Adapting to the new challenging environment that the post-coronavirus world is likely to bring in more opportunities and bring in new market leaders.
Adapting to the new challenging environment that the post-coronavirus world is likely to bring in more opportunities and pave the way for new market leaders. Will it be pharmaceutical firms that will be rewarded for bringing the world out of the pandemic, or will it be the new information technology giants who rebrand the way the globe works or could it be the telecom sector? Amit Jain, Co-founder & CEO, Ashika Wealth Advisors in an interview with Kshitij Bhargava of Financial Express Online, lists out a few sectors that he thinks investors should consider. Jain, thinks the equity markets will follow their global peers in the medium-term but the emotional lift provided by the government’s fiscal stimulus will also be crucial. Here are the edited excerpts.
- What do you make all that we have seen coming from the government, how good will this be for the capital markets?
Last week, the stimulus package of 20 lakh crore gave an emotional uplift to the stock market, however, we believe the Indian stock market will follow the global trend in the medium term. This is an unprecedented stage of the Indian economy which we haven’t seen in the last 30 years, Hence, We have to be very careful with any fiscal stimulus. If the government increases its borrowings further, then it may put pressure on INR (Indian Rupee) & hence may increase interest outgo on our foreign borrowings, which may not be liked by capital markets in long run.
- There’s an expectation that there will be new market leaders coming in after this crisis and one for sure is the telecom sector, are there any others that are on your mind?
It’s true that the new market leaders will emerge who will adapt to new challenges created by this unprecedented impact on Global economy. Historically, Every bull run had new leaders to lead the pack. For example, Heavyweight asset models weighed the most in Nifty till 2008. Post-2008, Asset light models, such as banking & IT, took the charge to build up the Economy.
Post COVID-19, we feel, Artificial Intelligence(AI), Pharmaceuticals, Speciality chemicals along with Telecom might lead the broader indices.
- Even the business models need to change post this situation, what are your views?
Post COVID – 19 era, all businesses need to focus on combination of their online & offline presence, Merely having an offline presence may not go very well with a lot of businesses. Also, most businesses need to focus on their domestic consumption and creating indigenous supply chains to fulfill their raw material requirements.
Also, for large corporate houses, there has to be a leaner cost structure with minimum possible debt in their books, which may be the critical success factor for all leading corporate houses in the upcoming decade. All businesses should use technology as an enabler to improve their efficiency and control the costs for each SBU of their organization.
- The Dollar index has been volatile since the beginning of the Pandemic. Where do you see the dollar in the coming few months?
In our view, in the short term, Dollar index may peak out around 104-105 levels. However, In case there is a possible war(Trade war, Currency war, etc.) then we may see the dollar index to be as low as 80 by 2030 which is approximately -20% decline from today. We believe post-2021, Dollar ($) will see a declining trend till 2030.