The information contained herein (the “Information”) may not be reproduced or disseminated in whole or in part without prior written permission from the Company. The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The document has been prepared based on publicly available information, internally developed data and other sources believed to be reliable. The directors, employees, affiliates or representatives (“Entities & their affiliates”) do not assume any responsibility for, or warrant the accuracy, completeness, adequacy, reliability and is not responsible for any errors or omissions or for the results obtained from the use of such information. Readers are advised to rely on their own analysis, interpretations & investigations. Certain statements made in this presentation may not be based on historical information or facts and may be forward looking statements including those relating to general business plans and strategy, future financial condition and growth prospects, and future developments in industries and competitive and regulatory environments. Although the Company believes that the expectations reflected in such forward looking statements are reasonable, they do involve several assumptions, risks, and uncertainties. Readers are also advised to seek independent professional advice to arrive at an informed investment decision. Entities & their affiliates including persons involved in the preparation or issuance of this document shall not be liable in any way for direct, indirect, special, incidental, consequential, punitive or exemplary damages, including on account of the lost profits arising from the information contained in this material. Readers alone shall be fully responsible for any decision taken based on this document.
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As the West imposes further sanctions on Russian entities and individuals, India continues to hold a neutral stance.

India imports nearly 80% of its fuel needs. A $5 increase in oil price increases India’s current account deficit by $6.6 bn. Amid the rising crude oil prices, India imports oil from Russia at a discounted price. While this deal eases some pressure on India’s deficit situation, it invites scrutiny from the West. Also, Russia accounts for two-thirds of India’s defence imports

The U.S. is India’s top trading partner and the second-biggest source of foreign direct investment. Similarly, the European Union is also a major trade and investment partner. Any deterioration in economic ties or sanctions, as a consequence of India’s stance, could have significant consequences for the economy.

This places India in a tight economic and diplomatic situation. A fall to either side could be costly.

While new threats are rising, the story of the dollar's demise as the global reserve is highly exaggerated.

As a global reserve currency, the dollar's share has been fairly stable at around 60%. Despite the Chinese government's efforts to trade in its own currency in recent years, Renminbi has barely cracked 2% of the global reserve currency.

However, there are several new and emerging threats to dollar dominance:

1. The US Fed money printing during the pandemic could lead to inflation and a decline in the dollar

2. Rise of Cryptocurrencies, particularly Bitcoin, as an alternative to Fiat currencies

3. Moves by Central Banks to create their own digital currencies, such as Digital Dollar, Digital Yuan, and Digital Rupee

4. Deglobalization trend

5. Use of the dollar as a political weapon by banning Russia from using its own dollar reserves

We believe that the percentage of global trade conducted in dollars will decline slowly in the coming decades. However, we do not expect a steep

decline as no clear alternative is on the horizon. As long as the US economy stays dominant, so will the dollar. However, one real risk emerges from cryptocurrencies for Fiat currencies.



Nickel prices move a few hundred dollars per ton in a day. For most of the past decade, they have traded between $10,000 to $20,000. However, last month, the Nickel prices went vertical and reached a price of $100,000 a ton, majorly due to a short squeeze.

This huge short-squeeze triggered billions of dollars of losses, leading London Metal Exchange (LME) to suspend trading and cancel all market trades.

After a strong equity markets rally in FY21, the momentum continued, with the markets (as represented by Nifty 50 Index) surging another 19% in FY22. Both Nifty Midcap 100 (+25% YoY) and Nifty Smallcap 100 (+29% YoY) outperformed the large-cap segment. The positive sentiment continued for most of the year, led by a strong economic and earnings recovery. However, markets lost their sheen in the last quarter as Russia’s invasion of Ukraine destabilized the growth outlook, concerns of rising inflation, and heightened geopolitical risks.

