by Vivek Karwa, CPFA., CFPCM
141016 – Fifth month is running since the new government had taken over the reins at New Delhi. The expectations are running high. The government seems to be moving in the right direction, considering its early days in the office. People of the country watch for the intentions of the government first, then comes the expectations of on ground performance.
The initial months have been spent well on connecting with people. Communication was something which was lacking earlier and now through various programs the spirits among the people seem to be rising. Even as I write this, the most needed labour reforms are being launched by the government, and the best part of the event has been that the required number of related forms, are being reduced from 16 to 1. Businesses want just this, easy laws will help all.
If the government is serious about its Make In India campaign then the ground realities need to be changed. Everyone understands that these are not things which can be done overnight and hence market will wait for may be few more months. The fact that files are being cleared at faster rate is welcome move towards the need. Some green organizations have raised concerned, but let’s be real on one thing, development cannot take place otherwise. We can be prudent at max.
The exit polls of Maharashtra and Haryana election can be considered as the referendum on people’s view on the present govt. If the results come as per the exit polls the central government will only become stronger and hence would be taken very positively by the market. Many started expecting the government to deliver in first 100 days itself. It was like expecting a baby in 3 months instead of normal 9 months! Reality has finally set in.
Indian market’s had run too fast too soon and off late we are seeing the volatility for good. The Mid caps and the Small cap stocks have corrected recently. This is supposed to be very good for the long term health of the market. A large part of the volatility is coming from the American and the European markets. The growth there seem to be still in slow pace. China also is slowing down.
In all these mess our country is benefiting the most, if not yet benefitted will benefit for sure in future. Crude oil for instance has come down to $80 per barrel in case of WTI and the Brent is trading around $83. All these prices were firmly trading just few months back. The crude oil has fallen more than 20 dollars since the union budget in July’14.
Crude alone will act as major economic booster for us. A dollar fall in crude oil saves the government Rs.6000 Crs in oil bill payment. Twenty dollars is like Rs.1.2 L Crs savings! If crude remains even for 6 months in this region we will have great positive impact on our fiscal deficit. The Finance Minister may really be able to achieve the set target in the budget.
Hence global volatility will be negative for our markets in short term and will be super positive in the long term. Hence we have to and we must invest. We believe that Indian markets should deliver the highest post inflation returns among all asset classes. Be choosy since the future will be of stock pickers market.
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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