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Journalism of Courage
As Indian markets fell sharply in line with global markets over rising concern on tariff war and slowdown in global growth, Prashant Jain, founder and CIO, 3P Investment Managers told Sandeep Singh that while there will be short term pain on account of correlation between the markets, Indian economy is more resilient and is good in the current situation.
He advised investors to invest in large caps in a staggered manner and said that investors should avoid small and mid caps.
Edited excerpts:
Why have the markets fallen?
Globally there is a concern around tariff war that has resulted in a panic. The US yields have fallen sharply, the dollar has weakened, and the oil prices have fallen. The equity markets around the world are witnessing a sharp decline, and since there is panic in the world, there will be some correlation that is resulting in a fall in Indian markets.
How do you see the outlook for the Indian economy amid the global concerns?
India is relatively better positioned amid the developments around the world. The goods exports to the US are only 2 per cent of India’s GDP, and in any case, the duty differential with our key competitors in goods exports such as China and Vietnam has increased, which puts us in a slightly advantageous position.
As the oil prices and US yields have fallen sharply, it is positive for India.
Also, with the US markets, which was the most preferred asset class over the last few years, underperforming other markets, it should lead to the realignment of capital flows, and India is a potential beneficiary. Besides, rising services business exports have lowered India’s current account deficit to 1 per cent. This enhances the Indian economy’s resilience in the current environment. All this put India in a much better position vis-a-vis other nations.
What should investors do?
One key concern for India was valuations. With NIFTY valuations around 17 times at FY’27 earnings, these are reasonable multiples for a realistic 10-12 per cent earnings growth. With domestic flows staying strong and lower supply from primary markets, the Indian markets should do well over a three-year horizon. There may be short term pain because of the global markets correlation.
As Nifty seems fairly valued, investors should prefer large caps and invest in a staggered manner over the next few months. Investors should avoid taking exposure to small and mid-caps as the valuations continue to remain expensive.
