Want an opinion about current economic condition

General
2

India is consumption based economy unlike China which is export based economy

If you are long term investor then no need to worry about short term events.
at present markets are falling due to FII selling. They are selling because they have better advantages elsewhere.

Reasons for their selling is

  1. FED rate hikes. which will give higher interest rates without exchange rate fluctuations if they invest in their home country.
  2. Slowing Economy in India will lead to further fall in interest rates that will reduce bond rates as well.
  3. FII have more Investments in Bonds than Equities
  4. When they withdraw money out of India that will lead to Rupee depreciation that again escalate their problem due exchange rates.
  5. Rupee depreciation will lead to Higher import cost especially Crude imports. That will push up inflation in India.

Positives

  1. After DEMO more investments are coming in to Financial Markets than physical assets like Real Estate and Gold
  2. GST made unorganised in organised one which will bring more revenue for Govt. Govt will be able to spend more that will propel growth.
  3. We still have lot of scope for Infra Sector development which drive indian Economy.
    4 .Auto Sector is major catalyst for Indian Economy this is doing well. Check Auto Sales.
  4. Govt. Housing Scheme will also drive economy in the future.
  5. Major policy initiatives have been done by govt. and Economy is Bottoming out now.
  6. Markets will go higher due to more money is coming into financial markets. look at number of IPOs these days.
  7. EPF funds also investing in Markets now. This will push up markets which again lead to attraction more retail investors in to markets.

Negative Issues:

  1. Real Estate severely affected due to DEMO, RERA and GST. Real estate was the highest employment generator.
  2. Due to GST Exporters are facing working capital shortage which at present nagging industry. This is temporary.
  3. There are about 600k Apartments unsold across India it will take at least 5 years to sell them. so Real estate will not grow immediately.
  4. Due to GST, unsold apartments will cost more than new apartments so unsold will take difficult for selling. This is putting lot of real estate companies under pressure. Look at UNITECH.
  5. before 2014 Due to coal shortage there was huge demand in power sector which drove many companies into invest heavily.
    later Govt eased coal linkage and production which lead to excess capacity. Solar power also added to that. most power plant are running at 50-60%. this is leading to NPA issues. many power plant half finished and no PPAs. These Plants are putting pressure on Banks.
  6. Due to NPAs banks are unable to lend freely. they are cutting their own branch.
  7. Technology leading to Job losses.
  8. Labour issues also forcing Companies to go for automation which is also leading to job losses.
  9. GST forcing small companies to windup again loosing jobs.
  10. Govt improving efficiency it is leading to job losses.
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