Indian stock markets witnessed Bears carnage in the month of February, with the benchmark Sensex closing over 4,000 points lower. The carnage witnessed in the market during the month led to a staggering erosion of over Rs 40 lakh crore from the market capitalization of BSE-listed companies and Nifty 50 marked its longest losing streak since its inception in 1996. The relentless downward trend has left retail investors anxious. In a message to investors Zerodha Founder and CEO Nithin Kamath termed the fall as “the first real market correction” since Covid pandemic.
“Markets are cyclical, and given the way our markets went up from late 2020, this fall was inevitable,” he said. Kamath told investors to not get carried away by the doom and gloom in the market and continue investing in SIPs. “I don’t know how good the data is, but it seems like the number of investors stopping their SIPs has gone up. This is the wrong thing to do. What an SIP helps you do is to average your investments across different market cycles,” he said.
Jim Walker to investors: Take long-term investment approach
A similar sentiment comes from Jim Walker, a celebrated economist from Alethia Capital who famously foresaw the 2008 financial crisis. In an exclusive interaction with ETNow, Walker gave perspective on the current state of the global economy and what he thinks about India. Contrary to widespread concerns that today’s market exuberance might precipitate a collapse akin to that of 2008, Walker holds a different view.
Speaking with ETNow, he acknowledged a global economic slowdown but stressed that the circumstances differ markedly from those preceding the financial debacle over ten years ago. Similar to Nithin Kamath, Walker batted for a long-term investment approach. Walker encouraged his clients to boost their stakes in India, despite valuation concerns in its stock market. “I’ve advised clients this week to significantly increase their investments in India. Though stock valuations raise eyebrows, I believe economic growth will soon justify them with strong corporate earnings,” he elaborated.
Known for his prescient 2006-07 warning of a looming U.S. housing market crash, Walker remarked that today’s danger signals are less evident. “The signs were glaring in 2006-07 when we predicted a severe downturn driven by excesses in the property sector; it’s not the same now,” he said.
He pointed out that unlike the lead-up to 2008, there are currently no significant overindulgences in the housing or financial sectors poised to spark a major banking crisis. Although certain areas show excessive stock market gains and asset price inflation, Walker believes these won’t lead to widespread corporate failures that could rattle the banking system. “We’re not seeing the kind of corporate collapses that impacted banks in 2008. That’s not on the horizon,” he observed.
Jim Walker picks India over China
Additionally, Walker expressed a stronger preference for investing in India over China, suggesting it might be an opportune moment to increase investments there. He is especially sanguine about India’s prospects, citing its robust policy environment—the best in three decades—as a key factor enhancing its appeal to investors. “India’s policy stability and certainty are at their peak in the last 30 years,” he asserted, crediting solid monetary and fiscal policies along with exchange rate stability for bolstering India’s economic structure.
He also praised the Indian government’s efforts in deregulation and improving business conditions, which he views as catalysts for future growth. By supporting small and medium enterprises, Walker believes India will spur further economic and job growth.