Equity investors have been extremely confident about the long-term growth prospects that India has to offer. The confidence for the long term investors comes from political stability in India, its demographic dividend and corporate performance. Moreover, business models working fine for a majority of the businesses, big corporates flaunting healthy balance sheets, consumption story driving the growth, abundant liquidity in the system, controlled fiscal deficit and many more aspects unique to the Indian economy magnified the healthy perpetual growth in Indian economy.
Suddenly, the unchallenged aspect of the Indian equity market story – the strong and durable economic growth (GDP) – appears to be fuzzy. The very strength of the Indian equity market has become its weakness. And that is impacting the psyche of market participants, i.e brokers, wealth managers and especially the investors.
When the GDP growth touched 5 per cent in the latest quarter, it got confirmed that we are indeed in the midst of an economic slowdown. We do not need government officials to admit that we are in a slowdown and that macros have been decelerated. If we consider the nominal GDP growth, it has come down to 7.6 per cent from 12-odd percentage points. The GDP growth has hit almost a 16 years low.
What has triggered the slowdown?
The economic slowdown and its protracted nature has surprised several market observers. Many would attribute the current slowdown to the lack of demand for goods and services in the economy. The private consumption has slowed, and the investment is being impacted throughout the economy.
We attribute the current slowdown to following four factors:
This story is from the Dalal Street Investment Journal Volume no 34 Issue no 21 September 13th 2019 edition of Dalal Street Investment Journal.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the Dalal Street Investment Journal Volume no 34 Issue no 21 September 13th 2019 edition of Dalal Street Investment Journal.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
How To Invest In An Ageing Bull Market
Bull rallies (periods when stock prices rise) and bear declines (periods when stock prices fall) are natural parts of stock market cycles, but they don't follow a fixed timeline.
Should You Entrust All Your Money To A Single AMC?
If you are a market participant, you have probably heard the quote 'don't put all your eggs in one basket', which suggests diversification. Investors often focus on diversifying across categories like large-cap, mid-cap and small-cap, but they may unintentionally overlook diversification across different AMCs. The question arises: is AMC-wise diversification really necessary? Rakesh Deshmukh takes a closer look at this scenario
Wild Swings Engulf Global Equities
U.S. stock markets experienced significant volatility. An early-week rally pushed the markets to new highs, but this momentum faded, primarily due to weaknesses in the tech sector. The major indices had a mixed finish with, S&P 500 and Nasdaq closed lower, while the Dow recorded a notable gain.
U.S. Elections and China's Economy Hamper Commodities
Commodity markets experienced selling pressure in the last fortnight, driven by uncertainties surrounding the upcoming U.S. presidential elections, concerns about the Chinese economy, and increased agricultural production in Brazil.
Wealth Building For Retirement Through Mutual Funds
Retirement is one of the most crucial and lifechanging phases. It marks a period where maintaining your lifestyle becomes paramount even though your regular income stops.
Mastering Investment with Information Ratio
Information Ratio helps in navigating the complexities of the investment landscape by assessing an active fund manager's performance. And though it has its limitations, it remains an essential part of the finance industry. The article explains what Information Ratio is and how investors can use it as another tool
Plan To Be Financially Independent
Each of us aspires to be financially independent as it ensures having enough resources to be self-sufficient and control our finances.
❝Technology is the new game-changer"
With a new breed of young investors entering the financial markets, it is the use of technology that is increasingly playing a major role in how investments are done and tracked. Anand Radhakrishnan, Managing Director, Sundaram Mutual Fund, shares his opinion about how this factor is turning into a significant tool and how it will shape the strategies of his company
What If Donald Trumps?
The potential election of Donald Trump as president in the U.S. carries significant implications for the Indian equity market. It could lead to changes in the global trade dynamics, in particular affecting the Indian IT sector while also raising inflation levels and leading to yet another revision in the visa programme for Indians who want to work in the US. The article takes a closer look at what may lie in store
Sectoral Gains Make A Mark
Benchmark indices continued their uptrend, reaching new record highs, although the pace has slowed as the broader markets faced selling pressures
