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Indianomics in the early stage of an upswing

The Indian economics is definitely in the primary stages of an upward swing as the wholesale inflation in India has slipped a lot deeper towards the negative zone to hit an all time nine year low and thereby raising hopes for another rate cut as soon as the data projected consumer inflation also eased unexpectedly despite of the unseasonal rains triggering the upside price rise of the vegetables!!! The price index dropped by 2.06% in this February and by 2.33% in the wholesale market in this march.

 The core inflation slipped to a sub-zero levels hinting at a weak domestic demand, this decline of the wholesale price was repeated for the fifth month in a row as the inflation is at the lowest level in the current series which commenced in the year 2005. The consumer inflation fell from 5.37% in February to 5.17% in this March which is actually keeping well below to the target of 6% set by the Reserve Bank of India.

 So the out of cycle turn rate cut just cannot be ruled out in the coming months and so also a cut in the policy rates is also on the cards as the inflation figures are well within the tolerable limits, and as such the cut in the rates will only help in stimulating the demands and so another downward revision in the repo rate before June 2015 is expected. After cutting rates twice by the 25 basis points in the January and then again in the March was also an out of turn policy move.

 Even the industrial growth rose to the three month high of 5% in the February but on the other hand the continued contractions in the production of the consumer durables suggests a weak consumer sentiments and this fragile mindset of the sentiment would drastically improve if the loans become cheaper. Even the home loans have come to sub 10% levels after many years, and the Indian economy is surely expected to grow over 10% soon beating the projections assessed by the IMF, World Bank as well as the Government of India.

 All said and done as the high growth projection is not corroborated and aligned with the high frequency indicators like the industrial production and the figures of the car sales which rose to 2.64% in this March. To add to it the unseasonal rains, and a poor monsoon EL-Nino and the Fedral Reserve interest in the offing casts a risk on the agriculture sector, further the government of India has announced a proactive food policies and the benign global commodity prices are also likely to keep the inflation within the RBIs satisfactory limits.

 As such most of the companies were entangled in the debt net and so also had bloated balance sheets by the financial yearend of 2013, now we witness twin effects of both the investments as well as expansion backed up by the higher profitability through cost cutting as well as the capex reduction over the last few years. All this reflects the external as well as the domestic inflationary fundamentals only indicates that India has recovered from the doldrums; downturn trend has ended and is on the way to blossom out in the near future, moreover the business cycle upswing is still in its toddler stage. The overshooting of the rupee and the fact that the money and the credit indicators are showing the surge and this was not the political result induced one year rally but it is one decade rally.

 The investment activity should be the natural consequence of the companies and the entrepreneurs who spot and realize the profitable opportunities. Both the improved profitability and the profitable opportunities will trigger the fresh round of the investment spending and once the recovery gathers the steam the growth is surely headed for a post ten percentage. At this point of the time the industrial stocks and the deep cyclicals would be the best bet because the global high conviction call Is based on the BSE 500 rather than the sensex or the nifty. It is a bit of a concern that the bad loans and the stressed projects and so also the stranded major infrastructure projects need to be seriously reviewed and also resolved, and the major infrastructure projects on the priority are power, road, shipping and the steel.

India has the best investment climate as compared to its peer BRIC nations -- Brazil, Russia, India and China because of the random drastic measures to change the regulatory and the tax related challenges are impacting the immediate investment plans on board. The investors are taking into the account the India’s growth potential, the huge size of the Indian market and the potential of the country to attract the FDI. So get ready for a big decade of huge upswing. 

Draw Your Verticals to Make Profit from the Opportunities

The stock market is on the move at the strolling pace with subdued bourses and is rather not on the erstwhile fire like it was up till the budget of 2015 fully loaded and packed with action. The irony is that the investors are mostly in a restless mode and are on the lookout for the quick money will have a patience for the time being until the dust settles down and the visibility is clear for the market to pick up the shreds of cues and surge ahead. Having the patience will always pay, wait for the news for the markets to muster up and regain the momentum. Certain news create dampness, while some news creates uncertainties, while there are the news or feeders which gives the required definite booster shot in the arm triggering the hustle bustle in the market. So we suggest you to wait and plan and draw your own verticals and create opportunities yourself.

As of now the markets seem to have gone numb so much so that that even the initial public offerings (IPOs) are not finding any takers ant that too in the rising secondary markets and the reasons could be many, the prime one could be rightly so the ambiguity on the direction the US Federal Reserve will move, even the news from the Europe is not encouraging either. But still India is the most attractive investment destination in the whole world and the current valuation of S&P BSE Sensex is a bit marginally above its long term average.

 What set the markets on fire in the recent past was just the pre and the post-budget rally with the expectations of the reforms and the favorable macroeconomic data coupled with the falling of the inflation and the commodity prices and so also the crude prices. The wait for the demand and the profitability of the Indian companies are still to come back on the track, and it is for this very reason that the investor needs to keep a bit patience for the profitability of these companies to recover. It is but obvious that the valuations in the near term look a bit stretched as the market has indeed has run-up in the recent months in the past.

 But the wait will not be a long one as the reforms will be carried out soon which will boost both the GDP as well as the investments opportunities in the long term. The auctions of the coal as well as the spectrum and the rise in FDI in the insurance are bound to do the wonders in the Indian Incorporations. The best move on right time makes you a winner always so hang on tight and just keep adding small sums to equity before committing your selves. In case of the short term gains one is not too sure at the moment, but the long terms gains in the Indian markets are pretty well on the cards you need to exhibit some cautiousness which will keep you seated buffetably.

Neo-Dawns of Dalal Street—Smallcaps and Midcaps

The shadow of the small caps and the mid caps are looming over the top of the large caps!!!! Both the investors as well as the market experts were worried and placid over the chequered performances of the nifty and on the other hand the sensex need only look at the other side of the garden that is the broader markets where the picture appears to be considerably brighter as the old saying goes that the grass is always brighter on the other side. Both the small caps as well as the mid caps indices on both the BSE and NSE are on the rampage making the new all time seven year high. The little bit of the gloom surrounding the large cap stocks are not appearing to reflect the broader markets and there could be ample reasons to support it.  Actually both the nifty as well as the sensex has been pulled down by the performances of the mining firms, capital goods, public sector banks and the metal. The financial sector stocks have weightage of 28% in sensex as well as the nifty and the capital goods have 7% in the sensex as well as the nifty and as such these sectors have performed badly over the past 12 months and as such the over concerns over the revival of the non performing loans and the investment revival are clouding the investor’s mindset.

Comparatively the mid cap indices are extremely diversified with companies from various sectors just for example the BSE midcap index has 247 companies where as the small caps index has 477 companies and on the other hand the NSE mid cap and the small cap have 100 companies each. On the other hand the weightage of the finance industry and the banks is just close to 8%. If we look at the mid cap indices these stocks such as Century textiles, Reliance communications and Bharat electronics have led from the front for the gains besides the Advanta, Network-18, JK Tyre, HDIL, Panacea Biotec, Zen Technologies are among the top small cap  performers. The past data suggests that when in the Bull Run the mid cap and the small cap indices underperform the benchmark indices and conversely during the bearish times. If we analyze since hitting the tank during the August of 2013 the BSE Mid cap has gained close to 110% and the and the small cap index has clocked 128%  as compared to the sensex which has gained a mere 56 % in comparison.