Lessons to learn from Sensex and Nifty’s record-breaking run in last one year

By Keval Bhanushali

With Indian share market benchmarks BSE Sensex and Nifty 50 recording new highs recently, it is time to reflect on the journey of this past financial year. This reflection is mainly to figure out how the Indian share market managed to reach such new highs in such testing times and extract the most prominent learnings that came along the way during the FY 2020-21. These major learnings from the past financial year are not just from an organisational perspective but also from an individual and national perspective.

Good economic sense prevails eventually

My learnings at all three levels – individual, organisational and national level are bound together by one common factor, perseverance. Just like many individuals struggled to make it through hardships, so did many companies and nations. At first, no one knew how to deal with the pandemic on the economic front. There were uncertainties, and the Indian shareholders grew worrisome and withdrew their money from the market. This insecurity resulted in the market plummeting during March 2020. So do you see how it is all interconnected? Insecure individual investors started pulling out their investments from the market, and this had a ripple effect on the companies and then on the entire nation’s stock market performance.

What stood out for me was that our investors’ collective consciousness allowed for a good economic sense to prevail eventually. The market recovered strongly, and the results of such organic growth come with stability. This organic growth and stability then attracted many new investors and ushered in new investments that have enabled the market to reach where it is today.

Adapt to the changing times

Let’s not forget the lessons that the past financial year had in store for us as companies and organisations. The pandemic came with its own set of challenges for businesses, and there wasn’t a ‘one size fits all’ solution available. Every company had its unique challenges in terms of technology and skillset available at its disposal. The retail industry, for example, had to shift heavily towards tech-oriented solutions. This move became of paramount importance as many businesses related to travel, retail and entertainment depended heavily on the physical presence of customers. We at MSFL adopted a hybrid approach, keeping the long road ahead of us in mind. We understood that any worthy solution would not be something that can be implemented overnight. We have been steadily working towards upgrading our skillsets and technology ever since.

Chief Ministers are like CEOs of their states

Talking about the learnings from a national perspective, I am not sure how many Indians are even aware that state budgets have funds solely dedicated to the state’s overall development. For example, states like UP and Maharashtra have recently released large state budgets around the INR 5 lakh crore mark each in total expenditure. Since the pandemic hit the nation, scores of people have blindly put the onus on the central government for infrastructure development in states. Such responsibilities to improve healthcare services and infrastructure are shared by the state governments too. No doubt, there’s a lot of progress yet to be made. But this progress can only be achieved in a democracy when the state governments collaborate with the central government. When it comes to contributing to the nation’s progress, all powerhouses should join hands and collaborate. This is not just about building more hospitals but about creating an entire ecosystem that provides better social security to Indian citizens through aspects like offering better insurance schemes and pension schemes.

The way ahead

With so much to reflect upon, indeed, these learnings also throw some light on the way ahead. On a personal level, the past financial year has taught me the attitude of gratitude. I have learnt to be extremely thankful for all the small things in life. On a national level, the past financial year’s pandemic related events have transformed many people’s psyche. People have understood that some of the most important things in life, like oxygen, cost us nothing. There has been a drastic change in our daily lives, resulting in altering the money spending habits of many. I see a lot of new people entering the financial markets, and this trend is something that I expect to continue. More people will continue to understand the importance of investing in good insurance and having sufficient savings along with having other kinds of liquid financial assets. Similarly, many more will soon also realise that holding entire assets into real estate and/or other illiquid assets is not a wise thing to do.

India is still one of the most well-poised developing economies in the world to lead the way forward. Of course, this will take some time. The coming six to eight quarters might be a bit tough in terms of economic reforms and GDP growth, but post that, I can see a massive surge during FY 2022-23, and I expect this big bounce back to continue until the first half of FY 2023 as well.

(Keval Bhanushali is the Chief Executive Officer of Marwadi Shares and Finance Limited (MSFL). Views expressed are the author’s own. Please consult your financial advisor before investing.)