Equity Market Experiencing Winter Shivers

With an intense cold wave sweeping across most parts of the country, the equity market too seems to be shivering under its spell. This can be assumed from the recent phase of volatility. In the very first 10 days of trading this year we have already witnessed Nifty swinging more than 200 points more than once! The biggest concern for the market remains the inflation trajectory and the US’ Federal Reserve’s direction on interest rate. Every negative news on the economic data front is cheered by market participants expecting that the Federal Reserve will pivot earlier than anticipated.

If history is any indication, I do not see inflation coming down drastically anytime soon. In the past decades, outsourcing and sharing the benefits of globalisation in the form of low goods inflation contributed to a disinflationary-type environment for the better part of the last 40 years. However, the pandemic and escalation in geopolitical tensions has disturbed the supply chain, thus building pressure on inflation. It will be some time before new supply chains are restored. 

This presents a huge opportunity for India to become an indispensable part of the global supply chain and an alternative to China. Signs of this are clearly visible with a USD 20 billion semiconductor fabrication plant to be built by Taiwan’s Hon Hai Technology Group, known as Foxconn, which manufactures Apple iPhones, in a tie-up with Vedanta Group. For the period April to December 2022, the value of iPhones exported from India were twice the value exported in 2021.

With valuations currently cheaper in China, it is, of late, drawing a lot of attention from FPIs. However, with the right talent pool and expected conducive government policies, India will definitely become a competitive global manufacturing hub going ahead. Hence, we should be seeing the FPIs return to India shortly. Our cover story in this issue talks about the opportunities in the manufacturing sector in India. We believe that this sector will outperform in 2023. To understand why and the opportunities in the manufacturing sector, the cover story will be a good starting point

Also, in the current issue we bring to you special coverage on ‘Best Business Schools in India’. This issue is going to help thousands, if not millions of MBA aspirants, to narrow down their search of finding an apt business school for themselves. 

Inflation can be stickier than most of us are expecting. However, manageable inflation can be great for equities and hence I would advise investors to remain optimistic on the asset class in 2023. Humongous opportunities are present in front of us if we are willing to see in the right direction and visualise the impact of the policy decisions. Our team is already sifting through lot of data points as they prepare to understand the upcoming budget and where the government intends to spend in 2023. Stay with us as we interpret the plethora of information and bring to you the best opportunities to invest in.

RAJESH V PADODE
Managing Director & Editor