The Indian equity markets over the last two quarters has shown great movement amidst falling crude oil prices and FII inflows. Crude oil prices have fallen sharply to a four low of around $ 72. The impact of falling crude oil prices is immense on the Indian Economy and it affects the Equity markets in multiple ways as illustrated below.
1. Falling crude oil prices will ease the inflation and improve disposable household income.
2. Falling inflation will also ease the CAD and in turn the GDP.
3. It also reduces the government's subsidy burden.
Every $ 10 fall in crude oil improves the CAD by 0.5% of GDP.
Talking about the Equity markets, there are two ways of analyzing the stock markets viz. 1. Fundamental Analysis and 2. Technical Analysis.
Fundamentally speaking, the Indian economy is not yet out of the woods. We need more push from the government in terms of reforms. The reforms will be long term advantage to the economy and in turn the Equity Markets. Also it will bring in a lot of foreign money, which will again improve the CAD. The equity markets are counting on the new government to deliver on the reforms side and hence showing momentum. The sectors to watch out for are 1. Infrastructure 2. Banks.
With crude oil prices down and inflation within acceptable limits there is every likelihood that RBI will ease interest rates on 2nd December policy meet.
Technically the indices are showing immense strength and we are firmly in an uptrend. Every dip should be and must be used to buy good quality stocks. Currently Nifty looks set to touch 8750. Any worthwhile correction will only start below 8420 on Nifty. Extended targets on Nifty stand at 9300 and 11350, these are a while away though.
All in all looking forward we are in a multi-year bull run likely to span over next 3 years. As they say "Make hay when the sun shines", make money when we are in a bull run.
1. Falling crude oil prices will ease the inflation and improve disposable household income.
2. Falling inflation will also ease the CAD and in turn the GDP.
3. It also reduces the government's subsidy burden.
Every $ 10 fall in crude oil improves the CAD by 0.5% of GDP.
Talking about the Equity markets, there are two ways of analyzing the stock markets viz. 1. Fundamental Analysis and 2. Technical Analysis.
Fundamentally speaking, the Indian economy is not yet out of the woods. We need more push from the government in terms of reforms. The reforms will be long term advantage to the economy and in turn the Equity Markets. Also it will bring in a lot of foreign money, which will again improve the CAD. The equity markets are counting on the new government to deliver on the reforms side and hence showing momentum. The sectors to watch out for are 1. Infrastructure 2. Banks.
With crude oil prices down and inflation within acceptable limits there is every likelihood that RBI will ease interest rates on 2nd December policy meet.
Technically the indices are showing immense strength and we are firmly in an uptrend. Every dip should be and must be used to buy good quality stocks. Currently Nifty looks set to touch 8750. Any worthwhile correction will only start below 8420 on Nifty. Extended targets on Nifty stand at 9300 and 11350, these are a while away though.
All in all looking forward we are in a multi-year bull run likely to span over next 3 years. As they say "Make hay when the sun shines", make money when we are in a bull run.
