Patience – Key to Building Wealth

There is a Bull Market which everyone hates. Yes you heard it right. It’s rising commodity prices. It not only stokes Inflation but also squeezes Corporate profitability as input costs for Companies rises. And currently we are riding a commodities bull Markets. Be it crude Oil, Coal or Metals. Largely due to Ongoing Russia-Ukraine war. Well Ukraine doesn’t have much at stake other than losing their lives, Russia didn’t assess this massive resistance and has been severely jolted by strong Ukraine Fight back and global Sanctions.

Some more headwinds: As US inflation shot up to 4 decade highs (nearing 8%), to douse inflationary fire the US Federal Reserve will hike 0.50% benchmark interest rate in May 2022 and more shortly, India CPI has touched 6.95%, though not alarming. What I’m very mindful of is Corporates results, because all others are external factors which impact corporate profitability. But as long as corporate profits are growing their Stock prices will continue to rise. Results so far has been mixed, IT Pack (TCS, INFY, HCL Tech) reported higher Profits & revenues, however the profit margins were down than analyst estimates.

 

                                                             NIFTY 2010- till date:

  • Korean Conflict, 2G license Scam, Bribe-for-loan scam involving banks saw NIFTY correcting nearly -23% in 2011.
  • 2015 was equally turbulent, dismal corporate earnings, poor monsoon and Nervousness GST and other bills clearance led to -20%+ drawdown in Equity Markets. Chinese shanghai Composite nose-dived 45% in span of 3 Months. 
  • 2020: Corona Crash. We do remember, what happened off lately.

One thing is common in all these crashes, Markets have rebounded back strongly, hence Asset Allocation plays the most important role in Building Wealth.

Global GDP Projections for 2022-2023

Going forward if I look across the world and try to find a fastest growing Large Economy, It’s INDIA.  We are the only country which has grown at over 8% in 2021, will grow at nearly 8% in 2022 and at 6.9% (Still the highest in the global Map) in 2023.

So it’s ok if FII are pulling out from last 12 Months, DII (domestic Institutional Investors) as supporting and the blessing comes from the fact that retail investor are now mature enough to buy market dips. And for the FII who have been selling, (it has more to do with booking profits and US rising Interest rates) but they just can’t ignore 8%+ GDP for long.

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