Market volatility is set to spike again on the back of adverse global news flows. The news of a sudden spike in H1B visa fees will test the resolve of investors in the I.T. space.
The habitual downward averaging that we usually observe in tech stocks is increasingly becoming too tiring. Investor patience is wearing out. Their conviction is being tested too frequently, and forcefully so. With margins already under pressure due to various industry related challenges, the industry’s guidance urgently needs to build confidence in the minds of analysts. Analysts tracking the I.T. space need to stick their neck out and share their conviction at what clearly seems the most difficult time in the industry’s history.
This is true of most industries dependent on exports to USA. It has become very tricky and challenging for analysts and managers alike to build conviction based on visibility. This will drive our investing more towards industries facing the domestic economy. The stage is now set for a shift away from export-led companies and industries.
Businesses that are completely domestic focused will receive a bigger share of fresh flows. Capital may also shift towards stable domestic themes like consumption. The rising domestic investor fatigue seems to strongly point towards increased churn. Portfolios of funds are going to gradually shift focus towards allocating more capital into defensive domestic themes. The mood swings of the market are increasingly looking more fickle than the English weather.