Economy Slowing! High Time The Government Wakes Up!
July 2019 is one month most investors would want to forget in a hurry. It has been the worst July in almost 17 years for Dalal Street, especially for Nifty and Nifty Midcaps. For Nifty Bank, it is the worst July in 19 years. Nifty is down by 5.69 per cent, Nifty Bank is down by 7.16 per cent and Nifty Mid-cap is down by 9.8 per cent in the current month. It is strange that our indices are one of the worst performing indices when compared to their global peers even as we are touted to be one of the fastest growing economies in the world. Definitely, the investor sentiment has been hit, and not for no reason. The current government has managed to create that unwanted fear in the minds of the investors and that it does not celebrate rich getting richer. Surely, investors feel being targeted when specific taxes are levied. Taxes on buyback of shares is just an example. What started with LTCG and STCG is being continued by taxing the super rich investors further.
It does look like the policy decisions made by the current government is triggering the negative sentiment amongst the global investors and thereby making India look less attractive. We cannot afford such a perception as we are a capital-starved nation. The global investors need to see policies that will put India on a higher growth trajectory being adopted by the Indian government. The real interest rates in India are amongst the highest in the world. No major fiscal expansionary policies were announced in the recent budget. It looks like the monetary and fiscal policies have been too tight for too long for India and that is holding the growth in abeyance. The government has to focus on putting the economy back on track or else the India growth story may be punctured for sure.
There are very many factors that have triggered a correction in Indian equities. In this issue, our cover story talks at length about various reasons why the market is falling and highlights what is the road ahead for the markets. The broader structure of the Indian economy is strong and growth oriented. It is only a matter of time that the stock prices recover. Do let us know if you agree with us on what we have opined in the cover story.
The realty sector has been one of the best performing sectors on the bourses. In one of our special stories, we have analysed the sector from investors’ point of view. I am sure you will benefit from our observations. In our other special story, we have talked about the listed MNC stocks. We do believe that during volatile times and in times of crisis, it is quality that we should be chasing. MNC stocks fit the bill perfectly in such conditions. Please go through the story and let us know if you have benefited from our observation.
With market sentiment getting hit hard, it will need an extra dose of conviction on the part of investors to stay on course. Long term investors should not get tethered as overall the economy is strong and the sentiment can improve with improving liquidity in the market. Interest rates are expected to come down and the markets will be back on the growth track sooner than we realise.
Stay invested and accumulate quality stocks.