The war we dreaded seems to be slowly grinding to an end. The oil we needed is finally moving through the blocked strait. Commodity prices have begun cooling off very quickly. Global insurance rates are returning to realistic levels. Freight movement is normalising.
Interest rates seem poised to rise everywhere. The rupee finally looks like it’s getting some support after facing a prolonged phase of pressure. The market is obviously relieved that macroeconomic conditions aren’t going to worsen.
However, we still have to overcome the challenges of monsoon concerns and FII outflows. Yet, there is still some relief and enough reason to cheer. Things are definitely likely to improve over the next few months. We will build further on improving macros, bring energy costs back under control, and stop losing money on soaring import bills for critical inputs like LPG and fertilisers.
We haven’t seen a recovery phase like this in a very long time. And, we are now very used to speedy relief from economic challenges. Our willingness to face near-term pain is low, and patience is scarce.
But, markets disproportionately reward patience and the capacity to bear pain shown in such phases. Investors who exited their equity portfolios during this war will probably not easily re-enter quality portfolios. Showing patience in trying times is not a favour we do to the market. It is a duty we perform to ourselves.
Often, we tend to become judgemental exactly when we must show restraint and grow patience. Being judgemental when the economy emerges from a difficult situation like the present tends to stop investors from objectively assessing fresh opportunities, buying new ideas, taking up existing bets on better news flows, and scaling up portfolios.
The phase between March 1 and June 15 was a great opportunity for every investor to do more in the market, strengthen their portfolios, and become future-ready.
The coming months will likely still offer select opportunities to invest in equities. Investors now need to stop worrying about the macros and focus on where the better opportunities are still present in the micros. We are clearly in a bottom-up stock picker’s market, and investors must move quickly to make the most out of this market.
