On the flipside, key risks to watch out for happen to be the spike in commodity prices (particularly oil), impact of tightening global liquidity and increase in food and fertiliser subsidy bill. For Indian equities, strong retail participation (63 per cent increase in demat accounts in FY22) and robust Mutual Fund flows have cushioned the downside from recent FPI selling spree. However, it’s equally noteworthy how the last couple of years have been a baptism by fire for investors, as sharp gyrations in financial markets and numerous unforeseen events have kept investors on toes.

Considering the rapidly evolving geo-political landscape, change in course of globalisation; and with Central Banks retreating into their role of reining in inflationary expectations instead of doing ‘whatever it takes’ to support asset markets, volatility is likely to remain elevated. Investors’ equanimity and patience will continue to be tested in the foreseeable future but don’t we know from history that the formula for wealth creation equates sound investment + time + patience.

In a world where new geo-political alliances are being formed and existing ones are being tested; sound financial plan and prudent asset allocation still continue to remain the best allies for investors to counter the formidable foe of volatility in financial markets.

—Navneet Munot is HDFC Asset Management Company’s MD & CEO