“We are living in VUCA (Volatility, Uncertainty, Complexity, and Ambiguity) world, and it is getting very difficult to predict what is likely to come,” said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services. He was speaking at the in-house talk organized by Centre for Comparative Studies (CCS) on ‘Emerging Trends in Indian Economy’ on 6th December 2018.
In the Indian context, there exists a disconnect between Gross Domestic Product (GDP) growth rate and corporate profits, he said. Between 2008-18, the nominal GDP of the country grew by 12.9 percent, whereas corporate profits registered a growth rate of only 4.9 percent. In the last few years, massive investments have gone to sectors such as eCommerce, aviation and telecom, but these sectors have registered high losses, which has reflected in the overall corporate profits, he added. The low corporate profit can also be attributed to the high accumulated loss of Public Sector Banks (PSBs) that stands at ₹ 82,000 crores said, Dr. Vijayakumar. He expects that there would be a quantum jump in the corporate profit in 2019-20, with the accumulated loss of PSBs expected to come down in the next fiscal. Insolvency and Bankruptcy Code (IBC) should be considered as a positive stepping stone in this regard, he added.
Crude is now viewed not as a commodity, but as a financial asset. The recent crash in the crude is mainly influenced by the US sanction against Iran, he said. Changes in the US 10 year bond yield can create profound consequences in global stock and bond markets, he added. Fear of global trade war subsided a bit. Fed rate hike should be viewed as a known unknown, but there are many unknown unknowns that influence the market, remarked Dr. Vijayakumar.
Prof Gopinath Panagad, Projects, CPPR presented a memento to the speaker. Shereen Sherif, Senior Research Associate, CPPR delivered the vote of thanks.
About the Speaker
Dr. V K Vijayakumar is a keen observer of financial markets and a highly respected figure in academic circles. Currently, he serves as the Chief Investment Strategist of Geojit Financial Services. Among his other achievements, he was nominated as Expert Member, Working Group on NBFCs of the Planning Board, Government of Kerala. He also served as Visiting Faculty at the CEU (Central European University), Budapest, Hungary as in 2006. Dr. Vijaykumar is known for his articles and participation in pre or post-budget television panel discussions. He regularly addresses Investor Meets and offers investment advice to both new and savvy investors.