Be optimistic be wealthy – Part II

Be optimistic be wealthy – Part II

While 2020 has shaken the toughest of minds and taken everyone through most uncertain times, we believe that it is time to shun the pessimism and embrace positivity – a necessity, not just for our mental wellbeing but also for our financial health. Three years ago, we had written about the relevance of optimism in taking maximum benefit from markets (https://simplymutual.com/optimistic-wealthy/), we find it important to highlight the same in the context of the current scenario

A tough environment for the Indian economy has been prevailing much before the outbreak of the pandemic – since the days of the world economic crisis in 2008 followed by the days of large-scale scams and policy paralysis in our country in the early 2010s. With the formation of a new government at the center, the series of tough reforms that followed brought further disruption and challenged the way business was done in the past. Finally, by the end of 2019, things were starting to look up, but then Covid-19 happened

While for many years now it seems that Indian industry just can’t get a break, in the background, there have been intense efforts towards change and revival. Industry law makers have worked to strengthen the foundations that were found weakened with years of corruption and outdated practices; Good companies, large and small, undertook restructuring exercises to right-size, de-leverage, modernize, increase efficiency and to become globally competitive

sbi-profit-chart

The Indian economy was well poised for years of sustained growth before it went off-track with the onset of Covid. Now, with a vaccine distribution plan getting in place equity markets are looking ahead of the crisis. The fast pace of recovery in demand across sectors has convinced participants that the economy will get back on track sooner than expected. Foreign institutional investors have been the quickest to sense this and have pumped in their highest ever monthly figure in our markets in Nov’20 (USD~9 Billion) and continue to add in December

With the low interest rates regime here to stay for some time, we expect local demand to remain strong across sectors. Efforts to boost local manufacturing will continue to be in focus especially after the border standoff with China. The keenness of global MNCs to reduce over dependence on China as a manufacturing hub has created a favorable environment. The Indian government is eager to help with policies like the PLI scheme and rationalization of labor laws

Markets reaching all time high levels has created a sense of skepticism in the minds of investors. The extreme pessimistic environment during the lockdown period is fresh in the minds, but we need to quickly come out of this self-doubt and show confidence in the abilities of our industry captains to put our investments back on track for a stupendous performance in the coming years. While there are sections of the economy that are harder hit and will take some more time to revive, and news flow will keep the markets volatile, there is reason to be confident about the future

The simplymutual family wishes you a happy, prosperous and optimistic new year 2021

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12 Comments

  • Naval December 17, 2020 at 9:02 pm

    Totally agree to this sir. This PLI is a massive step and I am sure China will start feeling the heat soon atleast from handset market. Indian economy is at the point of inflexion.
    Also as heard it from Krishna Sharma sir, market shouldn’t be called as all time high. Rather, it should be called till date highest. It brings in positivity.

    Enjoyed reading it sir. 🙂

    • sm_user December 19, 2020 at 7:19 pm

      Thanks Naval

  • Mohit Saxena December 18, 2020 at 2:00 am

    Excellent analysis of the situation and brings out the future expectations in a very vivid and crisp way

    • sm_user December 19, 2020 at 7:18 pm

      Thanks Mohit

  • Sayal kharbanda December 18, 2020 at 9:59 am

    Agree optimism and patience will always remain the key to investing. Low interest rates for any emerging nation acts as a big catalyst in pushing growth to the next level. Demand sooner than later can play a big role in taking the most out of low interest rate situation as in a nation like ours, over-dependence of inflation canvas on monsoon and crude can change perspectives and interest rate trajectories completely.

    • sm_user December 19, 2020 at 7:17 pm

      Absolutely Sayal. I have seen a drastic change in RBIs perspective on things especially during the current regime. I am pretty optimistic!
      Cheers!

  • Sachin Sahni December 18, 2020 at 9:40 pm

    Crisp yet very insightful. Loved reading and it

    • sm_user December 19, 2020 at 7:13 pm

      Thanks Sachin

  • Manish Gupta December 19, 2020 at 8:44 am

    Well said Deepak, long-term prospect of our equity investment are very bright

    • sm_user December 19, 2020 at 7:13 pm

      Thanks Manish

  • Mayur December 25, 2020 at 12:19 pm

    Neatly Analysed Deepak Sir

    • sm_user December 29, 2020 at 2:21 pm

      Thanks Mayur

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