Many people thought that this acceleration would continue long after the outbreak had ended. Nikhil Kamath shared that sentiment and so made the decision to significantly increase their investments. Sadly, things did not work out the way he had hoped.
He responds that it is very difficult to distinguish and kind of point at one thing in response to the question of eagerness and a greater understanding that at the end of the day profits are to be made out from markets since your other investments are not providing those kinds of profitability and are not even able to beat inflation.
On paper, practically speaking, increased interest rates, unemployment, and decreasing global economy should also harm India, yet we appear to be comparatively unconnected to the majority of the globe, both developing and emerging.
One nice way to look at it would be the constancy in India and the foresight that we have had in policy decisions that may be playing out today. You could see it both ways—as the glass being half full or half empty. Today, a lot more individuals than in the past are enthusiastic and interested in India.
At least for the time being, the India story seems to be the dominant one. While the US is struggling with decades-high inflation and we are aware that the UK is now technically in a recession, the narrative appears to be that even with 6-7% growth, India is still doing better than the rest of the world.
Despite stating that the retail sector of the market is a minor one, the possibility of inflation reaching the level of retail investors has been raised. Retail has an impact on the market of maybe 10%, but not more than that, when you consider the open positions that are present.
What promoters are doing, the amount of foreign investment and the number of capital expenditures the government is undertaking often have a considerably greater impact on the market.
One rather obvious pattern over the past few months is that FIIs, who had been selling for a while, now appear to be buying. They have resumed investing and returning.
It is difficult to single out one element, but perhaps there has been a convergence of factors. It’s also possible that the amount of money pouring in has anything to do with how young and underdeveloped many sectors are.
On Friday, the China narrative was somewhat reflected in the markets as investors hoped that some of the Covid restrictions would be eased and that conditions would improve in China. Even if China does start to open up, the harm has already been done emotionally.
Even in light of global geopolitical unrest, the majority of multinational corporations appear to be searching for a hedge against China, and India appears to be that hedge at the moment for a variety of reasons.
And perhaps that will be yet another factor that helps Indian markets perform better, but just looking at valuation and in relation to other regions of the world, India is only 3% away from all-time highs.
One must also consider whether it makes sense for a foreign investor who is unconcerned with the region to lower allocation and invest in Nasdaq, for instance, where prices appear to have improved significantly recently. Therefore, people will have to wait and sort of keep an eye on how these events turn out.
Nikhil Kamath says that Sincerity dictates him to be a fairly pessimistic man who is extremely cautious with his money, to the question that he has insightful comments about the real estate market, and that real estate, a longtime favorite of Indians as an investment, will likewise become more difficult because EMIs are increasing and valuations are diverging, and which is more interesting of the two.
Real estate seems to me to be the least appealing of all the asset types that are now available, barring the demographics of aging populations, declining fertility rates, and rapidly rising interest rates. They will inevitably need to raise our rates if the Fed does.
The illiquidity of the asset when compared to debt, fixed income, shares, and gold is a significant factor that consumers fail to take into account when purchasing real estate. However, attempting to do so with real estate presents a much more serious difficulty because of how soon illiquidity sets in.