As a result of geo-political tensions, scheduled general elections in India during the mid-year and in the USA towards the end of the year as well as valuations that had sky-rocketed, volatility during 2024 was anticipated by many of us.
What was not anticipated though was a fresh indictment with legal implications on the Adani group by the US SEC. The Foreign Institutional Investors (FIIs) who were already nervous about the rich valuations of Indian stocks and had already commenced profit-booking, then started selling even more aggressively leading to a 10% correction in the key indices.
The silver lining here was that an overheated market let off steam and there were value picks available for the taking among the lot of shares whose prices got hammered down during the selling spree. Is the selling over? Well, that is anybody’s guess but the fact remains that, notwithstanding all other constraints and negatives, the Indian economy is clearly headed in one direction over the long-term and that is – upwards.
So, once the dust settles, will those FIIs be back, sooner rather than later, on a buying spree and will that trigger a sharp surge in the Indian indices? Time alone can tell, though as I always say, if I were a betting man, that is where my money would be. When that will happen, if it does, is really the tougher question to answer.
For long, at the guest lectures I conduct at B-Schools I have spoken to the students about the difference between linear and lateral thinking while investing at the bourses. Back at my place of work, we interact with a fair number of well-educated High Net Worth Investor (HNI) patrons from urban areas across the globe, who have expectedly discussed the state of the market and the road ahead with my team.
Most of them have even decided to top up their investments via the SIP / STP route which, I believe, is an optimal linear decision. A few of our HNI patrons, as I have mentioned before in my column, hail from rural areas across India and what they lack in terms of educational ‘labels’, they more than make up with their lateral thinking ability to sense a killing whenever the opportunity presents itself.
A couple of them surprised us by simply asking to invest fairly large sums via the Lump-Sum route, sans any queries on the state of and outlook for the equity market. As a matter of abundant caution and professional compliance, my team did explain the pros and cons of making lump-sum investments and that too in a market that seems precariously perched in the near-term. Well, their line of thinking was simple.
The investments they were making were for their next generation and with a time frame of a decade in hand, they were confident that the returns would be handsome. Given that kind of clarity of thought, there was little left to debate. Linear or lateral thought, it is the ability to ride risks and with immense patience, that separates ‘few winners’ from the ‘many also rans’ in any equity market. Decide which you want to be as 2024 fades and 2025 closes in.
Ashok Kumar
Head of LKW-India.
He can be reached at ceolotus@hotmail.com
(Views expressed here are personal)