The Sensex and the Nifty have witnessed high volatility in recent times with the benchmark indices falling sharply in the last few days. Your Strong Core Portfolios continue to remain strong despite the ongoing concerns as they have fundamentally robust stocks – Highly Transparent Companies with strong balance sheets which continue to deliver on financial performance despite temporary external factors.
We have already shunned banks, companies with huge debt and those which have corporate governance issues or political connections from your Portfolios.
We remain optimistic that Your Strong Core Portfolios will weather the temporary market volatility and emerge even stronger going ahead.
The expected rapid pace of interest rate hikes by the Fed in the year 2018 was the first reason why the Sensex and the Nifty began to correct. The PNB scam added to the volatility of the Sensex and the Nifty and now the U.S.’s decision to impose import tariffs on steel and aluminium has increased uncertainty of global trade wars. Gary Cohn who is the top economic adviser in the Trump Administration has also resigned on the grounds of this decision. All this is leading to a panic in the markets all over the World but if we see the fundamental factors specific to India then investors should not be worried over temporary concerns.
The factors that are creating an uncertainty in the above scenario are totally external to the corporate earnings growth in case of India. The PSU banks are witnessing a significant correction in their stock prices due to the scams that are being uncovered but we have been extremely skeptical about PSU Banks for a long time now and continue to avoid them. The other sector stocks in your portfolios would temporarily suffer due to the current market sentiments but there is nothing to worry about it as far as the long-term growth scenario is concerned.
Any scenario which directly impacts the earnings and revenue growth for the companies in your portfolios is a sign of worry and investors should wait to invest if revenues and profits are continuously declining or refusing to recover from any downturn for them.
Any other scenario where revenues or profits are temporarily impacted but are expected to recover in the long run provides an opportunity to invest in the market as the indices tend to correct for a short term.
This means that the long-term trend remains intact for companies in India and investors need not worry over temporary external factors in the current scenario.