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The Equitymaster Research Digest

An Epic Turning Point For The Economy and Stocks
Nov 9, 2016

  • Correlation of Indian stock markets to US election results
  • What do we make of Trump's victory?
  • Should the market volatility impact trading strategies?

This could change the way India earns, saves and consumes....said a Whatsapp message even as PM Modi was addressing the nation yesterday.

According to us, amongst the few things that could bring about a big long term positive change to the Indian economy, crackdown on black money is one. But a short term pain is imminent.

The demonetization and Trump's win in US elections, both put together, could have a much bigger impact on stock markets than Brexit, over next few days and weeks.

Last midnight we sent an urgent update on Modi's War On Black Money to The 5 Minute Wrapup readers.

As we told you, there are two ways the stock markets can benefit in the long term. First, there could be a forced improvement in fundamentals for some sectors. Second, there's a strong possibility more money moves into stocks as black money investment channels dry up.

But does this mean we should go out and buy every stock we could lay our hands on? Absolutely not. The principles of stock selection still remain the same; buying fundamentally strong companies, run by a competent management team and available at reasonable valuations.

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