Posts
FIIs shying away from Russia, eyeing India: Sensex may hit ...IndiatimesThe Times of IndiaThe Economic TimesMore
Analysis
FIIs shying away from Russia, eyeing India: Sensex may hit 30,000 by December-end
| ||||||
By Raghu Kumar
Since 14th May, when the election results were announced, the Sensex has risen more than 10 per cent, and each subsequent month has seen the markets rise. This is not a coincidence.
When the markets are consistently moving in a positive direction month after month, it's usually a safe assumption that macroeconomic indicators are showing healthy signs.
With macroeconomic indicators pointing towards a healthy future, assuming that the headline interest rate remains unchanged at 8 per cent, when can we expect the bull-run to end?
This is not an easy question to answer. After all, there are many variables at play: what sorts of decisions will the government take to boost the economy in the near future?
How important is the fiscal deficit when it comes to the government's prioritization levels? When will the government set hard timelines on large scale projects, and will Mr. Modi be able to deliver on these projects with the same sort of efficiency that made the Gujarat Model so successful?
The good news is that the public still seems to have a strong perception that the Prime Minister and his team are in control of affairs.
This is critical: the Indian capital markets are famously known to overreact to news events despite what economic fundamentals may show.
Therefore, perception is key, and going by that argument it would seem that the markets will be in a good shape for the next few months.
How should investors construct their portfolio:
Investors can expect the bull run to continue through the year. With 4 months left in the year, it would require a major perception change from the public's eye (weak GDP figures, a major government mishap, or a major global event that hampers India's economy) to cause any sort of downward momentum in the markets.
Therefore, the ideal strategy for new investors is to look for under performing stocks in sectors that are expected to do well.
Infrastructure revival is the core of Modi's agenda. It would be wise to pin infra stocks against each other and look for outliers whose P/E ratios seem out of sync with their peers for no obvious reasons. After all, stocks are never perfectly priced!
For those investors who have invested in the markets- it is wise to hold on to your positions. Unless you find a concrete, rational reason for why a particular stock should fall, the general rule of thumb over these next few months is to buy and hold.
My views since the new government took over have remained the same - I see the Sensex hitting 30,000 by the end of the year after a handful of major reforms and, hopefully, a rise in GDP.
Strong FII activity:
There is a lot of talk of FII's turning towards India as Russia's recent geo political tensions are causing FII's to channel their funds away from Russia and to India.
If we look at the FII activity in India through 2014, we can see that FII's have been net purchasers each month (except Jan 2014). However, Russia's geopolitical concerns began months ago, and the statistics show that it has taken a hit on foreign firms willing to invest in Russia.
It is projected that funds flowing into Russia will fall by 50 per cent in 2014 compared to 2013. Therefore, if we assume that the current trend continues, we can expect an average of around 8000 cr per month in net FII purchases in the near term (through the first 7 months of 2014, FII's were net purchasers of 58,000 cr, which gives us the average of 8000 cr per month ).
However, it would be unwise to assume that the trend will continue through the end of financial year 2014-2015. Many FII's have already diverted their funds from Russia to India. July, for example, is showing a net purchase of just 2000 cr through three weeks.
That being said, expect FII's to continue investing heavily in India- just not at the same momentum that we have witnessed so far through 2014.
Since 14th May, when the election results were announced, the Sensex has risen more than 10 per cent, and each subsequent month has seen the markets rise. This is not a coincidence.
When the markets are consistently moving in a positive direction month after month, it's usually a safe assumption that macroeconomic indicators are showing healthy signs.
With macroeconomic indicators pointing towards a healthy future, assuming that the headline interest rate remains unchanged at 8 per cent, when can we expect the bull-run to end?
This is not an easy question to answer. After all, there are many variables at play: what sorts of decisions will the government take to boost the economy in the near future?
How important is the fiscal deficit when it comes to the government's prioritization levels? When will the government set hard timelines on large scale projects, and will Mr. Modi be able to deliver on these projects with the same sort of efficiency that made the Gujarat Model so successful?
The good news is that the public still seems to have a strong perception that the Prime Minister and his team are in control of affairs.
This is critical: the Indian capital markets are famously known to overreact to news events despite what economic fundamentals may show.
Therefore, perception is key, and going by that argument it would seem that the markets will be in a good shape for the next few months.
