As far as market returns are concerned, it would not be fair to expect it from the current period to the medium term. At present, the trend of the market from top-down to bottom-up will be correct.
2021 is about to end and 2022 is beginning. If we look at the last 21 months, it is reminiscent of the opening lines of Charles Dickens’ famous novel A Tale of Two Cities, in which the picture of that period has been drawn. The lines start like this – this was the best phase, this was the worst. This was the age of knowledge. It was a time of foolishness. It was a time of faith. It was a period of disbelief. It was the time of light. It was a period of darkness. It was a spring of hope. It was a winter of despair.
We saw a similar phase during Corona as well. Economically speaking, there has never been such a big divergence between asset prices and economic conditions. Most of the earlier shocks were of a financial nature in which corrections and recovery take place. This time the matter was related to health and medical and the world reacted like it is given in financial crisis. For example, cash and easy money were provided. Because of this, global property prices went up for a while.
Inflation and the risk of interest rate hikes
But what will happen now? The big danger is about inflation and hike in interest rates. Therefore, the environment of easy liquidity will end. The ongoing global debate on inflation rate and interest rate hike in the coming days is not over yet. Rising inflation, increased interest rates and changes and tightening of monetary policies can cause problems for all emerging economies including India. As far as India is concerned, it is still a country with partially convertible capital account, therefore Slightly less affected by global tremors. Sectors such as real estate and industrial manufacturing and capital expenditure in India were sluggish for the past decade. But now it is gaining momentum a bit. If the China Plus One strategy gains further strength, it can help India and Southeast Asian countries.
Do not expect returns from current round till medium term
As far as market returns are concerned, it would not be fair to expect it from the current period to the medium term. At present, the trend of the market from top-down to bottom-up will be correct. The choice of the right asset or stock and its allocation will decide how the returns will be. However, consumption in rural areas in India has not yet gained full momentum. At the same time, Omicron’s concerns have also increased. However, it is too early to assess its impact. However, after the initial uproar, it is now expected to cause less deadlock around the world.
ATM Charge Hike: Withdrawing money from ATM will be expensive from tomorrow, know the full account of the increased charge
Businesses will have to deal with new changes
The discussion and debate on the economy can be continued but it is important to know about the changes in the future context. However, in the coming years, changes can happen at a much faster pace. We can see a lot of new changes at this time and new concepts in some old ones like metaverse, blockchain, crypto, NFT, artificial intelligence, machine learning and climate change. The list of such words is getting longer. If we take the example of investment world, then new age companies, their business models are being worked on with enthusiasm. They will not be investment-worthy when viewed in the traditional way and given their sheer size, this cannot be ignored. This is just one of the hustle and bustle happening in the rapidly changing environment. In such a situation, I would like to mention a statement of Dr. Wayne Dyer – change the way you look at something. The things you see keep on changing.
(Article: Ajit Menon)
(The author is Ajit Menon, CEO, PGIM India Mutual Fund. Personal views expressed in this article are not necessarily agree with Business Khabar.)
Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.
.