Siddharth Mehta, former ILFS director suggests investors to use Dip to buy high rates to stay in the market for long term

Siddharth Mehta IL&FS is an India-focused investor who is highly focused on investing in publicly traded companies in India. Recently he gave his opinion on the US federation raising the rate from 150 to 200 bps. “It is now a given that rates in the US will rise another 150 to 200 bps between now and the end of the year,” Mehta stated.

He has a very strong intuition about the investment strategy that he shares with all investors globally, “to reiterate, long-term investors should be using this weakness to buy into high-quality businesses and stay invested for the next 5 years,” Siddharth Mehta stated in an interview with Economic Times.

Since the beginning of the year, there has been significant volatility in the global financial markets, which has been primarily caused by the Fed's actions and statements regarding the removal of liquidity from the financial system and a steeper increase in interest rates than initially anticipated.

 It is now a guarantee that US interest rates will increase by another 150 to 200 basis points before the year is through. Even though we are not experts in macroeconomic forecasting, we have a feeling that the US Federal Reserve will change its stance on the economy at some point in the fourth quarter of this year, and the Indian equities markets would follow suit. 

 

While there may be some further decline in the coming three months, long-term investors should take advantage of the current downturn as a great chance to invest in strong, long-lasting businesses that will weather the storm and become stronger and more dominating.

Since the year 2022 is half way to completion and the rest of the months seems difficult for the market because there is a slight chance for the market to fall for a short period for a rebound. “The very near-term is likely to be volatile and markets will be guided by the bigger global macro events. While there may be some downside, we do think that the latter half of the year will be better for equity market returns. Investors should be taking a 5-year view and in that context, the present scenario provides a very good buying opportunity, though investors need to be selective and thoughtful in what they are buying.” says Siddharth Mehta IL&FS.

Siddharth Mehta inclination towards Indian market never going outdated as he always praises the constant upscaling of Indian Market, in this matter he says, “Although there has been constant selling in India, substantial domestic investor flows have worked as insulators in contrast to previous events”. Although it is pointless to attempt to estimate the timing of this, once global macroeconomic conditions normalize, international investors will understand the long-term structural opportunity in India, and flows will reverse. To restate, long-term investors should take advantage of the current slump to invest in high-quality companies and hold onto their positions for the ensuing five years.