How should investors construct their portfolio:
Investors can expect the bull run to continue through the year. With 4 months left in the year, it would require a major perception change from the public's eye (weak GDP figures, a major government mishap, or a major global event that hampers India's economy) to cause any sort of downward momentum in the markets.
Therefore, the ideal strategy for new investors is to look for under performing stocks in sectors that are expected to do well.
Infrastructure revival is the core of Modi's agenda. It would be wise to pin infra stocks against each other and look for outliers whose P/E ratios seem out of sync with their peers for no obvious reasons. After all, stocks are never perfectly priced!
For those investors who have invested in the markets- it is wise to hold on to your positions. Unless you find a concrete, rational reason for why a particular stock should fall, the general rule of thumb over these next few months is to buy and hold.
My views since the new government took over have remained the same - I see the Sensex hitting 30,000 by the end of the year after a handful of major reforms and, hopefully, a rise in GDP.
Strong FII activity:
There is a lot of talk of FII's turning towards India as Russia's recent geo political tensions are causing FII's to channel their funds away from Russia and to India.
If we look at the FII activity in India through 2014, we can see that FII's have been net purchasers each month (except Jan 2014). However, Russia's geopolitical concerns began months ago, and the statistics show that it has taken a hit on foreign firms willing to invest in Russia.
It is projected that funds flowing into Russia will fall by 50 per cent in 2014 compared to 2013. Therefore, if we assume that the current trend continues, we can expect an average of around 8000 cr per month in net FII purchases in the near term (through the first 7 months of 2014, FII's were net purchasers of 58,000 cr, which gives us the average of 8000 cr per month ).
However, it would be unwise to assume that the trend will continue through the end of financial year 2014-2015. Many FII's have already diverted their funds from Russia to India. July, for example, is showing a net purchase of just 2000 cr through three weeks.
That being said, expect FII's to continue investing heavily in India- just not at the same momentum that we have witnessed so far through 2014.
Analysis
BREAKING NEWS
FIIs shying away from Russia, eyeing India: Sensex may hit 30,000 by December-end
By Raghu Kumar
Since 14th May, when the election results were announced, the Sensex has risen more than 10 per cent, and each subsequent month has seen the markets rise. This is not a coincidence.
When the markets are consistently moving in a positive direction month after month, it's usually a safe assumption that macroeconomic indicators are showing healthy signs.
With macroeconomic indicators pointing towards a healthy future, assuming that the headline interest rate remains unchanged at 8 per cent, when can we expect the bull-run to end?
This is not an easy question to answer. After all, there are many variables at play: what sorts of decisions will the government take to boost the economy in the near future?
How important is the fiscal deficit when it comes to the government's prioritization levels? When will the government set hard timelines on large scale projects, and will Mr. Modi be able to deliver on these projects with the same sort of efficiency that made the Gujarat Model so successful?
The good news is that the public still seems to have a strong perception that the Prime Minister and his team are in control of affairs.
This is critical: the Indian capital markets are famously known to overreact to news events despite what economic fundamentals may show.
Therefore, perception is key, and going by that argument it would seem that the markets will be in a good shape for the next few months.
How should investors construct their portfolio:
Investors can expect the bull run to continue through the year. With 4 months left in the year, it would require a major perception change from the public's eye (weak GDP figures, a major government mishap, or a major global event that hampers India's economy) to cause any sort of downward momentum in the markets.
Therefore, the ideal strategy for new investors is to look for under performing stocks in sectors that are expected to do well.
Infrastructure revival is the core of Modi's agenda. It would be wise to pin infra stocks against each other and look for outliers whose P/E ratios seem out of sync with their peers for no obvious reasons. After all, stocks are never perfectly priced!
For those investors who have invested in the markets- it is wise to hold on to your positions. Unless you find a concrete, rational reason for why a particular stock should fall, the general rule of thumb over these next few months is to buy and hold.
My views since the new government took over have remained the same - I see the Sensex hitting 30,000 by the end of the year after a handful of major reforms and, hopefully, a rise in GDP.
Strong FII activity:
There is a lot of talk of FII's turning towards India as Russia's recent geo political tensions are causing FII's to channel their funds away from Russia and to India.
