Market LIVE Updates: Indices extend losses with Nifty around 15,700; Bajaj twins,

June 13, 2022 / 01:52 PM IST

Santosh Meena, Head of Research, Swastika Investmart:

The record-high inflation numbers announced in the USA on Friday have created a huge sell-off in the global equity markets. The markets expect Fed to become more aggressive to tame the entrenched inflation; this will lead to huge outflows of FII’s and FPI’s money and further depreciation of INR. 

To be honest, today’s fall is nothing new; it’s just a reality check as the majority of stock prices had moved far away from their fundamentals or intrinsic values. Markets often need trigger events to comply with the universal law of mean reversion and the Russia-Ukraine War is that event this time.  Markets often get confused between risk and uncertainty, risk is the permanent loss of capital whereas uncertainty means situations involving imperfect or unknown information. 

Uncertainty often leads to correction and once it subsides, the markets normalize. In short, we recommend investors to see the big picture, it is true that inflation is going to stay for a while and affect the profits of corporate India, but in the medium to long term, there are many companies with good fundamentals, robust financials, and competitive advantages that are going to perform well. Further, India is better placed than its peers with respect to growth factors and the ability to fight the current inflation. Thus, the current uncertain times are best to lap up such quality stocks and investors can use the buy on dips strategy, however, in the near term, the markets are going to be volatile.