Current Indian Stock Market Scenario vs US Recession.

Indian Stock Market including both NSE-National Stock Exchange and the BSE-Bombay Stock Exchange have certainly taken a tremendous beating in the past few weeks. We are sure most of us here knew that the correction in the trading curve was round the corner which would be healthy, and the markets would bounce back from 18k levels with the help of mutual fund investments & buying of Indian stocks again. However the anticipation went wrong, and the US recession story along with global and Indian commodity prices have added fuel to the global equity market turmoil on a whole.

Do we have to worry our Indian investments in stocks & mutual funds?

What would happen next in the stock markets of India?

Whether investors should make more investments in India?

 

Well we have to realize a fact that we all are NO astrologers here, rather we are investors taking calculated risks, and we should take into account the probability of us being wrong as well. Things have gone certainly worse in the Indian trading context, but we at NriInvestIndia.com hope that in the coming months the same wouldn’t be the case.

 

We at NriInvestIndia.com would like to bring a couple of things into picture:


1. Federal Reserve (US head banking institution, like RBI in India) is looking forward to make more rate cuts (interest rate cuts) in the coming future to ease out the credit crunch that has evoked since this subprime crisis. Its effect would take 6-8 months to reflect in the global economies including markets of India:
Derivatives Trading Market, Futures Trading Market, and Commodities Trading Market of India. This reflection in trading and investment sentiment could take some time to happen, but it would be definitely witnessed with an increment in local business, FII investment in India and NRI Investment Services in India. Good news

2. Indian Shares/Stocks market are not performing great in the gone weeks, but institutions still have abundant money on the table to invest; but with the coming rate cuts, the debt market would not look any good to them either (in the US).

So would they put money into commodities (mainly: gold, oil, silver)?

Commodity prices have risen up real fast, not giving many investors the room or time to switch from equities or debt market into commodities market. All this brings the investors, institutions, banks & hedge funds in the land of uncertainty. They have to rethink their strategy and that is where the emerging markets look attractive to these investors (because these investors would still want to invest their money. US recession doesn’t mean people would stop investing for their future, or hedge funds/banks would stop investing/speculating money). Thus bringing such investors to look for good valuations and a very positive side for the Asian stock markets. Good news

3. Nothing bad is happening in the Asian markets. We look pretty strong, and all this major blood is on the street is a result of short-term panic we are witnessing. The momentum would soon pick up once the US recession worries ease a little with fed pumping in more money (bailout) into the subprime cycle. Thus we would see lot more buy orders coming into demat accounts to buy the Indian stocks. Good news

4. India story has not changed at all. We still believe that our economy has lot of potential with great fuel to shoot up. However we still believe that this is not going to happen in short-term, and we might not see too much purchase orders coming into the Online Dmat Accounts of Indians as well as NRI, PIO or OCIs (non resident Indians). There is a lot of room for expansion in India, and there is huge demand for credit consumption. We are just waiting for the liquidity to pour-in. That liquidity is definitely on the table, but all big institutions are looking for some good indicators, and when this happens we would be crawling back on the curve. Good news

5. We all believe that the markets are majorly falling due to the US worries that are coming in and not because of the performances exhibited by the Indian corporates. Earning results of the company are expected to be out in April (when companies declare their quarterly/annual performances to the public). Everyone out here expects these numbers to be good, which could thus decide the turn of the market sentiments. Good News

Important: Our idea is not to put a very rosy picture in front of you, but to ease out some tension by highlighting certain macro & micro economic points that are still in our favour. We know investors not only with us, but also with other brokers are loosing their portfolio strength in terms of capital and valuations. However, keeping all the above notes in mind along with strong/stable Indian fundamentals that are still pretty attractive we advise our clients to stay strong and very importantly increase their time frame from 2 years to a minimum of 3-4 years now. This is especially for clients who have invested heavily in mutual funds, as mutual funds are supposed to be long term financial instruments and not short-term trading products. To conclude we would advise clients to stay calm and hold onto the positions with a long term perspective (3-4 years now) and lets take this opportunity to build our portfolios even stronger by adding good positions(especially in mining, commodity, energy & infrastructure sectors) at lowers prices as well.

Looking to Invest in India? Current Investment Scenario in India.

NriInvestIndia.com is an upcoming NRI focused investment firm from India helping NRIs to invest in stock markets of India online, primarily they focus on enabling NRIs to do Investing in Mutual Funds of India and buy sell Indian shares Online.

In the past few years Indian stock markets have done tremendously well, and this story is luring more active NRI investors – non resident Indians from around the world. Indian economy is witnessing a major flux of capital inflow into both real state segment and capital markets of India, and all this is especially due to the growing investment opportunities that are being available to NRIs, PIOs and OCIs in India. There are a number of factors that have propagated an increment in the percentage of investors over last year numbers, and these few major reasons that have boosted the over NRI investment in India, categorically in buying/selling of Indian stocks and NRI mutual fund investments are:

1. Attractive, responsible and dynamic investment policies by the Indian government.
2. Major development in the agricultural and infrastructural sectors.
3. India becoming the centre of global outsourcing boom with more NRI capital inflows.
4. Well regulated capital markets offering array of products:
Nri Mutual Funds, Stock Trading account for Nri, Demat Account for Nris and other useful NRI Investing options & services like: OCI & PIO Dmat Account in India, Online Bank account for NRI, NRI Capital raising, etc.

NRIs – reason to invest
However the current market condition has put the investor confidence on the back step. Investment team for Mutual funds in India at NriInvestIndia.com believes that the fundamentals are intact, and the bull story is still on the run. In totality, the overall happy-go-jolly story has not changed in India, as nothing bad has happened in the economy…!!

The Investment team also states:
Yes the US recession is there, but in the long run it is not going to affect emerging economies, like China, India, Brazil, etc. Buyers will come up to buy, as the valuations still look great, and trading in India would pick up within a few months. In fact the crunch phase that we are witnessing is not only due to stimuli like US recession, US mortgage crunch, but also due to some technical reasons. Not to forget, the Indian stock market including both indices : Nifty from NSE – national stock exchange AND SENSEX from BSE – Bombay Stock exchange were waiting for a long due correction, and most importantly the markets ran too fast to 21000 which shouldn’t have been a case. And this over–bought/accumulation situation led to this steep fall in the gone 2 weeks.

This is a typical bull market scenario… when people sell, a panic is created… more panic creates greater panic… and this leads to unnecessary dumping of positions to lock profits.. this dumping starts triggering stop-losses on the negative territory..

We are here for 5-6 years minimum…!!
We would be heading up again…. everything looks great here…
And most importantly in a longer run if US undergoes a recession then, lot of European banks, FIIs, hedge funds and institutional investors from all over the world would look around for better places & good opportunities to park their money. Brazil, India, China and other Asian economies are the places where they would be investing there money. They have been putting in the past, but from now on they would be placing more money. This greater inflow of liquidity would increase productivity and the economic cycle of growth would not stop for another 10-15 years.

To conclude the team also says:
NOTHING has changed here…. fundamentals are pretty strong in India.
Do not move by the short-term volatility…
We are in here for a long game..!!

This ever growing saga of good financial well being, in the long run would always make India a best investment destination for Indians around the globe.