Last couple of months has been a challenging period for equity investors globally. Even in India, while the headline Nifty 50 has shown smaller correction, the broader markets have seen significantly higher drawdowns across sectors. Off course, quite a few such reasons have cropped up including inflation, interest rate increases, crude price rise and the Russia-Ukraine stand-off among others. Notwithstanding the fact that these headwinds are serious, we try to analyze various factors with logical reasoning and data points in the attached note.
The worst seems to be discounted and though we might not have a sharp V-shaped movement, markets should start to move into positive trajectory. We continue to maintain our stand that the past two years market returns were extraordinary and will not be repeated but decent mid-teen returns over the next 3-4 years are still possible. A near-term event to be watched will be the state elections, particularly the outcome in Uttar Pradesh.