The Economic Advisory Council to the Prime Minister in its recently published assessment of the Indian economy has stated that the economy is to grow by 6.5% in the current fiscal, 2009-2010. This projection by the EAC is more optimistic than Reserve Bank of India’s prediction of 6% and also by the IMF’s prediction of 6.4%.
Generally, investors decide to trade in equities without deciding upon the type of trade. They sometimes end up selling their profit making stocks, in a smaller way due to anxiety. On the other hand they might not prefer to sell even when the fundamentals have changed drastically.
The investment of FII’S, constitute borrowing. It flows into the stock market and add’s to the forex reserves. The higher the rate of profit, the higher is the effective rate of interest paid on the borrowing. In reality, the emerging market risk is extremely low.
Now if you start to think of pulling out of your equity investments, hold on. There can be strategies where you can make good money but when I talk to people they are changing their investment plans, getting out of stocks and dropping all plans to invest in stocks and so for such people I suggests some funds and stocks and go for a weekly SIP or accumulating as a very good strategy.
Wheat prices in India have fallen 50% from February onwards. Similarly, Soyabean and Sugar has come off any where between 15 to 25%. If you feel that oil inflation is certainly going to stay here for a while, then I must add here by saying that food inflation is looking southwards. So, over all things are good.
Most of us are aware of the present market situation which is nervous, especially after the fuel price hike. The fuel price hike was expected. The government has taken the courage to increase prices and this is like a positive signal for the market.
Experts (As seen on TV) say that there is 25% of fall in US dollars which is affecting the EMs and so valuation in India is important and in last few months due to inflation and rise in commodity prices Indian markets is facing a tough time.