‘Liquid oxygen market’: CIOs on why Indian equities have shrugged off one shock after another

As per the latest business developments, “Whatever you throw at us, we don't decline or we don't go up,” stated Deepak Shenoy, CEO, Capitalmind Mutual Fund, describing Indian equities as a “liquid oxygen market” that has absorbed one shock after another without a sustained collapse or a decisive surge.

Speaking on the sidelines of Moneycontrol’s Mutual Fund Summit – Delhi edition, during the session ‘Inevitable India, Uncertain World’, Shenoy, Anish Tawakley, CIO, DSP Mutual Fund, and Sachee Trivedi, Founder & CIO, Trident Capital Investments, discussed the resilience of Indian markets, global investor complacency and the risks that could challenge the current market environment.

“We just declined 10 percent and came back,” Shenoy stated. Describing the market’s current behaviour, he further noted: “Now we are the liquid oxygen market, which is the dialogue of liquid won't let it live, oxygen won't let it die. Which is, whatever you throw at us, we don't decline or we don't go up.”

That stated, Shenoy stated he was uncomfortable with the sense of security that market participants may be drawing from this resilience.

“We need to see probably more volatility because I am uncomfortable with markets that give you this false sense of glory of nothing will happen, don't worry. I feel that, you know, you should shake up markets a little bit,” Shenoy further noted.

India has stood tall through multiple hurdles

Trivedi additionally shared how India’s has shown ability to withstand multiple disruptions should give market participants greater confidence in the country.

“For the last few years, we have all been led to believe that there is US exceptionalism. And it's a term that is very well and richly deserved. I think it's time we took some confidence and some conviction in who we are,” she stated.

Pointing to the challenges India has faced, she stated: “Think around what we have gone through. We have gone through Covid, we have gone through tariffs, we've gone through a war with Pakistan, and we have emerged resilient.”

Short-term fluctuations don't measure market resilience

Tawakley of DSP Mutual Fund stated market participants should be wary around drawing conclusions from short-term market movements.

“It's hard to say anything intelligent around the market over a day, over a month, over six months,” he stated.

He recommended a longer investment horizon for equity market participants. "Market participants should focus on the potential for earnings expansion and the longer-term performance of businesses, rather than attempting to predict every short-term movement in the market," he further noted.