Few Words on Market…

Tamilnadu Investors’ Association – Investors Digest

by Vivek Karwa, CPFA, CFPCM ,Investment Strategist & Portfolio Manager

111117: People are now largely fed up with the rising interest rates scenario and many have also started questioning the rate hikes, which are mainly intended to tackle the inflation, but till now the so called medicine of interest rate hikes has not solved the problem but has had many side effects. The results declared by the companies prove this with the falling profitability scenario, mostly due to higher cost of capital.

It is high time the government takes note of it and does not let the rates go out of control. India is still dependent largely on the crude oil imports and with the Rupee trading above the $50 mark the upward pressure on the inflation will continue. The administration is not able to control the Rupee though we have really huge foreign reserves and even gold reserves, but if the inflation remains high due to these reasons, the common man may be again punished by way of interest rate hikes.

The policy decisions have to be taken on war footing now. Even the finest of corporate leaders have started feeling the heat now and also have started voicing the anguish against the policy paralysis. In the process, India, the onetime favourite FDI destination has now been totally neglected and the money infact is flowing reverse now.

US is still on bed rest and struggling to recover, Europe still on life support and the overheated China is finally showing the signs of slowdown. India is still growing almost at 8% without any support from the policymakers, the growth is automatic due to the young population we have and the entrepreneurial skills of Indian businessmen. This is the time India should take the lead in the global economics and can easily build consensus on various issues by exerting bare minimum diplomatic pressure on other countries.

No country, particularly the developed ones ignore India since lot of dependence is on Indian markets by their companies. It is the right time that India sees this opportunity and also seizes it, but we are losing this golden chance and trying to find out solutions for our internal problems by just sitting on them and not taking any firm actions.

Be it mining issues where SC has already banned mining in various places, Environmental clearances for various projects, High turnaround time in approving FDI proposals, Rupee mismanagement, Low investments in Infra projects due to higher capital costs due to very high interest rates and many issues require steps on war footing without which it would be very difficult for our country command the price let alone the premium!

These factors will not let markets move up but will keep on putting pressure since “stuck” investors will look out for exits everytime Sensex shows green. We are trading in a range and every time it moves up and corrects the already battered mid and small cap stocks get beaten up further. There are many extremely well managed and honest promoter led companies which are trading at 20-30% of what they used to trade at.

Bank savings account interest rates have been deregulated but not much impact is likely tp be seen on the numbers front since the customers are not expected to move to other banks just because they are paying higher rate of interest on savings balances. Expecting that RBI will take note of the falling growth rates and will halt the rate hike trend one may still look at strongly managed banks with a long term perspective.

Sensex should remain in the range of 15600 and 18000 for some more time to come and may find good support as usual at 15600 – 16000 levels.

Disclosure:- It is safe to assume that the author may have interest in the sectors recommended in this news letter. Seeking personal advice from your Financial Advisor is recommended before acting on any of the substance given herein. The numbers, figures, etc., presented may have been taken from various sources.


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1 thought on “Few Words on Market…

  1. rajan

    i need a appmt with u regarding pension plans on 3rd or 4th since i will be visiting chennai with my son.
    the apptmt is for my son prakash



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