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Quote On Morning Market 03 August 2023 By Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services

Often, stock markets are impacted by unexpected events. When market valuations are high, the sell off will be sharp. This was what happened in global markets after the Fitch downgrade of the US credit rating. Now, the important question from the market perspective is whether this will impact the fundamental factors driving the rally in global markets. The answer is no. The US economy’s soft landing narrative, that is driving the ongoing global rally, is intact and getting stronger. GDP growth in US is strong and inflation is coming down. 80% of US companies have posted better than expected quarterly results. The Fitch downgrade doesn’t alter this significant macro construct. The sentimental impact of the rating downgrade is likely to fade away soon.

The valuations in India continue to be rich from the short-term perspective, but fair for long-term investors. Weakness in the market may be used to slowly accumulate high quality stocks which have corrected. Leading stocks in banking, capital goods and construction-related segments look good for long-term investment.

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