Markets are swinging between 57,000 and 60,0000 Sensex. Will it fall further? Or is this the bottom? Should I invest now or wait for more dips?
Our opinion on the current market valuations?
Market valuations can be broadly judged by the earnings of the underlying companies (PE Ratio) and their book value (PB Ratio)
The above graph clearly shows Indian markets are FAILY VALUED - Not expensive and not cheap.
Can it fall further?
Predicting the markets in short term (6 months/ 1 year) is like shooting in the dark. Similarly, it is very difficult to time the BOTTOM of the market.
What should you as an investor do?
a. SIP Investor
Markets are expected to be volatile for the next 6 months. SIP is the best way to invest in volatile markets. Keep investing.
b. Lumpsum Investor
It is very difficult to invest right at the BOTTOM of the market. Hence, stagger your investments for the next 6 months and buy on dips, remembering 57,000 Sensex is FAIRLY VALUED.
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Coming 3-5 years, selected pockets (Thematic/ Sectoral MFs) in the market are expected to perform much better than the broad markets (Sensex/ NIFTY/ diversified equity MFs). We would strongly recommend investing a portion of your money (not more than 20%) in sectoral/ thematic funds. However, pls note, thematic funds are usually high-risk-high-return investment options.
The below graph shows how different sectors have performed compared to Sensex from January 2022 till date -
What about the World economy, Inflation fears, and recession fears?
a. Inflation -
As shown in the graph below, clearly, Inflation is a bigger problem in the US than in India.
b. Indian economy -
India's Manufacturing PMI was 55.5 in Sept - which means our economy is in an economic growth period. While PMI for countries like US & Germany is below 50 (signifying contraction)
India's PLI scheme, China Plus one, and now Europe plus one has started playing out in India - leading to increase in Capex and manufacturing opportunities in India by leading MNCs (eg. Apple has started production of iPhone in India and is expected to scale it up further).
GST collection is around 1.4 lakhs crore = positive figure
Retail sales have grown substantially compared to pre-covid time.
Corporate Balance Sheets are stronger than ever (due to deleveraging done by them during Covid)
Conclusion:
1. Indian economy fundamentally is in a very good position in absolute terms. However, we might face some spillover effects due to economic turbulence faced by US & Europe.
2. Compared to other countries, Indian equity markets is a place to be invested in
3. Valuation wise - Stagger your investments across the next 6 months, keeping in mind you cannot time the bottom of the market, but can definitely invest at attractive valuations. And try to take some position in sectoral plays.
If we can help you invest, reach us on -
Email: Arpita@NiveshMitr.com
Whatsapp: +91-91110-06340
Schedule a Call: https://calendly.com/nivesh-mitr/niveshmitr