India, no doubts, is a growing economy. However, now it comes disappointing that the growth has been paralyzed for some months and the growth rate have been fallen to 6.9% compare with previous years. Inefficient government policies and actions considers as the major contributor to this erratic growth along with various factors. Stock markets in India are volatile these times and Investors are panic by not knowing what would happen in near future. If you are the one among those investors, read this article to know the present factors and its impacts to decide whether it is the good time to invest in Indian stocks now or not.To reach to the final answer of ‘Yes’ or ‘No’ we would go through some of the major points. It not covers all the factors but not willing to miss any important factors that influence stock market investment decisions.
1. GDP Growth: September ending quarter reported that India’s annual GDP growth have been slipped to 6.9, and it is of course a reason of worry. Economists from around the world have no surety on when the growth reach more than 7% and forecasting it would be nearly 7% for some of the coming quarters.
2. Inflation: worry on inflation is still live. It is around 9% and still growing. No signals from government side to drag inflation to the normal rate. There are no effect in this after RBI hiked the rate multiple times. Prices are still up and going to uncontrollable. However, it is expected the inflation rate would come down in the coming month, but as an investor we can consider this as just a hope.
3. Rupee Value – One of the major concern. Rupee continuously crashing its value against Dollar and no signs to come back to neutral state. This phenomenon effects most of the sectors badly as their earnings are coming down to a great extend. Rupee now known as the worst performer among currencies of major Asian countries as it have already fallen about 15% in this year.
4. Issues in European Union affects to the export to a great extend as the exports seems lowered to a great extend. This trend seems to be continue until any positive growth in global as well as EU sectors.Trade deficit, the gap between export and imports, is maximizing by the fallen rupee value!
5. Other Major Factors – No major projects are coming, existing projects especially infrastructure projects are in stuck, economy slowing down, bank credit is dipping with rising defaults and bad loans, asset quality is decreasing, high interest rates, high fuel prices all are dragging the economy growth back to the bottom line. To spice up, rating agencies beating down Indian banks credit rating.
As an investor, what should you do now?
As a value investor, consider this is huge volatile time. SenSex would move forward and down continuously because of not able to reach to any point permanently. It is advisable to wait patiently and identify potential investment candidates and make the money ready. It is certain that an opportunity near to the door step, but not sure when the exact time approaches us. As a sensible investor, one should be ready to invest to the stock market at any time and be ready for that.However, I have already brought huge numbers of Titan and Tata Power stocks recently and it would be my investment for more than 18 years. Investor with long time perspective can still invest in stocks like HDFC, Titan, Gitanjali Gems with a focus of the betterment of their kids and have high duration.
Sherin Dev, a financial writer, investor and the founder Investinternals.com and moneywithmoney.net financial blogs. Follow him on Twitter or in Facebook. Any queries on articles, guest posts, contact at investinternals@gmail.com