Equity market had made lots of money for investors in last 3 years. Broader indices like Sensex and nifty are making new highs and looking resilient for down side. It is the most asked question “Should I invest at these level”?
Reasons are here,
# GST (goods and service tax)
Let’s start with the hot topic. GST is now a reality and great reform after independence. It will improve the efficiency of organised sectors and help them to reduce its working cost by 2-3%. As lesser compliances and simple online procedure GST is likely to improve business efficiency.
Government tax collection will improve as unorganised sectors must be regularised by law. This money will help for better infrastructure and new reforms.
# Good Monsoon & 7th Pay Commission
As rural India is mostly dependent on agriculture, the monsoon is most important for our economy. Monsoon is good till now and progressing in line with MAT department forecast. If we believe MAT department, in most parts of India, rain fall is normal and likely to have a great crop.
7th pay commission would improve the purchasing power of people, which leads to better domestic consumption.
# Strong political will
There is no need to explain about the political will of BJP, a party is working hard for reforms and addressing whole lots of economical issues.
New roads, Railways, Affordable housing, GST, Clean India, Digital India, make in India, Smart cities and much more will open up new opportunities for growth.
TINA (there is no alternative) effect is supporting equity market in India. All other asset class like Gold, Reality, Fixed income etc. are under performing as well investors are getting benefit zero capital gain tax after 1 year of investment. In Just past three years, Indian mutual fund industry has doubled its AUM.
There is 4500 Crores of monthly committed SIP coming toward Indian Equity market. EPFO is adding nearly 13000 Crores every year and now NPS is likely to add around 2200 Crores. All this money is finding its way in equity.
# Macro Economic data
Superior GDP growth, Tight current account deficit, Lower inflation may give a push to Indian economy and that is why the hope rally is sustained.
In last quarter we have seen little upbeat in bottom line of Nifty 500 companies. In long run fundamentals likely to catch up valuations.
Being cautious is always good, but don’t hurry to get out of equity, stay invested with right asset allocations. New investors should not hesitate to start SIP if they have long term view. If market corrects after few months new SIP investors would get more units at lower NAV. Taking advice from professional advisor surely improve portfolio returns rather believe on street talk.
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