Did your wealth have a few set-backs or a few nudges on its health front this November. What are the events or risks that nudge it higher or set it back? And how does it impact your wealth going forward. We have put together some systematic risks that we believe would impact the market.
"There is no such thing as a worry-free investment. The trick is to separate the valid worries from the idle worries, and then check the worries against the facts." -Peter Lynch
NOVEMBER 2021
Positive 
Negative 
Neutral 
| PARAMETERS, EVENTS | IMPACT | REASON |
| Inflation (CPI - India) | |
It was 4.48% in Oct, 2021 V/s 4.32% in Sept, 2021 and Inflation is still being within RBI's target of 2%-6% band |
| Brent Crude | |
Brent prices corrected by 16% in Nov, 2021 |
| Currency INR USD | |
INR depreciated by 0.2% due to FII outflows, |
| GDP | |
GDP grew 8.4% in Q2FY22 |
| FII Inflows | |
FIIs were Net-Sellers to the tune of ₹5945 Cr |
| DII Inflows | |
DIIs poured ₹30522 Cr into Indian equities in Nov, 2021 |
| G-Sec Yield | |
Yield moved from 6.388% to 6.326% in Nov, 2021 end |
| Tax Collection | |
Higher GST collection to the tune of ₹1,31,526 Cr |
| Global - Inflation | |
In USA, inflation is 6.2% in Oct, 2021 and it is at 30 year high |
| EQUITY MARKETS | IMPACT | REASON |
| Q2FY22 Earnings Session | |
Earnings are marginally higher than estimates |
| Valuations-PE | |
It is historical peak levels |
| Valuations-PB | |
It is historical peak levels |
| Valuations-Marketcap to GDP Ratio | |
It is historical peak levels |
High Risk 
Moderate Risk 
| RISK FOR EQUITIES | LEVEL OF RISK |
| US FED-Interest Rate Hike | |
| Current Valuations | |
| US FED-Tapering | |
| Commodity Price Inflation | |
| RBI-Sucking out Liquidity | |
EVENTS, NATURE OF IMPACT & TAKEAWAYS
FED Tapers US Fed has indicated that it intends to accelerate the tapering and is willing to wrap it up much earlier than anticipated dates of Mid of year 2022.
IMPACT: NEGATIVE
Remarks: Reduction in FRESH liquidity is expected to reduce the fund flows towards riskier assets i.e Equity, cryptos, etc. The FED does not intend to tighten the balance sheet now by sucking out existing liquidity. Reduction in liquidity when valuations are stretched will create volatility in equities. We expect equities to consolidate.
RBI Retail Direct RBI has opened the gates of G-Sec market to retail investors through opening up of a direct trading platform. Will enable retail investors to participate in G-Sec markets (both primary as well as secondary)
IMPACT: POSITIVE
Remarks: Significant event enabling retail investors to invest in the SAFEST DEBT INSTRUMENT in the country without any cost. Investment in G-Secs are the best option when planning for retirement income since the income is guaranteed & there is no involvement of credit risk. However, G-Secs are at risk as they are sensitive to interest rate movement and related news flows which may cause the market value of G-Sec to fluctuate. liquidity risk should be considered since G-Sec liquidation is subject to the availability of buyers for the particular dated G-Sec which investor has invested.
Expansion of Services PMI The India services business activity index, compiled by IHS Markit, stood at 58.1 in Nov, 2021.
IMPACT: POSITIVE
Remarks: The PMI (Purchasing manager index) reading of 50 and above indicates an expansion in business activity. The PMI reading of 58.1 is the second highest in a decade. It denotes the robust improvement in service activities across the country.
Paytm IPO Paytm IPO was subscribed 2X times. IPO price was ₹2150 while the stock closed at ₹1560 on listing day. This was the largest IPO in Indian history having raised around ₹18000 Cr.
IMPACT: NEGATIVE
Remarks: There is a general consensus that Paytm is expected to be profitable only in year 2027. Their IPO came with exorbitant valuations of ₹1.50 lakh Cr. However, their revenue is only around ₹2000 Cr+.
