1st June 2020 saw SENSEX going up by 879 points to 33,303 levels at the backdrop of the opening up of the economy.
Despite the “wait and watch” atmosphere in almost all sectors, the market sentiment has turned rather bullish. However, the opinion and the unfolding of economic recovery post lockdown could differ, and if market experts are reckoned with an optimistic attitude just might pay off. Here are a few insights into what fuels that sentiment on the path to restoring the economy.
A tentative yet conservative date for the pick-up would be sometime at the end of June or early July. Sectors that are at the fore from the investor focus are Chemicals and Pharma APIs and Agriculture. Agriculture and Agri-Business comprise 30% of our GDP and 70% of our population. The recession would primarily impact the service class and the service sector that is confined to the cities. The manufacturing and the rural-based economy would stabilize and prosper before the service sector.
One of the promising drivers, the concomitant shift of many companies’ production base from China to India, is to our advantage. Again, the “wait and watch” stance is how all of the financings are going to happen. Implicitly or explicitly, production and exports will be promoted, that’s affirmative, but preventing mismanagement of its implementation is imperative.
Another concomitant prerogative is the Japanese and Korean companies leaning towards India for our human capital while they bring in the capital and technology. To the Japanese, the Koreans, and to us, this is a delicious shot in the arm for all three, and a benefit to the vast domestic market. The big picture of resurrection has all sectors benefiting, unbridled, and is not limited to a select few.
However, to reap that harvest, execution at the broader strategic level is imperative. This involves trade associations, pharma associations, and manufacturing associations going proactive in their approach to India’s government and their plan and proposal to bring business to India. This is where time is of the essence, and no time can be wasted on cockamamie. The time to visit Japan and Korea is now.
While we can see volatility going up over the next week or so; however, the investor should keep the long-term view of investing and be in sync with the Indian demographic and growth story.