Marketing Research

Off late we have seen a huge selloff in Indian equities… This is due to various factors domestic as well as globally. At the given juncture, the market has factored various events and the price correction in stocks seems to indicate the same. The prices as of now have taken into consideration all the recent events having economic repercussions at large:

1. Demonetisation
2. Applicability of LTCG in Union Budget 2018
3. Applicability of tax on dividend
4. Nirav Modi case affecting NPAs of various PSU banks
5. High fluctuations in crude and INR-USD rates
6. US-China trade war
7. India-US trades, H1B Visa rule tightening, etc
8. Defaults and other Problems in NBFC sector
9. Applicability of tax on FPIs in Union Budget 2019
10.  Applicability of surcharge on Super Rich
11. Significant changes of rules in Auto sector…. migration to BS VI, EV, etc…
12. Deteriorating corporate earnings and increasing NPAs in banks
13. Scraping of Article 370 and 35A in J&K

The current stock prices are post happening of above events…i.e., taking into account the adverse scenarios.  Considering the magnitude of the events, there could be some more pain left in the system for some time, but situations will certainly reorganise and we should move toward normalcy.  Events as above are a regular phenomenon of normal Government operation and business activities… Some of such activities lead to massive correction in share prices… Historically we have seen both time and price correction posts any event having economic repercussions.  Indian stock markets are down around 10% from its life time high, but the Mid Caps and Small Caps of the world present a different story…. most of them at multi year lows.  Diligent and patient investor generally digests such interferences and never shies off the market.  In fact, they take benefit of such instances. Stock markets are very resilient and have shown good recoveries post falls… Its a matter of time when we could bounce back. One should continue with SIPs and start taking selective exposure in equities. A better idea would be to park funds in liquid mutual fund and do STP to equity and MFs. One could also take limited exposure to equities in high conviction stocks and hold for 3-5 yrs for decent returns.