The increase in the interest rates will have its effect in the equity markets here across the seven seas as the European central bank had cut the interest rates which caused the downslide of the Euro worldwide and also there was a boom in the stock markets the world over .
The Rs is getting stronger due to the foreign factors , one of them being Japanese banks sold American dollars which helped our currency ,but if America decides to increase the interest rates than the sailing ahead will be a bit tough .This Thursday European central banks cut upon the interest rates by mere 0.10% which had a major effect causing downslide of Euro and the share markets rose world over .The Rs is better since the last year .In the next two years the GDP will come back to 8% and investing in equities will yield enormously .So it is high time to book some profits which will help you to balance your portfolios .As the equity markets have risen from cheap valuations of 12 times forward earnings to the current levels of 17 times forward earnings and this is a well above historical averages , this rise is aided by the local and more by the global flows .
Global flows yes because India being the final destination as Russia is affected by Ukraine crisis, China has a credit bubble and petty governance issues, economy is at recession at Brazil, Thailand, Indonesia, Turkey and Gulf due to neo-political situations. Thus in India the macroeconomic indicators are improving, inflation is moderating and improvement in growth, stability in currency, softening in crude oil and thereby the positive upbeat sentiments.
The investment cycle is will be revived through the combo efforts of government –sponsored infrastructure activities, public sector undertaking expansions will overall attract FDIs thereby overall adding to the gloss at the dalal street .At these times of multi- year bull run do not expect the market to have a soft corner for the investors so as to give them a chance to enter in the markets at the dream come true significant lower levels. Although the markets will fluctuate a bit so it is advisable to enter in the dips with the focus on the non-leveraged companies generating free cash flows available at reasonable valuation .Do overweigh on Technology, Banking, Financial and Infra sector. And also focus on the Disinvestment offerings which are to be to be launched soon. Happy cruising times ahead for Dalal street!!!!