If we look at the FII activity in India through 2014, we can see that FII's have been net purchasers each month (except Jan 2014). However, Russia's geopolitical concerns began months ago, and the statistics show that it has taken a hit on foreign firms willing to invest in Russia.
It is projected that funds flowing into Russia will fall by 50 per cent in 2014 compared to 2013. Therefore, if we assume that the current trend continues, we can expect an average of around 8000 cr per month in net FII purchases in the near term (through the first 7 months of 2014, FII's were net purchasers of 58,000 cr, which gives us the average of 8000 cr per month ).
However, it would be unwise to assume that the trend will continue through the end of financial year 2014-2015. Many FII's have already diverted their funds from Russia to India. July, for example, is showing a net purchase of just 2000 cr through three weeks.
That being said, expect FII's to continue investing heavily in India- just not at the same momentum that we have witnessed so far through 2014.
(The author is Co-founder, RKSV. Views and recommendations expressed in this section are his own and do not represent those of EconomicTimes.com.)
Since 14th May, when the election results were announced, the Sensex has risen more than 10 per cent, and each subsequent month has seen the markets rise. This is not a coincidence.
When the markets are consistently moving in a positive direction month after month, it's usually a safe assumption that macroeconomic indicators are showing healthy signs.
With macroeconomic indicators pointing towards a healthy future, assuming that the headline interest rate remains unchanged at 8 per cent, when can we expect the bull-run to end?
This is not an easy question to answer. After all, there are many variables at play: what sorts of decisions will the government take to boost the economy in the near future?
How important is the fiscal deficit when it comes to the government's prioritization levels? When will the government set hard timelines on large scale projects, and will Mr. Modi be able to deliver on these projects with the same sort of efficiency that made the Gujarat Model so successful?
The good news is that the public still seems to have a strong perception that the Prime Minister and his team are in control of affairs.
This is critical: the Indian capital markets are famously known to overreact to news events despite what economic fundamentals may show.
Therefore, perception is key, and going by that argument it would seem that the markets will be in a good shape for the next few months.
How should investors construct their portfolio:
Investors can expect the bull run to continue through the year. With 4 months left in the year, it would require a major perception change from the public's eye (weak GDP figures, a major government mishap, or a major global event that hampers India's economy) to cause any sort of downward momentum in the markets.
Therefore, the ideal strategy for new investors is to look for under performing stocks in sectors that are expected to do well.
Infrastructure revival is the core of Modi's agenda. It would be wise to pin infra stocks against each other and look for outliers whose P/E ratios seem out of sync with their peers for no obvious reasons. After all, stocks are never perfectly priced!
For those investors who have invested in the markets- it is wise to hold on to your positions. Unless you find a concrete, rational reason for why a particular stock should fall, the general rule of thumb over these next few months is to buy and hold.
My views since the new government took over have remained the same - I see the Sensex hitting 30,000 by the end of the year after a handful of major reforms and, hopefully, a rise in GDP.
Strong FII activity:
There is a lot of talk of FII's turning towards India as Russia's recent geo political tensions are causing FII's to channel their funds away from Russia and to India.
If we look at the FII activity in India through 2014, we can see that FII's have been net purchasers each month (except Jan 2014). However, Russia's geopolitical concerns began months ago, and the statistics show that it has taken a hit on foreign firms willing to invest in Russia.
It is projected that funds flowing into Russia will fall by 50 per cent in 2014 compared to 2013. Therefore, if we assume that the current trend continues, we can expect an average of around 8000 cr per month in net FII purchases in the near term (through the first 7 months of 2014, FII's were net purchasers of 58,000 cr, which gives us the average of 8000 cr per month ).
However, it would be unwise to assume that the trend will continue through the end of financial year 2014-2015. Many FII's have already diverted their funds from Russia to India. July, for example, is showing a net purchase of just 2000 cr through three weeks.
That being said, expect FII's to continue investing heavily in India- just not at the same momentum that we have witnessed so far through 2014.
(The author is Co-founder, RKSV. Views and recommendations expressed in this section are his own and do not represent those of EconomicTimes.com.)
PREVIOUS STORYCLSA picks SBI, Maruti, Bharti in model portfolio; BofA upgrades 3 of 10 economic indicators
BACK TO TOP
great post. Thanks for sharing Online horoscope
ReplyDelete