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Half-Yearly Financial Review to help Investors

Tuesday 14 August 2012

We are into the 8th month of the year already; perhaps it is time to review the financial decisions you had embarked on, in the beginning of the year. The newspapers fetching the daily updates of the stock markethave failed to delight the investors. However, there is another side to the picture if you view it with a long-term perspective, to all those who feel that their decision to invest was an erroneous one.

One thing that changed the face of the marketwas the global economic crisis. It had its effect felt across the world including both the developed and the developing countries. The economic crisis took toll on countries like USA and Europe with high debt levels, pushing them to the brink of collapse. It became severe during the month of September 2011 when the Eurozone crisis set in motion. Irrespective of varied initiatives and policies that were rolled out, nothing substantial and powerful, enough to resolve the problem comprehending its root cause was soaked in.

With respect to India, there were many internal factors like the declining value of rupee, stringent monetary policy, and sluggish industrial growth and FII investments, other than the global crisis, that threw us in troubled waters. Besides, inflation continued to remain high throughout. Analysts and economists are however of the opinion that India will continue to be one of the fastest growing economies of the world and is in a better state to grapple with the crisis than anyone else.The Economic Survey estimates the growth rate of GDP to touch 7.6% in 2012-2013 and can further accelerate after that. Irrespective of the monsoon failures and policy paralysis that we are prone to, the survey indicates that we can expect an upward swing in a short period.

Even though the stock market currently appears volatile, this seems one of the best times to invest in equity. One can feel certain about investing at present considering the fact that the stock prices have geared to bounce back after the ups and downs. Another most important reason is that Indian companies have displayed an indomitable spirit that will pave way for profits in the later quarter of the financial year.

The top international players are keen on investing in India, eyeing on the long-term profits that they can garner. In fact, India seems to be in a healthy position with its growth rate of 6.5% as compared to the USA, which on an average account for a growth of around 1.6% in the past 10 months. Besides, we can expect more FDI inflows in the coming months with the permit for single brand retailers to own 100% of their business in India.Further, investors could sense a sigh of relief with the announcement that the GAAR does not apply to the P- Note holders and its provisions not being summoned on non-resident investors of foreign institutional investors.

There are reports going round that stocks in India have been trading at 12 times their forward earning or slightly lesser than their 10-year average. This makes Indian bonds, deposits, and Indian equities highly viable for investors in a 12-24 month perspective. An investor can monetize well by picking up the right stocks that will yield them high returns in the long term. Since the beginning of 2012, The Bombay Stock Exchange's FMCG index is 21% i.e. 12 points higher than the Sensex.

With India still seeming to be a hot destination to invest, we can look forward to a buoyant future where investors can reap benefits with long term investing.

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