The time to invest is now. Despite the unprecedented turmoil, the Indian economy emerged unharmed.

2022 was an unprecedented year for the global economy with so many macro-economic disruptions happening in a single year. It all started with the Russia-Ukraine war towards the beginning which led to a domino of events. Global supply chain disruption happened, which led to further elevation of global inflation, the Fed and other central banks started tightening like never before, emerging markets experienced currency and balance of payment issues and equity markets witnessed capital outflow. Global GDP growth slowed down from 5.9% in 2021 to 3.2% in 2022.

Quite naturally, investors were worried about the impact of the same on the Indian economy. While most people continued to maintain that India was de-coupled, markets were telling a different story. Despite strong earnings growth, overall CY22 returns stood at an abysmal 4%.

We are now at a juncture where most of the issues now seem to be out of the way. The inflation footprint in India and the USA seems to have softened considerably. Thereby indicating that the global tightening cycle is now largely at its end and a longish pause should follow. The budget has been good and growth-oriented and not overtly populist as most people expected it to be. After a long time, rural demand seems to be on a course of revival, which should lend a lot of support to the expected earnings growth for FY24. And lastly, valuations are quite comfortable at this juncture both from a historical trading perspective and when measured against the expected growth.

So, the time to invest is now, no doubt in my mind about that. However, the thing to realise is that 2022 gave us an important lesson. Despite the unprecedented turmoil, the Indian economy emerged unharmed. This underlines how strong the fundamentals of the economy are. We believe that from a long-term perspective, the Indian economy has the potential to reach the US$5trillion mark in the next few years and then embark on the journey towards US$10trillion.  Even if we assume a real GDP growth of 5.5% and nominal GDP growth of ~9%, it’s a matter of time before we become the third- largest economy in the world. GST implementation, corporate tax rationalisation, PLI and accelerated infra spending are just some of the key factors that are leading to this steady long-term growth of the Indian economy.

Now that we have established that India is destined for steady long-term growth, the second thing to realise is that the best way to make money in equities is to invest in “Good & Clean” companies and hold them for a long time. The longer you hold, the more wealth you create. It’s all about trying to spend as much time in the market as possible rather than trying to time the market. The goal should be wealth creation and not income generation.

Happy long term investing!

https://www.financialexpress.com/market/cafeinvest/ideal-time-to-invest-is-now-as-global-uncertainties-stabilize-india-destined-for-steady-long-term-growth/3058888/