Concern or Opportunity ?
Then why Indian markets are lagging their peers. Why every rise is a selling opportunity in India’s stock market. Is it A short term phenomena? Currently, the pessimism is at peak. Such a negative sentiment is unwarranted, so thinks many analysts, especially fundamental analysts. When there is no such de-growth factors due to interest rate hike to a greater level, why sentiment has been blurred. The india’s indices are bleeding every now and then days. FIIs to a little extend have turned seller. Does this phenomenon signal something else? Technically, the market long term trend has gone down. This means there may be instances of resumption of bear market. This could be a bear market in progress. But interestingly, peer markets of world were strengthening and the so called high growth oriented hyped countries India and China were cascading. Unlike NSE & BSE indices, most of the world Indices after gapping lower to start in the New Year, the markets quickly stabilized and finished in a good position week over week until recently when half of the world markets have gone to intermediate downtrend. The Nasdaq 100 and Russell 2000 cleared very important levels. These are solidly in the positive for the year for US markets & others. The rally continued with only a few minor days of selling. Every dip had been bought. Many groups associated with an early bull market like the transports, Mining and technology stocks clearly outperformed.
For India, The Sensex grew by about 17.4% in 2010. It is not the last year growth but beyond that horizon. During 2000-2010 decade, India’s Growth statistics says something more: Nominal GDP nearly trebled from less than US$0.5 Billion to US$1.3 Trillion and Per capita GDP raised 2.5 x from US$427 to US$1,058. Stock market returns is impressive too. Stock markets delivered 18% CAGR returns, the second best performing emerging market. Market cap expanded 14 x over the decade, improving India’s global rank from 17 to 8. Then again why the market signaling of a resumption of bear market.
Of course, the immediate conceivable facts which drag the sensex is nothing but few factors viz. Inflation, Interest Rate hike which are real enemy of stock market since inception. High inflation leads to tight liquidity and high cost of credit stifles the growth momentum. Prices of global commodities are strengthening relentlessly. Beside the ever-dragging factors, the governance issue in India such as recently divulged scams, corruption etc weighed upon more on sentiment. These are short lived. On the other hand, Indian companies with resources are well positioned to benefit from hot up commodities prices. A strong global recovery is leading to demand for high tech services, which fires up India's tech industry. Domestic rural prosperity is widespread and is leading to demand for consumer goods and services. Sectors such as textiles, automobiles, FMCG, telecom and rural credit should benefit from this. On the back of good business conditions, banks are doing exceptionally well in terms of volume and lower credit costs.
Looking at such scenario in totality, the world is recovering from the 2008 crisis and Indian corporate is registering good earnings growth. Then why we are to concern? Why not to invest in a small quantity on a good sentimental dip. However, nothing is certain in stock market. And the chart says something else? Be calculative. Stride slowly.