In Indian equity market the picture is certainly gloomy and is getting worsen as the day past by And today being Friday the 13th the superstitious will not expect any good news going forward for this end of week. Monday morning Sensex plunging down by over 500 points as expected from the Asian Markets and European markets which opened after India.
As the Global commodities prices are rising, India’s current account deficit will be 3.9 per cent of GDP, but will rise to 4.7% if oil goes to around $150. India crude stock is at a price of $123 a barrel and currently crude is well above $135 So the government’s measures may not be of much help if crude continues to climb and it will certainly not consider another fuel price hike given couple of things one being poll and other the amount of controversy it has to deal with.
When crude started to rise from $60 it had very less impact on EM’s because of the weakening of dollar but as of now a weakening rupee is not helping the Government and giving a rising inflation. Inflation rise is forcing the Government to take actions which makes interest rates rise and tightening of liquidity which could also be challenging for equity market.
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.
For an investor who is investing for for a foreseeable future of more than couple of years time horizon, plunging markets and all-round gloom are good news.