I ask this question to all the investors over here, how much should I be concerned about the current financial situation of india? There are mixed responses from various expert economists some say not to worry, some are saying there will be a recession in india’s economy. I am feeling nervous about that. @nithin,@karthik what’s your opinion about current economic condition?
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
- FED rate hikes. which will give higher interest rates without exchange rate fluctuations if they invest in their home country.
- Slowing Economy in India will lead to further fall in interest rates that will reduce bond rates as well.
- FII have more Investments in Bonds than Equities
- When they withdraw money out of India that will lead to Rupee depreciation that again escalate their problem due exchange rates.
- Rupee depreciation will lead to Higher import cost especially Crude imports. That will push up inflation in India.
- After DEMO more investments are coming in to Financial Markets than physical assets like Real Estate and Gold
- GST made unorganised in organised one which will bring more revenue for Govt. Govt will be able to spend more that will propel growth.
- 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.
- Govt. Housing Scheme will also drive economy in the future.
- Major policy initiatives have been done by govt. and Economy is Bottoming out now.
- Markets will go higher due to more money is coming into financial markets. look at number of IPOs these days.
- EPF funds also investing in Markets now. This will push up markets which again lead to attraction more retail investors in to markets.
- Real Estate severely affected due to DEMO, RERA and GST. Real estate was the highest employment generator.
- Due to GST Exporters are facing working capital shortage which at present nagging industry. This is temporary.
- 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.
- 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.
- 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.
- Due to NPAs banks are unable to lend freely. they are cutting their own branch.
- Technology leading to Job losses.
- Labour issues also forcing Companies to go for automation which is also leading to job losses.
- GST forcing small companies to windup again loosing jobs.
- Govt improving efficiency it is leading to job losses.
Just to add further to all critical positives and negatives mentioned by Hari, I would say it’s on our perspective of how we judge the current state… I.e. Is it opportunity or threat… In long run Markets have survived wars, attacks on important financial cities, floods, droughts, brexit and demons (though still damage recovery in process). If u are having positive outlook and feel abv points as perceived risks which may have been factored also to 1 point u may Buy on dips else if u feel abv risks r real and worse than few disasters of past stay away till u feel that mkt is worthy… All ur pov.
Thanks for your detailed response, and yes I am a long term investor. But still I don’t want to get negative return, till now my portfolio return is 11% in 4 months so I want to preserve that return upto 1 year.
Market always front runs the respective country’s economy and at times adjusts itself with corrective measures to reflect the reality.
At current juncture, the Indian market is correcting itself on the growth expectation it had frm DeMo n GST. Also, No further rate cut in sight to stimulate economy becos of inflationary expectation due to kharif crop failure resulting in nil corporate profit growth & becos of high fuel prices.
Commenting on India, its greatest asset is its consumptive population, stable govt with dynamic policies, stable central bank policy measures, highly regulated financial sector, vibrant digital platforms to thrive.
Whenever distruptive things r tried in an economy, downturn is bound to happen till the things become ‘New Normal’.
Keep watch on the economic indicators of India on RBI website & keep comparing them at various years considering India itself as a company. The study of broad outlook always gives the better picture on wht is in store ahead.
Now cmg on to ur wish of seing No negative returns at all in long term investing, thts absurd. Even Warren Buffet is not lucky in tht front sometimes. Long term investing is all abt Wishing fr Happy Journey instead Happy Ending!
GST collections misplaced. Is another case how our media twists facts.
If I pay GST I deduct input credit and pay remaining. This was twisted by media , for 95000 crores collection 65000 crores goes as input credit. This is wrong. You pay tax after deducting input credit.
Destocking in Apr June Qtr will take at least one Qtr to adjust. So Jul-Sep Qtr will reflect that.
You can see Auto Sales on Monday. That will tell clear picture .
Long term Investors can add more when market falls instead of exiting.
SIP is the best way.
Meaning if SIP for stock market is it will come every month with 5% growth. What Fund Houses will do with money, put in Market only. So FII pullout is temporarily disrupts the market.
You can Hedge with Index Futures.
Nobody would know where the markets would head to & there is no expert in this market. But as i had told you in some other forum you should ask this question to yourself…do i believe in indian market & economy in long term?..if your answer is yes then go ahead & buy at every dips… You keep reading articles & spreading panic about markets to crash etc which i would say you should stop. If you want to consider my suggestion…watch for every index downward pivot breakouts & invest in stocks or MF. i’ve built a system based on a model but can’t share here as people would think i’m selling my system etc. Good luck…happy dassera !!
Yes I am aware of that negative returns are inevitable but when there is a broad chance of market slowdown and when I have a quite good portfolio (11% in 4 months isn’t bad IMHO), should I take some precaution measures in this current situation? So that I book profit now and wait for further market correction. Should I keep invested for next year or should I exit now and then re-enter when market settle down ?
Have a look at this. It was my portfolio then. Now no portfolio. Unfortunately I quit it when market made double bottom last December. Our decision go like that.
see prices of this stocks Now.
This is what long term investment is. You should not sell at every correction.
At that time I thought I can make more money in day trading than investment. But now I discovered that I am making more money to @nithin
If u r not comfortable in keeping ur portfolio, do a small mistake of booking 5% of profit out of 11% paper profit tht u r quoting. Then observe fr some days standing as a spectator with cash in hand. Afterwards u will only start preaching wht you shud hv done.
Remember, one cannot ‘Time’ the market. U can google out on the topic ‘Timing the Financial Market’.
i was like this Sabyasachi 10 yrs back…but have moved on with some maturity. but i personally feel that you must always book partial profits at regular intervals & then reinvest on dips.
This is an extracted image from commentary on Chapter 6 in Ben Graham’s Intelligent Investor book.
So decide how fast you wish to run in the long run
Hi Sadhu ,
Where you invested that in last 4 month you got the 11% return , are you taking about equity because as I am invested in mutual fund since April 17 ( 5 months) and return s 1.76%.
Here is my portfolio SIP in Mutual Funds
Reliance Mid & Small Cap Fund - Direct Plan - Growth 2,000.00/permonths
Franklin India Smaller Companies Fund - Growth 1,000.00/permonths Birla Sun Life Equity Fund - Direct Plan - Growth 2,000.00/permonth SBI Blue Chip Fund - Growth 2,000.00 /permonth DSP BlockRock Small and Mid Cap 3,000.00/permonth Franklin India Prima Plus 2000/month
Wow I am so jealous now, just kidding but yes we all can replicate that kind of return in a long term horizon. Thanks @haribabu.
Hi, I had invested through @smallcase, returns are so far so good. I too invested in some mutual funds and returns are so-so so far.
No slow down seen in consumers spending.
Yes I am too bullish on india’s growth story. And after hearing the report of Morgan Stanley on digitization my confidence increased many fold.
Bhai, being Indian, one FII(MorganStanley) report was needed to be gung-ho on Indian economy? In the report hv they explained why their folks r migrating somewhr else? Whr else they r getting attractive returns thn India? Can u provide the link to the report?