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ASSOCIATE SPONSORS
The central bank seems to have fewer concerns about growth rather than around the inflation outlook.
India VIX is currently placed just below 11, which is near historical lows. A lower VIX could mean that the market is not expecting any significant risk in the short term due to any big event scheduled ahead.
The pause may reflect MPC members' intention of not upsetting the growth momentum despite persistent high inflation.
Markets globally are facing concerns of inflation, slowing growth due to Covid-2 and Covid-3 waves, and rising interest rates. The worry is whether the coming inflation is likely to be transitory or may extend over more than a quarter.
If the COVID issue gets resolved by say mid-May, then we can still make up for the shortfall in the economic output. However, if this extends beyond May-end, there could be renewed fears on the economy and asset quality front, said Jasani.
Our preferred sectors are the ones that are least impacted by the COVID pandemic and can lead the upside going forward, says Deepak Jasani of HDFC Securities.
Investors will have to be careful to check whether the pandemic has caused any structural damage to the stories of the companies in these sectors, and if yes, stay away from them.
By investing across countries investors would get exposure to companies with the different business models, diverse revenue streams, currency differentials, and thus different risk-adjusted returns.
Infra, agriculture, rural economy, automobiles, Make-in-India thrust, more on ease of doing business, employment generation thrust could gain focus from the Budget.
Retail investors should learn from market moves, and may also want to upskill themselves regarding the ways of the markets, and individual stocks’ financials/valuations.
Worries remain on how the agri-stress and employment situation will be handled by the political parties and to what extent will the equity market be impacted by these
