Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Stock markets: On the positive side... - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Nov 24, 2004

    Stock markets: On the positive side...

    It is being heard time and again that the Indian stock markets are currently in a strong bull grip, which will help the indices scale newer highs. An improving and favourable economic scenario along with significantly improved corporate fundamentals has helped attract strong and almost uninterrupted FII inflows, which has been the key driver for Indian stocks markets in the last 18-24 months. Domestic institutional participation and the entry of the retail participants into the equity arena have further helped matters.

    However, while the Sensex has now breached the crucial 6,000 mark on more than on a couple of occasions in the recent past, the sustenance of the same has been in question. This is because, at these levels, investors have been consistently booking profits, making it difficult for the index to scale newer highs. However, in this article, we shall not be speculating on whether the index would achieve record highs once again. In fact, while almost every investor waits for the Sensex to test its previous highs of about 6,250, we would like to highlight here a few points that could potentially drive markets to new highs in the long-term.

    • One of the key long-term growth drivers for India Inc. will be its large population base combined with a favorable demographic mix. While one may argue that this was the case even ten years ago, the situation was different then in the sense that interest rates were abnormally high for both corporates and consumers to borrow, literacy rate was significantly low and majority of the population were below the poverty line. Things have now improved for the better as new job opportunities have led to higher disposable income in the hands of people, a part of which will now aid consumer spending, in turn driving economic demand.

    • India Inc. is far more efficient at the current juncture compared to five years ago. In the mid 1990s, Indian companies went on a diversification spree. But increased competition from MNCs has taught them a lesson or two, not only forcing Indian majors to shed their excessive flab by keeping strict control checks but also emerge as more efficient and much stronger players. The effect of such restructuring and benefits of consolidation across various sectors will continue to be reflected in the future performance of India Inc.

    • Slowly but surely, governments are beginning to realize that reforms are the way forward. Though slow in nature (as has always been in the past), the intent of the government has changed and this is a sign of positive things to come. In fact there are already signs of this in various sectors like telecom, aviation, banking, power, etc.

    • Further, if one looks at the past decades and the expected GDP growth for the Indian economy going forward and compares it to the growth rates of other economies, India is clearly amongst the fastest growing economies in the world. India in recent years, has taken some good steps in terms of policy announcements for infrastructure development and also considering the reforms process currently underway in the country, the climate looks conducive for growth.

    While we believe that India Inc. (on a broader scale) will continue to perform well in the medium to long-term, it is time to take a re-look at stock specific fundamentals and valuations in the near-term in wake of strong crude and commodity prices and rising interest costs. Nonetheless, to conclude, considering the various positives working in favour of Indian equities, it would not be wise to stay out of Indian equities.



    Equitymaster requests your view! Post a comment on "Stock markets: On the positive side...". Click here!


    More Views on News

    How to Ride Alongside India's Best Fund Managers (The 5 Minute Wrapup)

    Jun 10, 2017

    Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.

    Were You Lured By Mr Market's Bait? (The 5 Minute Wrapup)

    Aug 23, 2017

    Mr Market lured investors into believing they'd bitten into a crash. Did you take the bait?

    Deep State First (Vivek Kaul's Diary)

    Aug 23, 2017

    Nowhere was the darkness deeper than in the nation's capital. There, no light shone. No flicker of awareness...observation...learning...or reflection appeared.

    Why Hasn't Warren Buffett Rung the Bell Yet? (The 5 Minute Wrapup)

    Aug 22, 2017

    It's surprising Warren Buffett hasn't warned investors about the expensive stock market? Let us know why.

    Think Twice Before You Keep Money In A Savings Bank Account (Outside View)

    Aug 22, 2017

    Post demonetisation, a cut in bank savings deposits rates was in the offing.

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    It's the Best Time to Buy IT Stocks(Daily Profit Hunter)

    Aug 16, 2017

    The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 23, 2017 02:06 PM