surplus and risk appetite for equities as an asset class.

Moving on, the year 2018 started with correction in markets essentially on backdrop of premium valuations which got built in the year 2017 as the markets were making new highs all throughout. Markets always need reasons to go ‘UP’ and similarly ‘Down’. In current year given the situation that valuations were stretched, corrections began with the news on introduction of long term capital gains for equities in the budget, hence this became the trigger and since then there have been developments such as SEBI introducing scheme rationalization in which cases fund houses needed to be re-calibrated their stock holding based on the new defined criteria of Large Caps/ Mid-Cap and Small Cap stocks, then we had a situation of deteriorating macros with Oil moving up to almost $80 which led to higher inflation, weakening rupee, rising interest rates, widening of CAD etc…some of the other concerns were around introduction of ASM (additional Surveillance Mechanism)/ headwinds over NBFC’s (led by IL&FS defaults) and trade war introduced by US. All this put together kept the underlying tone of markets bearish.

As we approach towards the year end and beginning of new-year 2019, a lost of dust seems to be settling down with Oil prices settling down at $60 this will certainly have a very positive impact on India’s domestic macros, fight between US – China on trade barriers also seem to be cooling off, recovery in corporate earnings and reasonable valuations as compared to 2017. Therefore, odds being in favor of markets we as investors should be more positive than cautious or negative.

Also, don’t miss the larger narrative for India in long term, money is made is rising economies and India being one of the fastest growing economy with nominal growth of 11-12% the GDP of India would $5 trillion by 2025 which is actually double from today in next 6 years or so…this would mean our per capita income would also rise from $1800 to around $4000 by 2025. Rising economy means country is prospering, along with that the people also prosper with rising income levels leading increase in consumption activities benefiting many industries immensely. This along with various reform measures introduced by the government namely housing for all, doubling of rural income, GST, JAM and others will lead to more sections of society migrating from rural to urban category and lead to pent up demand for various products and services. Therefore, India provides an opportunity of 5-10-15-20 years of double digit nominal growth and investing with such a horizon would ensure lot of wealth creation for investors.

Thus I say, have belief and keep the faith in India and Indian equities for long term compounding of wealth.

     


Share this articles
  • FB Comments
  • Comments without login
Facebook comments not available
Newsletter
+91-22 40548002 | 8108622222
Site best viewed in IE 9.0+, Mozila Firefox 4.0+ and Google Chrome at 1024 x 768 pixels resolution Disclaimer | Privacy Policy | Feedback | Subscribe our rss feed | Voting Policy | Sitemap