Lovely Surprise Indeed!!
If a word that could perfectly explain the last week performance of the Indian stock market, it is none other than “Surprise”. Amidst political uncertainty and threat of mid-term elections, the stock markets were able to find new highs for themselves. SENSEX and NIFTY were up by 5% each during last week trading.
Honestly speaking, my mind raises some questions pertaining to current state of Indian stock markets. Aren’t we ignoring the threats facing by the economy overall? Isn’t currency appreciation a threat for our IT and other export oriented companies? Aren’t we seeing a slowdown in the economy overall due to various restrictions imposed by RBI? Don’t you think that mid-term elections next year will pull the brakes on the reforms?
Wide Angle – Wide Perspective
If these concerns are real, then why markets are going in just one direction, which is UP? Before we discuss the coming week outlook, it is important to discuss the reasons behind this steep rally that started after Fed cut in mid-September. For this, let’s take an example. Let’s suppose, you have 100 Rs to invest and there are three companies to choose from.
Company A is a peer in its segment. It has delivered to his investors in the past. But currently, it is unable to find new ways, new paths to grow due to which its growth trajectory has become flat. Company B is an upcoming company, latching on every new venture. Its growth is very fast in last few years. Though, the company policies are not investor friendly. It doesn’t appoint independent directors in the company and promoters have the only say on the company’s issues. Company C is also an upcoming company and growing rapidly like Company B. But its policies are investor friendly. The company has several independent directors in its board and holds the reputation of encouraging talented people within the ranks of the company.
Now in most likely scenarios, you will be putting your money in Company C, since it is growing as well as known to be investor friendly. Somewhat Indian economy is the Company C for the investors worldwide. It has its real concerns, yet it asserts the confidence of a brighter future. The political structure in our country is democratic where people have a say. Our media is free. The reforms are currently on track. Infrastructure is improving, albeit slowly. The educated class is very big. On the other side, if we look at other countries, including China, the economic setup is not as vibrant as India has.
Thus, when an investor decides to allocate the funds, it will definitely put some money in Indian economy as well. And today, when there is ample liquidity available globally, Indian markets are getting the good share out of it. Thus, if we complete the whole cycle, recent Fed cut has increased the liquidity in the global markets and in turn, led to major investments in Indian companies as well.
Markets this week – Profit Booking
Now, once we are clear about the long-term perspective, let’s try to evaluate the coming week. The coming week will see half-yearly results announcements by major companies including Reliance, TCS, and Wipro. There are chances that one may see profit booking in these companies on the day of announcement or there after. Hence, those investors who are unable to enter these quality stocks can find the opportunity at lower levels in these stocks.
Hence, the word that can indicate the weekly outlook for Indian stock markets is “Profit-booking”. Though, the good thing for markets is that threat to the government is largely over. The comments from both sides have shown temperament, which indicates some kind of patch up between the parties. Thus, investors will not be wary of putting their money at the current levels.
We all love surprises, especially if they bring something good. No wonders! The last week performance of Indian stock markets was no less than “lovely surprise”. And hopefully we continue to receive such surprises quite often in the future as well.
Wish you a happy investing this week!!!
If a word that could perfectly explain the last week performance of the Indian stock market, it is none other than “Surprise”. Amidst political uncertainty and threat of mid-term elections, the stock markets were able to find new highs for themselves. SENSEX and NIFTY were up by 5% each during last week trading.
Honestly speaking, my mind raises some questions pertaining to current state of Indian stock markets. Aren’t we ignoring the threats facing by the economy overall? Isn’t currency appreciation a threat for our IT and other export oriented companies? Aren’t we seeing a slowdown in the economy overall due to various restrictions imposed by RBI? Don’t you think that mid-term elections next year will pull the brakes on the reforms?
Wide Angle – Wide Perspective
If these concerns are real, then why markets are going in just one direction, which is UP? Before we discuss the coming week outlook, it is important to discuss the reasons behind this steep rally that started after Fed cut in mid-September. For this, let’s take an example. Let’s suppose, you have 100 Rs to invest and there are three companies to choose from.
Company A is a peer in its segment. It has delivered to his investors in the past. But currently, it is unable to find new ways, new paths to grow due to which its growth trajectory has become flat. Company B is an upcoming company, latching on every new venture. Its growth is very fast in last few years. Though, the company policies are not investor friendly. It doesn’t appoint independent directors in the company and promoters have the only say on the company’s issues. Company C is also an upcoming company and growing rapidly like Company B. But its policies are investor friendly. The company has several independent directors in its board and holds the reputation of encouraging talented people within the ranks of the company.
Now in most likely scenarios, you will be putting your money in Company C, since it is growing as well as known to be investor friendly. Somewhat Indian economy is the Company C for the investors worldwide. It has its real concerns, yet it asserts the confidence of a brighter future. The political structure in our country is democratic where people have a say. Our media is free. The reforms are currently on track. Infrastructure is improving, albeit slowly. The educated class is very big. On the other side, if we look at other countries, including China, the economic setup is not as vibrant as India has.
Thus, when an investor decides to allocate the funds, it will definitely put some money in Indian economy as well. And today, when there is ample liquidity available globally, Indian markets are getting the good share out of it. Thus, if we complete the whole cycle, recent Fed cut has increased the liquidity in the global markets and in turn, led to major investments in Indian companies as well.
Markets this week – Profit Booking
Now, once we are clear about the long-term perspective, let’s try to evaluate the coming week. The coming week will see half-yearly results announcements by major companies including Reliance, TCS, and Wipro. There are chances that one may see profit booking in these companies on the day of announcement or there after. Hence, those investors who are unable to enter these quality stocks can find the opportunity at lower levels in these stocks.
Hence, the word that can indicate the weekly outlook for Indian stock markets is “Profit-booking”. Though, the good thing for markets is that threat to the government is largely over. The comments from both sides have shown temperament, which indicates some kind of patch up between the parties. Thus, investors will not be wary of putting their money at the current levels.
We all love surprises, especially if they bring something good. No wonders! The last week performance of Indian stock markets was no less than “lovely surprise”. And hopefully we continue to receive such surprises quite often in the future as well.
Wish you a happy investing this week!!!
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