We foresee exorbitant valuations coupled with poor IPO subscription. Sharp correction in stock prices, mainly due to the difficult path to profitability of the company is expected to bring the sanity into upcoming IPOs by new age Tech companies. Many of the new age tech IPOs may get delayed due to negativity created by Paytm IPO and already Mobikwik’s IPO seems to have been delayed.
Spreading of Covid Variant Omicron South Africa reported new cases of a mutant covid variant, now named as Omicron.
IMPACT: NEGATIVE
Remarks: Data points on 'SPREAD AS WELL AS LETHAL NATURE' of this variant are low. There are very few cases reported in Europe, African countries, USA and India as well. However, there is no clarity about severity or effectiveness of existing vaccines against this variant right now. Hence, there is a WAIT AND WATCH about this as of now.
EVENTS, NATURE OF IMPACT & TAKEAWAYS
FED Tapers US Fed has indicated that it intends to accelerate the tapering and is willing to wrap it up much earlier than anticipated dates of Mid of year 2022.
IMPACT: NEGATIVE
Remarks: Reduction in FRESH liquidity is expected to reduce the fund flows towards riskier assets i.e Equity, cryptos, etc. The FED does not intend to tighten the balance sheet now by sucking out existing liquidity. Reduction in liquidity when valuations are stretched will create volatility in equities. We expect equities to consolidate.
RBI Retail Direct RBI has opened the gates of G-Sec market to retail investors through opening up of a direct trading platform. Will enable retail investors to participate in G-Sec markets (both primary as well as secondary)
IMPACT: POSITIVE
Remarks: Significant event enabling retail investors to invest in the SAFEST DEBT INSTRUMENT in the country without any cost. Investment in G-Secs are the best option when planning for retirement income since the income is guaranteed & there is no involvement of credit risk. However, G-Secs are at risk as they are sensitive to interest rate movement and related news flows which may cause the market value of G-Sec to fluctuate. Liquidity asks should be considered since G-Sec liquidation is subject to the availability of buyers for the particular dated G-Sec which investor has invested.
Expansion of Services PMI The India services business activity index, compiled by IHS Markit, stood at 58.1 in Nov, 2021.
IMPACT: POSITIVE
Remarks: The PMI (Purchasing manager index) reading of 50 and above indicates an expansion in business activity. The PMI reading of 58.1 is the second highest in a decade. It denotes the robust improvement in service activities across the country.
Paytm IPO Paytm IPO was subscribed 2X times. IPO price was ₹2150 while the stock closed at ₹1560 on listing day. This was the largest IPO in Indian history having raised around ₹18000 Cr.
IMPACT: NEGATIVE
Remarks: There is a general consensus that Paytm is expected to be profitable only in year 2027. Their IPO came with exorbitant valuations of ₹1.50 lakh Cr. However, their revenue is only around ₹2000 Cr+.
We foresee exorbitant valuations coupled with poor IPO subscription. Sharp correction in stock prices, mainly due to the difficult path to profitability of the company is expected to bring the sanity into upcoming IPOs by new age Tech companies. Many of the new age tech IPOs may get delayed due to negativity created by Paytm IPO and already Mobikwik’s IPO seems to have been delayed.
Spreading of Covid Variant Omicron South Africa reported new cases of a mutant covid variant, now named as Omicron.
IMPACT: NEGATIVE
Remarks: Data points on 'SPREAD AS WELL AS LETHAL NATURE' of this variant are low. There are very few cases reported in Europe, African countries, USA and India as well. However, there is no clarity about severity or effectiveness of existing vaccines against this variant right now. Hence, there is a WAIT AND WATCH about this as of now.
What you should do. And should not.
Remain invested in equity for the long term BUT a 20%, correction is possible at anytime
Continue your SIPs and STPs, dont try to time the markets BUT you may get NO returns over 1 to 3 year period
Create Cash NOW if you need money in the short term
ADD money on market dips if you are a Long Term Investor
Conclusion:
Please remember investing is mostly backing quality businesses run by quality managements that offer a runway for strong cash flow growth, earnings potential, and long-term prospects. Buying them at a “reasonable” price with an eye on the returns is important. Stay invested, stay disciplined and secure your returns. We have prepared a sound long term holistic financial plan for you based on your risk profile, defined your financial goals along with you… did an asset allocation (with contingency plans built in) with you. We believe we are in the best objective position to help navigate the vagaries of the market.
