Benefits always follow a pattern of flow. They have an origin point, a direction, a trajectory and several points of delivery. Economic benefits also follow a pattern of flow. Investors closely following the Indian economic recovery have been looking for all round improvement. This is not happening. It is not going to show up anytime soon. But, there definitely is a pattern of flow. Improvements have begun to show up in several parts of the economy. A normal monsoon will raise the flow of benefits significantly. Falling inflation, falling interest rates and falling commodity prices have created the early flows of benefits. But, the monsoon has the ability to further catalyse the flow of benefits. Good rains will stabilise inflation further. This will lead to further cut in interest rates. Commodity prices have bottomed out and seem to be gradually moving up. This will lead to increase in inventory levels. Stocking will lead to more demand. All this will flow into the markets as better sentiment. Investors can use this window of time to invest into equities. Benefits will flow in due course. This is no time to even think of selling equities.
Risk mean more things can happen than will happen.” – Howard Marks.