Amidst the ongoing tension in West Asia, the biggest question in the minds of common investors is whether there is any major threat to their investments? Due to day-to-day fluctuations in the market, the portfolio going into the red naturally creates concern. But, the opinion of stock market veteran and Motilal Oswal Group Chairman Ramdev Agarwal is a little different and is a relief. He believes that unless a very large and unimaginable event occurs, the market has already priced in the potential risks of war.
Has the market digested the shock of Iran war?
It has often been seen that whenever there is a geopolitical crisis in any corner of the world, the financial markets react immediately. According to Ramdev Aggarwal, the market does not wait for the real impact of any bad news. He assesses the future risks and decides the price of the shares within just two-three days. Therefore, the biggest fear of tension related to Iran has now been adjusted in the market to a great extent. However, many events happening simultaneously around the world have definitely made the investment environment complicated. In such a situation, it has become very important to maintain caution and balance at every step in the market.
The results of companies will decide the movement of the market
Amid global concerns, the real energy for the Indian market is coming from the domestic economy. Aggarwal clearly says that now the direction of the market will be decided by the quarterly results of the companies. Recently, after analyzing the financial data of about 350 companies, it has come to light that the performance of most of them has been better than expected. The country’s excellent economic growth rate (GDP) of 7.8 percent is a direct proof that economic activities are accelerating at the grassroots level. After the recent fall, now Nifty has also come to the level of 21.5 to 22 times its earnings. This valuation makes the market more logical and balanced for investment, even if it cannot be called completely ‘cheap’.
You will make money by choosing the right sector
A major challenge facing the market is energy supply. If the supply of oil and gas through important routes like the Strait of Hormuz is disrupted, it will have a direct impact on the common man’s pocket and industries. For example, even the production of tiles in Morbi, Gujarat had to be stopped due to gas shortage. However, Aggarwal is hopeful that in the coming few weeks the global energy supply will return to normal by 90 to 95 percent. In view of these uncertainties, investors will have to be very selective in choosing stocks. Sectors like domestic consumption and banking are considered largely protected from foreign shocks. For new investors who have recently joined the market and do not have deep knowledge of stocks, the safest and most prudent step would be to invest through index funds or professional fund managers.
Earning opportunities are hidden in decline
At this time, investors should give up the hope of becoming rich overnight from the stock market. According to Ramdev Aggarwal, considering the pace of earnings growth of companies, it is more practical to expect returns of 12 to 15 percent. There is very little possibility that there will be a sudden huge jump in the valuation of shares. However, for sensible investors this market is no less than a treasure trove. Shares of many strong and best companies have fallen by 25 to 30 percent from their highest level. If the real value of a good share is Rs 1000 and in the current fall it is being sold at Rs 600 or Rs 700, then it is a great investment opportunity.
Disclaimer: This article is for information only and should not be considered as investment advice in any way. TV9 Bharatvarsha advises its readers and viewers to consult their financial advisors before taking any money related decisions.