Business news in recent days has been full of impending doom – Dow Jones down 20% from its peak, US 10 yr Bond at a multi year high, Dollar Index near 115 – all pointing to a bear market. But often hidden behind the bad news is a good investment opportunity for long-term investors.
Let us examine why?
When we see a negative headline, we don’t realise that the markets are forward-looking and have already factored in these events. Markets have already considered the possibility of commodity prices plunging or the US Fed hiking interest rates in the coming days long before the headlines shout it.
The market knows before we do that in the coming months US inflation is likely to go down more or less at the same speed at which it rose. This will eventually reflect in the financial numbers be it inflation or anything else leading to a u-turn in the market cycle.
When the financial media talks of UK inflation at a 40-year high of 10%, what it doesn’t tell you is the 65% plunge in natural gas prices from their peak which will positively impact the efforts of bringing down the inflation.
Thus in the bevvy of negative news, one often misses the available opportunities and then tends to regret it when markets go about reclaiming their lost glory.
As far as Indian markets are concerned, we are in a sweet spot.
The S&P has an important support at 3600, and in case it takes this support and reverses, our markets has high probability of touching new highs. If there was ever a right time to invest in the Indian markets, then the TIME IS NOW.
The Indian markets are just 9% down from their all-time high which is the lowest vis~a~vis global markets. There is a reason why India escaped with minor bruises while other economies bled. During Covid, countries like US and UK printed currency to shore up their economy while India didn’t. In a post-Covid world, when revival happened, India’s upswing was Aatmanirbhar while for others the surge was artificially propped up due to the newly printed currency.
Brent crude is now at $84 from its peak of to $ 125 and even if it were remain in this rage of $80- $90, it will still be a big positive for India.
The surge in local consumption is another positive for our economy, and the government schemes to boost manufacturing via PLI (Production Linked Incentives) schemes and other sectors have had a positive impact.
With the possibility of a US market turnaround, this is the right time for investors to Cherry pick some good stocks at discounted prices in this BIG BILLION SALE and wait for bumper returns given the high possibility of Indian markets reclaiming their earlier highs and even breaching them.
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