Well the title chosen for this topic is an obvious question that each investor might be facing within himself. To make things complicated there is no proper or simple answer to this by anybody. Even the best of market experts present diplomatic answers ( they are always diplomatic.... Isn't it).
So lets dig down this a bit and assess it with some logical and analytical skills.
It was CRUDE that started the slide, more specifically the middle east nations decision to not cut down the supply to protect crude nose diving prices as they were more worried to protect their market share. Was that the real case, no. They wanted crude price to nosedive in short term so that the shale production stops in erstwhile USA, so that they can later dictate terms as well as prices. But things didn't go well as US shale production though costly was still going strong.
Meanwhile China was facing signs of slowdown and that made the whole picture gloomy. The commodities were going southwards accompanying crude. As a short term measure China devaluation yuan to protect its economy a bit. That made matters worst for world markets and every stock indices started tumbling, the first being the Shanghai exchange index.
Though crude softening was good for India and it's crude basket, the nifty was emulating the world markets due to global uncertainity. Crude going down, China slowing down, Europe not in good shape and fear of recession, USA recovery not being on a track. All these aspects making it a gloomy picture took markets to South on each passing day.
Then came the budget. It was an ok budget with no major highlights but markets cheered. As there was no long term capital gain tax imposed, it was taken a positive. GDP forecast was taken positive. PSU banks npa restructuring was taken positive. The markets was so much down n out that it recovered about 550 points in nifty in a week. The recovery surprised many working India, more so to other markets in world.
So are we better placed than the rest. No so...
The budget euphoria will settle down within few days. Crude has recovered a bit and due to this the world market is also cheerful a bit. But make no mistake, nothing has changed at large. USA payroll data seems that problems are again resurfacing. Europe is still dodgy. China is still slowing. Crude might hold for now but markets might not. The picture still looks gloomy.
India is just a bit better than the rest but it has its own sets of problems. Reforms not happening as anticipated. PSU net's are spiralling and making banks looks ugly. Political tensions fuelling uncertainity. The government stand on many issues had been lackluster giving opposition an edge over them.
Things might improve a bit if Q4 results get better, but it's just a hope. A hope that being undone from quarter to quarter. So unless the earnings improve there is no respite.
Domestic consumption story looks good, so it's an interesting aspect to look after for investment. Pharma and IT will also perform better than the rest of sectors. So if you are a long term investor than you can invest about 10-20 percent of your capital in the months to come. But don't expect any fireworks soon. The wait can be a long one and a frustrating one. But keep investing bit by bit in strong sectors.
So lets dig down this a bit and assess it with some logical and analytical skills.
It was CRUDE that started the slide, more specifically the middle east nations decision to not cut down the supply to protect crude nose diving prices as they were more worried to protect their market share. Was that the real case, no. They wanted crude price to nosedive in short term so that the shale production stops in erstwhile USA, so that they can later dictate terms as well as prices. But things didn't go well as US shale production though costly was still going strong.
Meanwhile China was facing signs of slowdown and that made the whole picture gloomy. The commodities were going southwards accompanying crude. As a short term measure China devaluation yuan to protect its economy a bit. That made matters worst for world markets and every stock indices started tumbling, the first being the Shanghai exchange index.
Though crude softening was good for India and it's crude basket, the nifty was emulating the world markets due to global uncertainity. Crude going down, China slowing down, Europe not in good shape and fear of recession, USA recovery not being on a track. All these aspects making it a gloomy picture took markets to South on each passing day.
Then came the budget. It was an ok budget with no major highlights but markets cheered. As there was no long term capital gain tax imposed, it was taken a positive. GDP forecast was taken positive. PSU banks npa restructuring was taken positive. The markets was so much down n out that it recovered about 550 points in nifty in a week. The recovery surprised many working India, more so to other markets in world.
So are we better placed than the rest. No so...
The budget euphoria will settle down within few days. Crude has recovered a bit and due to this the world market is also cheerful a bit. But make no mistake, nothing has changed at large. USA payroll data seems that problems are again resurfacing. Europe is still dodgy. China is still slowing. Crude might hold for now but markets might not. The picture still looks gloomy.
India is just a bit better than the rest but it has its own sets of problems. Reforms not happening as anticipated. PSU net's are spiralling and making banks looks ugly. Political tensions fuelling uncertainity. The government stand on many issues had been lackluster giving opposition an edge over them.
Things might improve a bit if Q4 results get better, but it's just a hope. A hope that being undone from quarter to quarter. So unless the earnings improve there is no respite.
Domestic consumption story looks good, so it's an interesting aspect to look after for investment. Pharma and IT will also perform better than the rest of sectors. So if you are a long term investor than you can invest about 10-20 percent of your capital in the months to come. But don't expect any fireworks soon. The wait can be a long one and a frustrating one. But keep investing bit by bit in strong sectors.
