There is a lot of money to be made by indulging in the Indian Equity Markets in the next year or so.
I love investing and have been active for about a decade, barring the years I was doing my full-time MBA. It is my firm belief that you would never lose money in the Equity/Stock Market if you do your homework before investing and have patience if things don’t work out well.
What kind of homework does it entail and how things look going forward?
1. Economic Outlook: If you follow financial markets, you would know that we have been experiencing good growth since the Modi-led government took charge of the office. The decision by the Fed to keep low interest rates in the US have only added to the growth. There are some global risks, like Brexit vote in the past and the threat of a sustained slowdown in China, but our domestic factors have insulated us from these risks so far.
A win for Hillary Clinton in the upcoming US presidential elections would further add to this growth, and it is indeed looking a possibility going by the poll numbers.
2. Earnings Growth: Companies have been reporting decent bottom-line growth (profits), more so in the case of small and mid-cap firms. Though the top-line still has to show some improvement, without any major setbacks, the markets would only add to the returns.
Having said that, not every sector will do well (and understandably so), so one has to see where money can be made. Off late, Financial (especially NBFCs) and Auto Sectors have done remarkably well.
3. Domestic Factors: Be it good monsoons, stable economic and inflation outlook, and the recent decision by the RBI to cut the Repo rate, the news has been good all along. There is abundant liquidity in the system, which seems to be only going up.
The economy-friendly policies by the Modi-led government have been adding fuel to the growth engines, the recent being the passage of Goods and Services Tax (GST) bill.
4. Foreign Investments: Foreign Investors have poured in billions of dollars this year, and this is evident in the sharp rise in the markets over the last few months. Since the beginning of the year, BSE Sensex has given over 8% returns. And if you had invested in a handful of strong small or mid-cap companies, you would have easily made more than 20% returns!
If you have never played in the market, this might all seem daunting to you. The best way is to open a Demat account and start investing using the Systematic Investment Plan (SIP) route, where big fund houses would invest on your behalf. Since they have to earn their own livelihood, they won’t disappoint you as well!
Disclosure: These views are of my own. Investments are subject to market risks, so do a bit of homework before you jump in with your hard-earned money! And never invest all of your savings, and that too in just one fund/stock!