TRIKAAL’S INVESTMENT AND TRADING WEEKLY
Hello everyone, wishing you a very happy and prosperous Diwali. Today’s newsletter is brief but enough to highlight strength of India Growth Story.
Nifty View: We had mentioned a short-term bounce back in last Monday’s newsletter, and Nifty has bounced more than 500 points from that level.
We expect the up trend to continue with high volatility.
Opportunities: We had mentioned IT sector as a good opportunity, almost all major stocks in this sector have gone up. We are still bullish on this.
Is it a good time to invest or exit?
If you have gone through our past two newsletters, you would agree that there are super big risks in markets that can create bigger than 2008 crisis. But, at the same time there are some real great opportunities, once this global inflation crisis is over, India may witness its biggest ever secular bull market. The problem in investing now is that if there is a recession (which has a very high probability), it is difficult to tell how long it may continue, it may be one year or it may be ten years, or even more! Check out this old newsletter to recall that –
- The 2008 financial crisis took six years for recovery
- The great inflation took 16 years for recovery
- The great recession took 25 years for recovery
These are US data, but stock markets in all countries move in almost same fashion, though the extent of damage will vary.
India is in a very strong position so we may not be affected that badly, but considering the gravity of the situation, one must be extremely careful with his investments in current scenario. Right now it is better to trade for short term than to invest and forget. As and when the situation develops, we can modify our positions.
Why India is in a strong position
- Crude prices are declining, a major import cost for India
- Industrial input prices are declining, again beneficial
- India has one of the world’s most stable democracy, politically
- India’s infrastructure and business environment has been improving since last several years
- Policy decisions are mostly favourable for growth
- We are not heavily dependent on exports for growth
- Manufacturing in India is picking up, and most developed countries want to de-risk and diversify manufacturing from China
- FDI is on rise, an acknowledgement of India’s growth potential
- Capacity utilization has come down to 71% and there are signs of pickup in private investment – most important for a holistic growth
- Banking industry clean-up has been effective
- India’s demographic profile is highly favourable. According to a CII report, if India’s demographic dividend is productively employed, growth prospects will brighten, helping it to leapfrog its GDP from the current $3 trillion to $9 trillion by 2030 and $40 trillion by 2047.
Global inflation can delay India’s take-off by several years. You may refer to these posts for details –
- Inflation Super Cycle
- How long can inflation continue? Where to invest now?
- Can India remain unaffected by global downturn?
We will keep you posted about latest developments.
Next Week: The key factors that can cause a rally or a recession in near future.