7/4/2011 12:17 PM Monday
The Indian markets have always been attractive, but the valuations are bit on the higher side. Let us put it in this way if we look at the BRIC countries, India always stands a chance ahead of them and I am still a strong believer of the growth story of India. Why I believe in this is due to the demographic advantage that our country has as compared to Brazil, Russia and China. We all know that the Indian industry is very competitive and will perform better going ahead only if issues like political instability and high inflation is taken care off well by the government. It is believed that the markets are going to perform well if all these issues are addressed properly and we still remain bullish on the Indian markets.
We are through with the fourth quarter results and are looking forward for the first quarter of the new fiscal FY12. The markets are talking a lot on the advance tax numbers but we have to remember that we cannot get an actual picture of the results just by depending on the advance tax numbers. It is quite clear that companies have to pay taxes three times in a year and when the final figures comes; if there is anything excess they can claim it back. That is why it is not the right way to measure or take a call on the results depending just on the advance tax figures. But, going forward we have to remember that the markets are going to face some problems; we have seen the RBI playing with interest rates. The impact of rising interest rates is going to play a deterrent role in the forthcoming result season.
On the inflationary front one has to remember that the inflation we need to tackle is the food inflation as well as the nonfood inflation. One has to remember that food inflation is a bit easier to control as there is no shortage of food grains in the world. There always has been a demand supply mismatch in India and we have to decide and set up a body that will on a regular basis import food grains and dump it into the market that will ease off food inflation. The effect of rising interest rates will not be seen overnight. It is a delayed effect and can be seen only at the end of CY11 or beginning of CY12.
On the global front in the US we have seen that they have printed notes and distributed it but the virus in the system still remains. It is most important that you need to kill the virus and get into the root cause of the matter. If they are able to address the issues and face the challenges once rather than subsiding it then they could emerge in a much larger way. On the European front, what I believe is that, when unification of 25 nations and creation of a common currency happened it was with a common agenda to bring the poor countries to the level of the rich countries. But, this is not happening and the scaling operation is not taking place in a proper time. There are questions raised by the rich nations as to why taxpayers money in the richer countries should be used for reviving them. The breaking up of the European Union cannot be ruled out.
Now, again coming back to India, we are still bullish on the Indian markets. At present we remain bullish on sectors like Engineering, Automobiles, Oil & Gas, Power and Retail. It is advisable to investors that you remain invested in the stock for a longer term perspective in fundamentally sound companies. It is also advisable that you do not work on the ‘TIPS’ and refrain from trading in future and options.
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