General Market Chatter
Views on the current stock market scenario in India:
we need to have an overall portfolio approach, while building a stock portfolio
if you hold a mix of stocks exposed to a variety of risks (positive as well as negative), the overall portfolio would do well in the long term
it takes time to construct a portfolio of stocks -- a simple approach is better than a complex process
now, individual speculators are going out of the market (India as well as in other global markets) due to a variety of reasons
the lack of individual interest in market is showing in negative market breadth and mid- and small-cap indices doing worse versus large-cap indices
as you are aware, the relative attraction of stocks (price versus value) changes dynamically
one stock may be attractive today, but its valuation could change in the next one or two quarters
another stock may be cheap today; but may become expensive in the next five to six months
with some luck, we may try to buy quality stocks at reasonable valuations and hold them for longer term of five to seven years
so, it's better to stagger our investments over a period of time, rather than thinking too much about market timing
interest rates across the world might come down in the next six months; we might see the same trend in India too
interest rate (the price of money) is one of the big factors for stock market outlook
how Indian rupee moves versus the US dollar or Euro matters a lot for Indian stocks
though India is not immune from global events, India is relatively better placed to show decent GDP growth in the next two to three years
India will have hiccups here and there; but overall growth trajectory will be good in my opinion
spending may go up in the next one year ahead of Indian Parliamentary polls due in May 2024
foreign portfolio investors (FPIs), domestic institutional investors (DIIs) and individual investors are of the opinion that PM Modi government will return to power next year
as such, political risk appears to be low to moderate to Indian stock market
a caveat: political predictions could go wrong as Indian voters are capable of springing up a surprise
well-established Indian companies have been able to weather all political, economic and global risks as my three-decade experience with the market shows
among emerging market basket, select Indian companies have been doing much better than, say, firms in Brazil, Turkey, Mexico or other EMs
this optimism on Indian listed firms is reflected in Indian stock valuations; that's why Indian stocks appear to be more expensive than stocks in other EMs
as we've seen, return on equity (ROEs) of Indian companies are superior to their global peers
due to attractive valuations and other reasons, some companies are resorting to buyback offers to shore up their stock prices, improve return ratios and distribute cash to shareholders
in general, if there is any sign of trouble in Indian stock market; the first people to sell Indian stocks are Indians (not foreign portfolio investors)
nothing is permanent in markets; but select Indian companies have been resilient to all kinds of events and troubles
the structure of Indian economy is changing; a few new-age companies with technology may disrupt established companies
but there's no crystal ball to tell us which new-age firms will show decent profitability, high growth path and long term sustainability
some slowdown is visible in India's GDP growth in the past three to four months; but some firms may buck the trend
the growth slowdown is reflected in Oct-Dec2022 quarter results; and recent fall in Indian stock prices
investors, however, need not be deterred by current troubles in the global economy -- with critical thinking and sound judgment, they may find opportunities in the market
due to lengthy court cases in Insolvency and Bankruptcy Code (IBC) and slow National Company Law Tribunals (NCLT) resolutions, a lot of capital in India is still locked up unproductively which is negative for India
things to watch for India are high fiscal and current account deficits
as individual investors, our effort is to ignore constant market noise; stay calm and catch good signals to make decent long-term money in markets
as at close of 29Mar2023, the indices levels are as follows: Sensex at 57,960; BSE 200 at 7,279; Nifty 50 at 17,081; India VIX at 13.63; USD-INR at 82.20 and India 10-year G-Sec yield at 7.30 percent
you may check this blog for a variety of articles on markets
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Adani Stocks Meltdown and Nifty Next 50 Index
Are Indian Stocks Immune to Adani stock Meltdown?
Meltdown in Adani group Listed Stocks
Indian Stock Market Moves Fully to T+1 Settlement
India Up the Ladder in MSCI EM Index
New Rules on Ex-date and Record date
Crisil Report - Big Shift in Financialisation
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Disclosure: I've vested interested in Indian stocks and other investments. It's safe to assume I've interest in the financial instruments / products discussed, if any.
Disclaimer: The analysis and opinion provided here are only for information purposes and should not be construed as investment advice. Investors should consult their own financial advisers before making any investments. The author is a CFA Charterholder with a vested interest in financial markets.
CFA Charter credentials - CFA Member Profile
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He blogs at:
https://ramakrishnavadlamudi.blogspot.com/
Twitter @vrk100
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