Nifty bulls have two allies to fight volatility in stock market: HDFC MF CEO Navneet Munot – Economic Times

Forex Market Stock Traders

As investors on Dalal Street and in equity markets elsewhere appear to be caught in a perfect storm amid geopolitical uncertainties, rate hikes and rising inflationary pressures, Sensex has lost over 4,000 points year-to-date. Reflecting an uncertain future, fear gauge index, India VIX, on the other hand, has shot up by over 25 per cent during the period.

“Considering the rapidly evolving geopolitical landscape, change in course of globalisation; and with central banks retreating into their role of reining in inflationary expectations instead of doing ‘whatever it takes’ to support asset markets, volatility is likely to remain elevated,” says Navneet Munot, MD and CEO of

.

In a world where new geopolitical alliances are being formed and existing ones are being tested, sound financial plan and prudent asset allocation still continue to remain the best allies for investors to counter the formidable foe of volatility in financial markets, he said in a note to investors.


Warning that investors’ equanimity and patience will continue to be tested in the foreseeable future, he said that history has taught us that the formula for wealth creation equates sound investment, time and patience.

On D-Street, strong retail participation (63 per cent increase in demat accounts in FY22) and SIP inflows through the mutual fund route have cushioned the downside from recent FPI selling spree.

Foreign investors have been selling Indian stocks relentlessly for the last eight months. In 2022 alone, FPIs have sold equities worth Rs 1.69 lakh crore.

“Over the years, financial markets have grown used to expecting the unexpected. Almost any passage of time in the history of financial markets is replete with events which have taken market participants by surprise,” Munot said.

On the declining rupee, he said India’s sizeable forex reserves should help stave off significant threat to rupee stability. “While India won’t remain insulated from global developments, India continues to remain better positioned as compared to other emerging markets at this point. Rapid digitalisation, strong tax buoyancy (growth in tax collections nearly double that of nominal GDP growth for FY22), services exports at record high (FY22), healthy balance sheets of corporates and banking sector, policy reforms, formalisation of economy and push for privatisation and capex hold India in good stead,” he said.

On the flipside, Munot sees a spike in commodity prices (particularly oil), tightening global liquidity and increase in food and fertilizer subsidy bills as key risks.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)

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