By Sitashwa Srivastava
Despite the highly unusual circumstances during 2020-21, the year marked a huge shift in the way Indian investors traded. Investors who put their monies in the US markets have been in quite an enviable position.
Their investments gained from the various economic stimuli that the US government executed in the wake of COVID while they were arguably better off living in India than in the US this year.
Additionally, a volatile home market, continuously shifting economy, and shrinking income encouraged many investors to add high-performing US stocks to their portfolios.
After the onset of the lockdown, we at Stockal saw a 300% growth in Indian investors on the platform. In terms of volumes, Stockal processed $400 million worth of transactions during this financial year.
From doing $12-13 million in monthly transactions until April 2020, transactions have now shot up to about $50 million by March 2021. As of today, about 75 percent of Stockal’s users and assets are from India.
After a year full of ups and downs in the economic cycles, 2021 began with a faster recovery for most industries and seemed refreshingly normal as the pre-covid years. But, have the investors healed from tumultuous market movements? Well, the answer is not yet.
With cases rising in many parts of the country, the US government’s focus is directed towards the healthcare and pharmaceutical industry, planning your portfolio for FY 2021-22 can be quite a bumpy ride.
That said, the recent US Fed decision to leave the rates untouched for a couple more years shows the US government’s resolve to keep backing retail consumption.
It is also a strong indicator that the US Fed believes this uncertain environment will continue for some more time and we should not get ahead of ourselves.
Investors know that every market crisis is followed by periods of heavy trading in the recovery stage. In 2010, for example, investors questioned the market rebound’s sustainability, the year period marked the start of a long bull market.
In short, investors in the US market are expected to be more bullish than investors in the rest of the world. Also, investors are intelligent and it does seem that some of the expected future volatility is already priced-in. So we’re likely to see a bull market despite the uncertainty!
The fact that Indian investors know what they are doing has been abundantly evident in their choice of US investments on Stockal. So instead of seeing investments in only a handful of securities, we saw investments in more than 2,600 stocks and ETFs. People didn’t just invest in FAANG and sit tight.
People invested in industries like tech, mobility, gaming, energy, pharma, and financial services. Electric vehicle stocks like NIO (apart from Tesla) were a crowd favorite.
People have been following and investing in Pfizer, Moderna, AstraZeneca and many other pharma companies as vaccine news propagates.
Plus, with Fed’s economic outlook being positive and the US GDP growth forecast at 6.5% (up from 4.2% in December), the markets should continue to attract new investors from India.
For new investors who have recently joined the bandwagon, here are some thoughts to help invest more efficiently in 2021-22
• This is a year when small and mid-caps should do well. Those companies that have survived the pandemic are more resilient, as a result, while also being the last of few still standing in the industries
• Coming out of a recession, I think it pays to buy stocks with the lowest expectations with a mix of high growth stocks that stabilizes returns on your portfolio while giving you benefit from the bullish markets across the globe.Markets around the world still need to wrestle with the uncertainties around COVID-19. Although we’ve now moved into the early-cycle environment, which normally leads to strong growth of profits, its impact is yet to be seen in the markets, despite the recent rallies.
By the end of 2021, we expect the market to perform better due to pick up in the business like Travel, Hospitality, and Transport et al which were badly impacted due to COVID.
(This is a partnered post)
(The author is Co-founder & CO- CEO, Stockal Inc.)
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