Learn about global happenings (US Fed policies, China in the economy, geopolitics) and how an investor can change the approach

1. U.S. Federal Reserve Policies
Key Impact:
– Interest Rate Hikes:
When the Federal Reserve increased the interest rate to 6.5% in 2022 Indian stocks lost ₹28,000 Crores worth of foreign investment which dropped Nifty performance by 10%.
Companies in both IT and real estate sectors suffered from U.S. customer spending reductions and increased borrowing costs that affected Infosys and TCS as well as generally slowed down the real estate market.
The reduction of market liquidity through quantitative tightening weakens emerging economies across the board.

Actionable Steps:
The official Fed meeting schedule can be tracked using this calendar link .
Indian companies can protect themselves by focusing on IT and pharmaceutical exports which perform better during rupee devaluation.

2. China’s Economic Slowdown
Key Impact:
– Commodity Prices: China’s slump → Lower global metal prices.
During 2023 when iron ore prices dropped by 30% it resulted in reduced profitability margins for Tata Steel.
The decline of Chinese import activities affected the demand for Indian exports.
Drug exports to China (totaling ₹24,000 Cr each year) reduced significantly and caused financial harm to pharmaceutical companies such as Dr. Reddy’s.

Actionable Steps:
Businesses should examine the Chinese dependency of sectors including metals, chemicals, API industries.
The company should invest funds in stocks that benefit domestically oriented consumption such as DMart and Asian Paints.

3. Geopolitical Tensions
Key Impact:
Geopolitical conflicts such as the Russia-Ukraine war causes Brent crude oil prices to reach $100 per barrel.
An oil price increase during 2022 expanded India’s current account deficit to 4.4 percent of GDP therefore diminishing the rupee to ₹83/$ which propelled Wipro stock (+12 percent) and other IT firms.
Global economic disruptions from U.S.-China trade sanctions result in supply chain breakdowns among affected exporters.
The decision by Apple to manufacture in India resulted in increased business for Tata Electronics.

Actionable Steps:
Invest in OMCs particularly Indian Oil Corporation during downward trends in oil prices.
Companies should not invest heavily in industries that face sensitive sanctions such as firms which depend on Russian oil.

4. Dollar Index & Currency Fluctuations
Key Impact:
A strong dollar delivers negative effects on market prices since it raises the expense of imports such as electronic devices and crude oil.
The Hindustan Unilever Company experienced rising palm oil costs because of the dollar index reaching 105 during 2023.
A weak Rupee currency supports ethical information technology companies together with exporters through increased revenue streams in foreign currency.

Actionable Steps:
– Invest in forex hedged debt fund (e.g. Nippon India US Equity Fund).
– Combine IT stocks (Infosys) with import led sectors (auto).

5. Global Commodity Markets
Key Impact:
– Gold Prices: Safety first during the time of crises → Sovereign Gold Bonds rally.
– Agri Commodity: Drought in Brazil →Sugar hives along with Balrampur Chini.

Actionable Steps:
– Use sector/Commodity ETF for diversity (e.g. Motilal Oswal NASDAQ 100)

Portfolio Adjustments for Global Risks

Tasks for You.
1. Global News Tracker:
– Track Reuters or Bloomberg Quint for breaking news.
– Setup Google alert for – “Fed rate decision”, “China GDP”, “Brent crude”.

2. Analyze Your Portfolio:
– Find stocks susceptible to global moves (e.g Tata Motors’ dependence on JLR’s Europe sales)
– Using tools such as Trendlyne. To just have a look at about to be foreign institutional holding (FII) trends.

3. Diversify Strategically:
– Invest 10-15% on global equity funds mf (e.g Axis Global Equity Fund).
– Take gold ETFs (eg: Nippon India Gold ETF) as a hedge.

Key Takeaways
1. Stay Educated Not Reactive: Market fluctuations are influenced by global events, yet avoid sudden selling out.
2. Leverage Hedges: Balance export-driven and domestic stocks.
3. Long-Term Focus: Quality companies (Reliance, HDFC Bank) withstand global shocks.

Common Mistakes to Avoid
– Ignoring FII Flows: Sudden FII sell-offs can tank markets (e.g., 2022’s ₹2.8L Cr outflow).
– Overlooking Currency Risks: Unhedged foreign investments can erode returns.
– Betting on Commodities: Cyclical swings can trap inexperienced investors.