The way I see geopolitical risk playing out for investors in India is that it inevitably gives them a chance to re-enter the train which they might have missed at the last station, is the word coming in from Dipen Sheth, head-institutional research at HDFC Securities.
"It is difficult to get a fix on what is happening in the Indian economy, we are subject to sentiments, fund flows, liquidity and global growth trends, which eventually influence our economy and hence the stock markets but I would think that India is a 10-30 year story for most long-term investors and every time you have an accident like this - a small Black Swan creeping out from somewhere - it is going to give you an opportunity to re-enter the market,” he said in an interview with CNBC-TV18.
The bounce back in the market today
leaves me spellbound. I didn’t think it would happen this early, said Sheth, adding that we are going through a phase in markets where things happen and then unhappen pretty quickly.
“There is much more geopolitical risk now and if anything it will give us a chance to get back into investing in India at good prices,” Sheth stated.
With regards to earnings, he said, “I suspect that this earnings season is going to be yet another season where everything is pretty much known in advance and we are not going to see major surprises." "Consumption has come off and it is going to reflect in the numbers that come out from autos. I don’t think this quarter is going to make a difference to the long-term thesis. Some of the bad news will keep coming out especially on the consumer side.”
When asked about his expectations from the Union Budget, he noted, “I am very happy that the government is in a corner so far as policy and tax reform is concerned. History teaches us that any Indian government irrespective of political or ideological affiliation reacts better than it proacts."
"In 1991, we had a billion dollars in forex reserves and we were with our backs to the wall and you had a flurry of reforms. I suspect that this government is now at a stage where it has fiscal license and there is a whole lot of – in my view – silly and stupid tax laws out there. Cutting corporate tax rate is the least of my asks. We are paying dividend out of post-tax profits and it is still taxed, even buybacks are now taxed. I think this is silly and this has to go.”