​Nothing much has changed in the past one year – the geopolitical situation remains fragile; the war continues; inflation remains a worry; economic growth is decelerating; earnings growth is slower than anticipated; rates are higher and expected to remain elevated for long; monsoon is expected to be below normal; and FPI outflows continue. To add to this we are entering an intense election season that should culminate with general elections in March-May 2024.

The market is playing out ranges without breaking out on either side (17350-18050). This is typical of price and time correction phases. However, the narrative now is NOT negative. At worst it is neutral. The war is now on the back pages of the newspaper. It is neither mentioned in the prime time news headlines nor does it trend on social media. Central bankers have successfully anchored inflationary expectations and the popular discussion is around peaking of rates & inflation. The US and European recessions are not a consensus now. India growth is also estimated to be bottoming above 6%.

In our experience, the highest mistakes happen during this phase in investing when market participants force returns by churning their positions too much than required. Apart from 3-4 positions across our coverage universe, the pain is limited and many stocks in defence, auto ancillaries and IT have seen upside in the last 2-3 weeks. We continue to track earnings for any negative surprises and if potential action is required to be taken in our investment positions.

Boring market does not mean a bear market. This year promises to be full of uncertainties, adversities, and fear. Experience tells you that during such tough phases, an investor must be intensely focused on what investment action he needs to undertake to achieve superior returns. Correct investing actions taken in H1CY23 will bring fruits from H2CY23 onwards.