Adani Saga: Markets Will Overcome

There were some important market events lined up last fortnight that should have shaped the equity market movement for days ahead. However, these important events such as US Federal Reserve action and the Union Budget 2023 were completely overshadowed by the Adani Group saga. Companies forming part of the group saw a massive decline in their share prices. The market capitalisation of these companies dropped by a huge `9.37 lakh crore (around USD 115 billion) from January 24 to February 6. To give you a perspective, this drop is equivalent to some of the African countries’ GDP such as Kenya and Ethiopia. 

There was even some collateral damage as the banking stocks fell due to their exposure to the group’s debt. Many investors are concerned about its repercussion on the overall Indian equity market performance and its attractiveness from foreign investors’ perspective. Being in the market for the last 37 years gives us, DSIJ, a vantage point to see things clearly with experience. What we can see is that it will not inflict much pain to the overall equity market in India. It will only have a short-term implication. I am confident that our regulators will take this issue to its logical conclusion. This will help investors, both domestic and international as well as retail and institutional, to repose their faith in the Indian equity market. 

The Adani Group saga also reminds me of the famous short-selling on Reliance Industries’ shares in 1982 by a cartel of bear operators just before their rights issue was to open for subscription. At the end of that entire event, shares of Reliance Industries emerged much stronger. However, it should not be construed that the fall in the share price of the companies under the aegis of the Adani Group presents a buying opportunity. The entire regulatory and trading mechanism has changed now and you should approach these companies based on their own merits. The Quarterly Results tend to set the tone for market direction and help investors take cognisance of the crucial ground realities. Indian companies are making a strong comeback this season. 

Our cover story in this furnishes an extensive analysis of the Q3FY23 results, highlighting the hits and misses and deciphers the trend for this earnings’ season. There are several key companies that have declared better-than-expected results – watch out for such names in the cover story. Then we also have a sector leader company declaring very good set of numbers despite that particular sector not doing well. Such inspiring companies should always be on an investor’s radar. The cover story should help you track earnings of some of the high-quality names. Further, our special story in this issue focuses on the performance of Portfolio Management Services (PMS) funds in 2022. 

After heavy underperformance by several PMS funds, how does one decide on PMS investments? We have answered all the sensitive aspects of PMS investing in the special story. Meanwhile, in my view, the equity markets post the budget announcement should recover owing to the lofty announcements regarding capex and the increase in spending. The expansionary budget, I think, will provide support to almost all the sectors directly and indirectly and will help create jobs. There are opportunities in sectors such as private banks, defence, manufacturing and green energy. There is a high probability that the markets will end higher in 2023. Every dip should therefore be used as a buying opportunity.

RAJESH V PADODE
Managing Director & Editor