India heads into a very critical economic phase. On the macro front, we need to manage our inflation, exchange rate and deficits better. We need to moderate the impact of potential swings in these three factors. We will always stay in a state of alert to ensure things remain under control and reduce incrementally.
As events and data unfold, we will see the markets take a more positive view of our macros. This will only strengthen domestic conviction in the India story. The FIIs are going to reassess their India stance when this reality dawns on them. But, the last word on this is yet to be spoken.
There is always an outside chance of things going out of control on one or more factors. We could well see one or more factors trouble us longer than we anticipated or prepared for. This can rattle markets in the near term. But, an investor must be steadfast during these troubled times. He needs to strengthen his conviction when he sees adversity. He needs to focus on his own priorities when the markets show all round nervousness.
Staying invested and growing one’s equity book during troubled times is the only way to achieve outlier returns over the long term. That is the most important thing to practice right now.