Navigating Inflationary Environment

Detailed note on how we have positioned the portfolio to navigate the current situation and have been adding more exposure to businesses and sectors that may be resilient or benefit during the current economic phase of high inflation and rising interest rates.

Key points

• Rising commodity prices and rising inflation have kept volatility intact into the equity market in recent times.

• Higher inflation brings with it rising interest rates, which in-turn impacts multiple sectors and its growth prospect. With higher commodity prices, businesses grapple with high input costs, resulting in passing on higher prices to consumers. Higher prices in-turn impacts demand.

However, historical evidence suggests that equities have done well after initial phase of volatility recedes in a rising interest rates environment