Don’t worry about volatility, says Kumar Mangalam Birla

Aditya Birla Group chairman Kumar Mangalam Birla has called on corporations and individuals not to be unduly disturbed by the excessive volatility after the pandemic but to remain focused on core economic and business variables, demographic drivers of market trends, technological drivers of supply chains while building reserves for the future. These fundamental variables, he wrote in an annual note on a website, don’t change as discontinuously as prices and indices suggest.

“The people, companies, and nations who have emerged stronger have been the ones who had accumulated reserves of strength and not necessarily the ones who were sprinting the fastest,” he wrote.

Birla pointed to the swift recovery staged across sectors, completely negating doomsayers who had predicted irreversible shifts in consumer demand and the evisceration of sectors. In India too, the initial prognosis and narrative of experts proved to be excessively pessimistic.

While it isn’t clear exactly how much froth there is in the euphoric financial markets, Birla said, another quarter or so was needed to confirm the booming trajectory is here to last.

With markets hitting new highs everyday, Birla wrote the extent of froth in the euphoric financial markets was still an open question. The change in the underlying earnings estimates has been far lower than the price swings suggest, he noted. The economists, he said, are now searching for alphabets that will adequately describe this trend of cautious optimism.