Global Geopolitics Aside, Indian Markets Set for Growth

The recent conflict between Israel and Hamas is undoubtedly a source of sadness for many. The unfolding humanitarian crisis in the region should have been prevented. However, for DSIJ it is crucial to focus on the implications and what this conflict means for our readers. In its current form, I do not foresee broader economic or market impacts resulting from this conflict. Unlike Russia’s invasion of Ukraine which had significant direct and indirect effects on global energy, fertiliser and food supplies, the Israel-Hamas war, assuming it does not escalate into a larger regional conflict, is unlikely to cause significant disruptions to the global supply of critical goods. 

The limited response from major regional actors like Turkey, Egypt, Saudi Arabia, Qatar and the UAE to the Israel-Hamas war reflects the unique nature of regional politics and alliances. Sympathy for innocent civilians’ plight is certainly one reason, but there is also a shared concern in many parts of the Middle East about the desirability of avoiding war, conflict and potential refugee crises. Hence, these events might not trigger a bigger sell-off. 

In this context, our economy and market continue to exhibit resilience. Our equity indices have experienced significantly fewer corrections compared to many other major markets, both in the developed and emerging categories. This outstanding performance has prompted numerous international brokerage firms to increase their overweight position in Indian equities. This is due to the fact that relative growth is on the rise, and the macroeconomic stability framework appears robust enough to withstand a higher real interest rate environment. 

Recent trends in high-frequency data also reinforce our optimistic outlook, with decreasing concerns about inflation and improvements in the trade balance. A recent tracker indicates that projects under implementation are experiencing widespread growth, and the PMI manufacturing index has remained in the expansionary zone since July 2021, likely fuelled by strong domestic demand amidst broad external economic challenges. 

Hence, I hold a strong belief that the Indian equity market will reach new highs by the year’s end and even better by next Diwali. In our cover story, we have provided a selection of nine stocks for you to consider when building a robust portfolio. I am proud to inform that our `10 lakh Diwali portfolio from last year has consistently outperformed all the benchmark indices, delivering approximately 20 per cent returns in the past year in contrast to single-digit returns from leading equity indices. 

In one of our special reports, we have analysed the Quarterly Results for the period ending September 2023. The overall results have been a mixed bag. The banking and finance sectors have shown strong revenue and profit growth, while the IT consulting and software and textile sectors have faced challenges with limited growth and profitability. Pharmaceuticals and realty have displayed significant improvements in profitability, particularly in operating profit margins. For a more in-depth analysis, please refer to our special report. 

In an engaging special feature within this issue, we address the age-old question of many investors – whether to invest in real estate or equities. This story will assist you in making informed financial decisions and provide insights into how you can gain exposure to real estate without the typical hassles associated with property ownership. With festivities around the corner, I would like to take this opportunity to wish each and every one of you and your families a very Happy and Prosperous Diwali! Together, as partners in progress, we are committed to navigating the realms of opportunity, fostering growth and building enduring wealth.

RAJESH V PADODE
Managing Director & Editor