© The Indian Express Pvt Ltd
Tags:
Journalism of Courage
Whenever there is a war situation, there is a knee-jerk reaction in the market — we have seen that in the past during the Gulf war, Iraq war, etc. Last week, everyone was comforted by the news that the Russians were retreating, and so the markets were not prepared. Hence, when Thursday’s situation unfolded, there was panic.
The near-term concern is the spike in oil prices and inflation, although I am not too worried. I see the outflow of foreign portfolio investors as a medium-term concern. They have been selling heavily over the last couple of months, and while that did put pressure on the rupee and the stock markets, it was absorbed well by the markets.
I do not think the current geopolitical event changes India’s prospects in the long term. Nothing changes fundamentally. India is not caught in the crossfire, and it has not taken sides.
Exports are strong, IT services exports are more than oil imports, and even the economic cycle is turning. The quadruple balance sheet — government, RBI, banks and corporates — is strong now, and there is a push for infrastructure spending.
I would say that the markets may remain volatile in the near term on account of geopolitical concerns — but my sense is that over the coming weeks, smart investors will use the decline in the markets as an opportunity to invest in good companies.
Rashesh Shah is chairman and CEO of the Edelweiss Group
