When you see a glass of water only filled till the half, there are two ways to look at it:
– Glass is half empty
– Glass is half full
How you perceive any situation in life depends a lot on whether you’re focusing on the opportunities or threats that the situation offers. The current case is similar – With the ongoing pandemic, tensions on the India-China border and other country-level factors, for many investors, the stock market is similar to the glass. The only thing is – for most of them it is half empty, whereas, for a few opportunity seekers, it is half full.
I agree that the challenges are galore, but as we say ‘If it doesn’t challenge you, it doesn’t change you.” And the current situation is similar. These challenges demand a change, and with the much-required change, India can emerge as a healthier, more powerful and more robust economy.
Good businesses shall grow, or bad companies shall perish? – it depends on how you look at it
Well, as I talk to many of you, the biggest concern is where to invest as the survival pressure is almost at an all-time high. So, as I say, have an eye for businesses that will not just survive but also flourish with time.
And if you see, the current situation is favourable for both investors and good businesses.
Let’s look at how:
During this time, more reliable and more significant businesses will have the opportunity to grow, adapt and innovate to become bigger and better businesses. As we see small players shutting shops, these bigger businesses will capture more market share and eventually, you will see lousy capital getting replaced with good money. This will improve the business environment and efficiency of the system, eventually leading to better opportunities for the investors to park their money.
Downfall or opportunity to ‘buy low and sell high’? – it depends on how you make the most of these times
Well, we all remember the 23rd March scare when markets crashed by approx. 13% in a single day, taking Sensex to 38% low since the high of 2020.
If you look now, Sensex is up already by 34% since the lows of March 2020, and down only by 17% since the highs of Jan 2020.
Now imagine if one would have invested in March 2020, rather than timing the highs and lows?
Well, no point in now counting the opportunities lost. Instead, always remember that exceptional money is made only during exceptionally times.
An end of India’s growth story or an accelerator for self-reliant India? – it depends on how you perceive it
The government has time and again emphasized the need for becoming self-reliant and leveraging on China Plus One strategy to emerge as a more robust economy. In case you want to read more on China Plus One Strategy and whether India has potential to gear for this strategy, click here.
With this, digitization will improve as companies that never or partially adopted digital, will now be forced to embrace digitization. With more and more companies embracing digitization, this will enhance the cost structure of the company and improve scalability.
- A contraction in India’s GDP or robust 2021? – it depends on whether you can stay calm and patient
Yes, I know that the International Monetary Fund (IMF) on Wednesday projected India’s economy to contract by 4.5% for FY21. IMF cited it as historic low on account of an unprecedented pandemic that has stalled all economic activities in our country. At the same time, IMF expects India to bounce back in 2021 with a robust 6% growth rate. The more the damage to GDP in FY21, the more will be the bounce back in FY22, as it will provide an adverse base effect.
Look at what happened in 2008 and 2009: GDP in 2008 dropped from 8% in 2007 to 3% in 2008, but jumped back to 8% in 2009.
- Consumption on hold or impending purchases to rise? – depends again on how you look at it
I see much news surrounding the end of India’s consumption story, considering that many people have pulled the plug on unnecessary purchases or discretionary spending in light of the uncertain times ahead. However, look at the other brighter side – with things resuming to normal gradually, many people would consider celebrating the small pleasures of life, achievements and anniversaries. As people celebrate, people will buy more and gift more. Also, brands that have solid emotional value will relatively remain unscathed, and in fact, would only see more sales as people indulge more in revenge shopping.
During such times, there are only three things that you need to remember. Maybe you can frame this note and ornament your study desk or working environment. So, yes, here are the three priceless golden rules for SUCCESSFUL INVESTING:
- Short-term hiccups don’t change the fundamentals of the businesses. And it is least likely to impact the fundamentals of good businesses negatively. And, we have countless examples – Look at companies such as HUL, TCS, Wipro, Nestle that can survive the current tide.
- When investing in the stock market, uncertainty has always been a part of an investor’s life.
- Stick to sectors or businesses that match your philosophy. Stay away from businesses that you don’t understand.
To conclude, we can see a revival in electricity and fuel consumption, pickup in purchasing managers’ indices (PMI) for manufacturing and services, improvement in railway freight traffic, increase in digital retail financial transactions in May’20.
Definitely, with activities resuming normal, there are green shoots of revival in the economy. But my question to you boils down to – Is your glass half empty or half full?