Goodwill Investors’ Education Initiative !
What is in store for Investors? A market analysis.
Investors have never felt as bad as they are now in the context of all adverse occurrences clouding the economic and capital markets. In fact the adage that adversaries do not come alone but in a bunch is proved right in the contemporary context. Rupee is falling like a pack of cards for reasons not gauged by the eminent economists! They differ amongst themselves proving that ‘if there are six Economists together, there will be Seven opinions”. The energy crisis is booming. The International Oil prices, tamed for quite some time, has started to show its ugly face again after a few years much to the chagrin of the whole human population around the world, more so in India. The Foreign balances are slowly depleting, CAD swells, Fiscal deficit in upswing. International Oil prices were hovering around $ 100 a barrel in May 2014 declined to an average of $ 50-60 in each of the last three fiscal years. The free for all pricing offered by the Government to the Oil marketing companies (OMC) took revenge on all consumers by constantly hiking the petrol and diesel prices every day invariably putting the consumption and economic growth on a speed-breaking mode.
The Government’s belated reaction to the mounting oil prices going unbridled was obviously welcome based on an announcement on 4th Oct , reducing an excise tax reduction of Rs1.5 per litre and an additional Re 1 per litre reduction by oil companies. This loss to the oil companies is estimated to be around Rs 9000 cr. While it is a small lolly pop to the consumers at large, the great loss was immediately borne by the investors in OMC wherein the shares tumbled like a falling rock, stealing Rs 1.26 Trillion in the market cap of the share value of these companies like IOC, BPCL and HPCL.
Added to these woes, the IF&FS defaults in meeting their debt obligations added to the fury of the investors and stocks like ILFS and other NBFCs went in for a toss and their share prices fell down, depressing the mood of investors. As a result within a week’s time or so, the BSE and NSE Indices bore the brunt and Sensex dived by a massive 1850.15 points or 5.10 % and Nifty lost 614 points or 5.50%. The RBI stance of maintain the status quo on rates too contributed for the diabolic decline in bourses.
The Analysts continue to become pessimistic in their approach and shout from the roof-tops that the markets continue to be under the tight grip of bears and the Bulls are hiding in disguise. The losses in value of shares were not only confined to mid-cap and penny shares but also to Index shares which causes insurmountable cause for worry at least for now.
Under the circumstances what an investor should do is the million-dollar question. While the situation is quite fluid and grey, as Indian are always optimistic as ever would like to wait and watch and at the same time do some bottom-fishing of credible and well-tracked counters of course treading on a cautious path. One factor in favour of the Indian Economy is that the fundamentals of the economy are quite strong and sturdy not withstanding these transitory and the brief spell of external episodes and the turbulence would eventually stabilize and pale into insignificance in the months to come by then the Bourses will into the grip of Bulls and the Domestic Institutional Investors flush with funds would find the light at the end of the tunnel to pump in their accumulated MF surpluses to reap the benefits of good ROI. So, let us be optimistic and not get perturbed! People who have invested in SIP of MFs would certainly harvest better returns in medium and long term as the share are available now on cheaper rate and hence they will get more units for their investments! So let us be optimistic and keep our fingers crossed hoping to see the shiny days ahead!
