CEO Speak March 2022
As we draw curtains on financial 21-22, we wish the new FY brings in good health and wealth to everyone. While we cannot predict the markets or the geopolitics of the world, we can anticipate some degree of volatility and hence be prepared. This means that one must review their portfolios from time to time and the beginning of a new financial year may be reasonable as you may want to take stock of your financial goals, your portfolio and its performance. However, reviewing one’s portfolio does not necessarily mean “exiting” from instruments/stock or funds but more on “rebalancing’ especially the ratio of debt and equity exposure that your portfolio needs basis of your financial goals and risk appetite.
I am taking this opportunity to reflect on the events and trajectory of the year gone by….
A brief overview of the financial markets in FY21-22
The fiscal year gone by - FY22 has been an eventful year for markets witnessing a roller coaster ride with the indices touching several milestones.
The data shows that in FY22, the S&P Sensex grew by 18%, however, one needs to break this down into two halves to understand it better. From April to mid-October we saw the Sensex reaching its highest level nearly reaching 62,000 from 50,000 at the beginning of the year. However, post midOctober there has been huge volatility with the Sensex falling to a low of around 53,000 from its high and then recovering to 58,700 levels mainly on account of the rally in the last 3 weeks of march.
The global events as also the war between Russia & Ukraine caused major upheaval in both the fixed income and equity markets. The cost of oil shot up and also fuelled inflation which had become a cause of worry across the globe.
On the fixed-income side global factors that central banks across the globe were poised to increase rates played on the mind of the Indian investors also. Hence people shifted to shorter-duration funds which were a result of the uncertainty of the bond markets.
Amongst all these uncertainties and events - the resilience of the Indian markets, the strength of the domestic Institutions and the growing confidence of the retail investor stood out.
Indian stock market outperformed major global peers including the US & UK in the fiscal year 2021- 22. The Nifty50 index emerged as the best performing index in FY22, gaining by 19% at 17,465 levels in the period under review. In comparison, US market benchmark S&P500 index gained 16%, UK’s FTSE100 index 13% & French benchmark CAC40 11%.
The foreign investors were seen exiting India in large numbers in the latter part of the year, pulling out Rs 1.44 trillion from domestic stocks in FY22. This outflow was compensated by DII buying in significant numbers. The large SIP book of 11,000 crs also helped the equity markets when we saw a sharp fall during the year. The mutual fund industry added more than 1 Cr new investors this FY substantiating the growing and sustained confidence in the Indian mutual fund industry.
Way forward ….
We believe that markets may continue to outperform in FY23 as well, as the Indian economy is ready for multi-year growth despite short-term hiccups. Our advice to investors remains to look at the equity market for the long-term goals and not get swayed by the euphoria or short-term blips. We strongly believe that SIP (Systematic Investment Plan) remains to be one of the wisest ways to invest in the equity markets to average out the cost of investing over multiple market cycles. We believe in the growth story called India and a lot of indicators like the GST collections, government expenditures and increased activities both in the manufacturing and services sectors are all showing growth as we are coming out of the pandemic.
Your new FY resolution can revolve around Reviewing & Rebalance your portfolio and believe in our markets as India is the place to be for an investor.
Wishing you a rocking new Fiscal Year!
Source: AMFI, BSE, NSE, Internal