Indian financial environment turning favourable
The Indian stock market rallied due to institutional buying while also tracking the rise in global equities. We have also witnessed an improvement in data from consumer linked sectors like cement, autos and steel, though this may not necessarily point to a reversal in trend. India continues to be a largely domestic economy strengthened by its large base of public sector employees and rural population.
This and the country’s demographic advantage would be the key drivers of the Indian economy over the long term. In the short term however, markets would continue to track signals from domestic consumer linked sectors as well as other global macro-economic data.
The quarterly results to be announced in April could be muted as we are in the midst of a cyclical compression in earnings and might see this trend continuing in the coming fiscal year. Besides this, near term events like G-20 meeting and the outcome of the general elections are to likely influence the direction of the market. Meanwhile, the Reserve Bank of India will continue to exert downward pressure on interest rates in order to spur demand.
India’s expected GDP growth of approximately 5.0%-6.0% p.a. over the next two years continues to be attractive relative to the slowdown in global economies. While equity markets could witness some volatility due to the general elections and a slowdown in demand, the trend of reducing interest rates and relatively high GDP growth rates should have a positive long term impact
My perception has been that at 8,000 levels, the Indian market is very, very attractive from an investor point of view. If we believe EPS estimate, in the worst case scenario, comes out around 812-815. We are at the bottom of the earnings cycle and a falling interest rate scenario, so India should not trade below 10PE. So we have touched the bottom.
When the market went from 17,000 to 20,000, it was overshooting. In the fall, it is undershooting. I think 8,000 is the bottom of the Indian market. The risk reward for an investor at 8,000 is very favourable. This is not the time for investors to go into a shell and say that the market may come down to 5,000 levels so let's wait.
Biggest lesson in down trend that “back to basics” always helps. In the ecstasy we were all carried away by the India growth story and FII inflows. So the market was actually chasing liquidity. I find that value investing really works. It may be painful in the short term, but it stands when investing for the long term.
The Indian stock market rallied due to institutional buying while also tracking the rise in global equities. We have also witnessed an improvement in data from consumer linked sectors like cement, autos and steel, though this may not necessarily point to a reversal in trend. India continues to be a largely domestic economy strengthened by its large base of public sector employees and rural population.
This and the country’s demographic advantage would be the key drivers of the Indian economy over the long term. In the short term however, markets would continue to track signals from domestic consumer linked sectors as well as other global macro-economic data.
The quarterly results to be announced in April could be muted as we are in the midst of a cyclical compression in earnings and might see this trend continuing in the coming fiscal year. Besides this, near term events like G-20 meeting and the outcome of the general elections are to likely influence the direction of the market. Meanwhile, the Reserve Bank of India will continue to exert downward pressure on interest rates in order to spur demand.
India’s expected GDP growth of approximately 5.0%-6.0% p.a. over the next two years continues to be attractive relative to the slowdown in global economies. While equity markets could witness some volatility due to the general elections and a slowdown in demand, the trend of reducing interest rates and relatively high GDP growth rates should have a positive long term impact
My perception has been that at 8,000 levels, the Indian market is very, very attractive from an investor point of view. If we believe EPS estimate, in the worst case scenario, comes out around 812-815. We are at the bottom of the earnings cycle and a falling interest rate scenario, so India should not trade below 10PE. So we have touched the bottom.
When the market went from 17,000 to 20,000, it was overshooting. In the fall, it is undershooting. I think 8,000 is the bottom of the Indian market. The risk reward for an investor at 8,000 is very favourable. This is not the time for investors to go into a shell and say that the market may come down to 5,000 levels so let's wait.
Biggest lesson in down trend that “back to basics” always helps. In the ecstasy we were all carried away by the India growth story and FII inflows. So the market was actually chasing liquidity. I find that value investing really works. It may be painful in the short term, but it stands when investing for the long term.
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