An often-neglected factor is currency. The Indian rupee is trading at an all-time high on a trade weighted basis. Even with the economy in good shape, a robust investment outlook and more stable current account, there is clearly more downside risk to the rupee.
The foundations have been laid for a multi-year bull market in the country. The demographic, political and economic backdrop all point towards a brighter future, but the market seems to know it.
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Today might just be the time to remember Warren Buffett’s wise words: “Be fearful when everyone is greedy, and greedy when everyone is fearful.” Right now, it’s difficult to find anything to fear, and almost everyone seems to be greedy.
Ernst Knacke is a fund research analyst at Quilter Cheviot
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