14/05/2022
In recent times, Investors are asking these 3 things:
1. *Impact of the Ukraine war*
2. *Impact of US Fed rate hike*
3. *Impact of Inflation*
With this message all the 3 concerns will be addressed:
🇮🇷
*(1) IMPACT OF THE UKRAINE WAR:*
Let’s look back to similar historic events and their impact to understand this situation:
👉🏻In 1986, *the Libya Bombing* happened
Market Declined by 6% but *recovered in 24 days*
👉🏻In January 1991, *the first Gulf war* happened
It had *no impact* on our market.
👉🏻In March 1999, *the Kosovo bombing* happened
Market Declined by 14.1% & but *recovered in 29 days*
👉🏻In May 1999, Parwaz Musharff declared *Kargil War*
It had *no impact* on our economy.
👉🏻In September 2001, the *Twin Tower attack* (9/11) happened
Market Declined by: 22.4% but *recovered in 48 days*
👉🏻In March 2003, the *Iraq war* happened
Market Declined by 9.4% but *recovered in 49 days*
👉🏻In Jan 2011, the Arab Spring happened
Market Declined by 7% but *recovered in 41 days*
👉🏻In March 2014, the *Syria conflict* happened
It had no impact on our market.
✅So, in situations like this, we have faced an* average Drawdown of 10%* & *recovered in 38 days*
🇮🇳
*(2) IMPACT OF US FED RATE HIKE*
Let’s look back to previous Fed rate hikes from Fed and their impact:
👉🏻*Between April 04 and April 06* - the *US hiked the rate* from *1.03% to 4.86%*
*Nifty delivered 95%* during this period.
👉🏻Between Dec 15 and Dec 18 - the *US hiked the rate* from *0.13% to 2.40%*
*Nifty return* during this period was *36.5%*
✅Like the above-stated examples, in 11 out of 12 previous Fed rate hikes (which is 91.66%), Indian markets gave positive returns…
🇮🇳
*(3) IMPACT OF INFLATION*
whenever inflation was contained within 10%, it has helped the Indian Equity market. Also, moderate inflation has been kind to equities so far.
Now we have more advantages, than ever before
a) We have the *Strong Nifty earnings*
b) Nifty at 20.8 times now is not on the expensive side, as we have seen up to 25 times in the past
c) *Strong reforms like GST* provide structural stability.
d) *Banks are now at their peak of health* and ready to fire if credit growth comes back
e) *Corporate balance sheets have the least leverage* currently as they repaid debts out of savings from the corporate tax cut
f) *India is going to be the fastest-growing economy in the world as per IMF*
g) We have *strong growth favouring the Central bank*
✅To conclude,
Every sideways market will be an opportunity in the hindsight
So, *Don't hesitate to invest now*
