We believe that challenges which global economy facing in form of rising inflation and interest rates are not creation of immediate past events but seeds were sown much earlier.
China supplied products at much cheaper prices for last 3/4 decades and created deflationary environment. Post-covid, many countries are now looking at creating an alternative to China. This source can be their own land as well.
The other reason is narrative created around ESG and clean energy. This created a situation where new investment into traditional energy like thermal, coal, nuclear, etc. and metals has almost stopped. The world is paying price for this ‘activism’.
We believe that India will not be impacted much from it beyond some reaction because of headline noise.
We also believe that in every equation, there are winners and losers and no one side can remain winners and losers on continues basis. Things will fall back into some sort of equilibrium. This has happened in past and will happen in future as well. Oil moved from high to negative to high again! Not necessarily benefiting oil exporters always.
Rising interest rate is a great news for domestic fixed income investors be it FDs or debt MFs.
Investors may allocate money into select corporate bond funds/ PSU Bond Funds and Gilt Funds over in 3/6 months!
Investors may also look at investing into following equity funds
– Banking and Financial Services Equity Funds
– Auto Sector Fund (only one option)
– Flexicap and multicap funds.
Value will start emerging in IT and Pharma in next few months.
Avoid allocation into small and mid caps for few months.
Happy investing !