From a valuation perspective, market trades at a trailing PE (price to earnings) of 23.9x, a premium of 9.7% compared to its historical average of 21.8x. Also, PB (price to book) at 3.5x is at a 25.5% premium to its historical average. After touching a bottom of 56% in March 2020, the market capitalization to GDP has rebounded to 116% (based on the latest GDP data available).

During the financial year, we witnessed a reversal in the flow trend. DIIs who have been net sellers in the last financial year turned out to be strong buyers with record inflows at $26.6 bn, and FIIs turned net sellers after being net buyers last year.

As we step into the next financial year, we believe volatility will persist as some of the major central banks accelerate towards higher policy rates and corporate margins start to get impacted due to rising inflation. As margins get impacted, companies shall pass on the higher prices to consumers, forcing them to reduce discretionary spending. Also, China’s Covid-19 situation further augments the risk to the markets. The combination of input cost pressure and slowing growth could lead to erratic earnings for FY23, especially for consumer-facing businesses. However, export-oriented businesses could benefit from currency depreciation.

Given the headwinds for the market, we advise investors to consider staggering investments in equities through SIP or STPs. Also, if there is any major market correction, we would recommend buying such DIPs as we believe that India has sustainable drivers for secular growth and continue to remain bullish on equities from a long-term point of view.

To further reduce the risk, we recommend investing in 2-3 ELSS schemes. Based on our fund selection process that considers performance and fund management aspects, below is the list of our recommended ELSS schemes.

FIXED INCOME: ERA OF RISING INTEREST RATES
Interest rates in India and globally are expected to rise as retail inflation continues to remain elevated. While the RBI has maintained an accommodative stance in its recent monetary policy, it would be difficult for them to continue to maintain this stance given the stickiness in the inflation rate. This would put the RBI behind the curve in tackling inflation at a time when central banks across the globe are tightening policy to ease inflation pressure.

Also, the recent inversion of the US treasury yield curve resurfaces the risk of the global economy entering a recession. Also, Dow Jones Transportation Average slipped into the bear market territory, another sign of bad news in store for the economy. Dow Jon Transportation Average tracks companies from airlines, railroads, and trucking, which helps in gauging the health of the economy.

As we expect interest rates to be volatile, it is best to avoid funds investing in long-dated securities. Thereby, investors can consider investing in securities with shorter maturity (short duration funds and banking & PSU funds). Also, one can consider investing in floater rate funds as returns are adjusted based on prevailing yields in the market. Also, investors can look at target maturity funds if the investment horizon matches the target date. As target maturity funds invest in G-Secs, SDLs, and PSU bonds, the default risk is very low.

Investors can continue to hold their investments in short (including money market) duration funds as we expect a limited impact on these funds for a given change in interest rates. An investor invested in a long-duration fund can exit their holding after considering exit load and tax event.

The information contained herein (the “Information”) may not be reproduced or disseminated in whole or in part without prior written permission from the Company. The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The document has been prepared based on publicly available information, internally developed data and other sources believed to be reliable. The directors, employees, affiliates or representatives (“Entities & their affiliates”) do not assume any responsibility for, or warrant the accuracy, completeness, adequacy, reliability and is not responsible for any errors or omissions or for the results obtained from the use of such information. Readers are advised to rely on their own analysis, interpretations & investigations. Certain statements made in this presentation may not be based on historical information or facts and may be forward looking statements including those relating to general business plans and strategy, future financial condition and growth prospects, and future developments in industries and competitive and regulatory environments. Although the Company believes that the expectations reflected in such forward looking statements are reasonable, they do involve several assumptions, risks, and uncertainties. Readers are also advised to seek independent professional advice to arrive at an informed investment decision. Entities & their affiliates including persons involved in the preparation or issuance of this document shall not be liable in any way for direct, indirect, special, incidental, consequential, punitive or exemplary damages, including on account of the lost profits arising from the information contained in this material. Readers alone shall be fully responsible for any decision taken based on this document.
Copyright © 2021 Fintso