Vol. 8, March 2022

14 March, 2022 0 Comments

            Vol. 8, March 2022

The month of February was an anathema for a multitude of reasons. A flurry of information kept invading our daily lives contributing a great deal to the chaos that we have repeatedly asked our investors to guard against.

From a macro-environment perspective, we were told to beware of interest rates rising, the Fed’s pullback on liquidity, high valuations in the market, etc.


But our key thoughts on all these was ratified when we had a chat with some key people in the financial markets.
And the first item on the agenda was

Do Macros Matter?

A View From India’s No 1 PMS
A conversation with Mr. Charandeep Singh.
Co-Founder & Fund Manager, Girik Capital

If interest rates are increased as is being threatened by both the RBI and the FED, it tends to discourage investment because investments have a higher opportunity cost. This can be seen from the juxtaposition of the Sensex vs the Interest rate movement.

So how would an increase in Interest rates impact our investments?

A conversation with Mr. Chintan Haria
Vice-President, ICICI Prudential Asset Management Company Limited

Also persecuting the group was the thoughts on how reduced liquidity by the Fed, coupled with the proposed increase on interest rates, would impact returns from our equity markets.

The statement by Dinesh Balachandran (VP & Sr. Fund Manager SBI Mutual Fund) rings true to all people in the financial space across the globe.
'People chase earnings growth.'

Read the perspectives about

Liquidity, Interest Rates And Earnings Growth

In conversation with Mr. Shreyash Devalkar of Axis Mutual Fund and Mr. Dinesh Balachandran of SBI Mutual Fund.


Interestingly, at the time of our meet, Varun Daga (Co-Founder & Fund Manager, Girik Capital) had made a profound statement.

“The risk is always the unknown.”

Click to Read the Article on Linkedin

In many ways we believe this to be correct. Did we know that Russia would invade Ukraine? Did we know that the Chitra Ramakrishnan fiasco would impact the market? No. While grappling with the “known risks”, we were hit by completely unknown problems which derided the market.

In other discussions alternate investment opportunities in Cryptocurrencies, Gold and Real Estate were spoken of, with their relative strengths, pros and cons which point to equity still being a stronger bet over the long run. It may lose the battle in the current situation, but history has shown that it will still win the war over the long term.

Equity vs. Cryptocurrency, Gold & Real Estate.



Overall, the panel had some great advise to our investors which we think bears relevance to the current situation.

The Expert Panels Advise To Investors

One last thing before we sign off, there have been many wars which have impacted the world economy. But how long do you think the same economies took to recover?

The image below shows the drop and recovery of the world markets and India as well during the various wars that we have participated in. You can see economy has bounced back as fast as it dropped during the crisis. If anything, this is the time to enter the market in small tranches to get alpha returns.