edited by: Namit Singh Sengar
Last Update: January 19, 2023, 13:43 IST
DSP said that often avoiding critical mistakes at critical moments, maintaining investment discipline and accepting high equity returns with a certain level of volatility makes all the difference. (Representational image)
In his annual note ‘2023, It’s a Relative World’, the DSP said the country’s structural transformation is accelerating due to several factors.
Despite potential short-term challenges, DSP Investment Managers said on Thursday it was confident that India The story is now a reality.
In his annual note – ‘2023, It’s a Relative World’, DSP said the country’s structural transformation is being accelerated by a number of factors, including de-leveraging by corporates, increase in capacity utilization in manufacturing, infrastructure Government investment and well-being are included. capitalized banking system.
This represents a sea change and a significant opportunity for investors as India continues to grow in the global economy, the statement said.
The note noted that currently there are two main risk factors to consider: interest rates and growth. While central banks are currently prioritizing inflation over growth, there are signs that inflationary pressures may be easing.
The market may not be considering the possibility of a slowdown in growth enough. This may lead to further decline in the near future. Current multiples for Indian markets (MSCI India index trading at ~21X forward PE) are high compared to history and returns from these levels have been moderate in the past.
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Vineet Sambre, Head (Equity), DSP Investment Managers Pvt Ltd said, “It is heartening to see that Indian investors are choosing to participate in the growth of the Indian economy and markets. Our recommendation to these investors has been simple and consistent is: take a balanced approach.”
“It is important to be practical and to recognize that future returns may be lower when an asset is bought at a higher price than it is acquired at a lower price. It is important to rebalance the portfolio so that it is based on your goals and risk profile. You have to have the right mix. Having the right expectations, maintaining discipline and being patient can take you very far in your investment journey,” said Sambre.
The note also highlights that 2022 has been a challenging year for the ‘quality’ factor in India and globally, especially in the US where it experienced one of its worst years since 2008 . But the ‘quality’ factor has been one of the best. Performance Factor, second only to ‘Momentum’ since 2007.
It is worth noting that in the past the recovery of this factor has often been gradual rather than sharp. In contrast, the ‘Value’ and ‘Momentum’ factors exhibit more significant fluctuations. Therefore, we need to be aware of these behaviors, the note highlighted.
While it is natural to speculate on future movements in commodity prices, central bank policies, liquidity levels and the impact of COVID-19, the DSP noted in the note that it is important to recognize that these factors have a significant impact on the economy. There can be no effect. The success of most investors.
Instead, it often makes the difference by avoiding critical mistakes at critical moments, maintaining investment discipline, and accepting that high equity returns come with a certain level of volatility.
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