The Indian stocks market has taken a nosedive as a result of the Middle Eastern crisis between Iran and Israel. Experts remain optimistic about India’s long-term economic prospects, citing solid fundamentals and the impending elections as reasons for their optimism.
The primary cause for the selloff in the Indian market this week is the latest flare-up in tensions between Israel and Iran, which has made investors worried.
As a result of growing concerns over the region’s geopolitical stability, investors in India’s stock market have been dumping their holdings, according to Avinash Gorakshkar, Head of Research at Profitmart Securities.
As a result, worries about an interruption in supply have driven up the price of crude oil, which Iran ranks third among OPEC producers of crude oil. When the price of crude oil goes up, it puts a strain on the Indian economy and fiscal book due to greater inflation, higher interest rates, lower corporate profitability, and so on. In addition, India’s creditworthiness might take a hit if the current trend of high crude oil prices continues.
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Unless there are indications that tensions between Iran and Israel are beginning to ease, the market is predicted to stay in negative territory. However, investors face other concerns. A multitude of headwinds stares at them.
It appears that a substantial rate drop this year is already out of the question. New US inflation data suggests the Fed could be hesitant to cut rates just yet.
Also, US spending remains high, according to recent hotter-than-expected retail sales figures, which may lead to inflation.
Why investing in Indian Stocks is a good option right now?
The market’s future looks uncertain. Still, if you want to gamble on high-quality Indian equities, now is the moment, according to the experts.
What makes the Indian stock market a good investment opportunity?
Strong economic growth, predictions of political stability following the 2024 general elections, and a large influx of domestic retail investors have most experts pessimistic about the medium- to long-term prospects of the Indian stock market.
The Indian market seems to be able to keep going strong because to impressive GDP growth, good direct tax receipts, reducing inflation, and the prospect of a decent monsoon.
Inflation still baffles policymakers and stakeholders throughout the world, but the Indian economy is the complete opposite, as Vice President Nikunj Saraf of Choice Wealth pointed out. The problem is made worse by the fact that international tensions are rising, as shown in the continuing dispute between Iran’s government and Israel. Nonetheless, we are on a good path when we look at India’s macroeconomic situation.
“The Indian markets are unlikely to be significantly affected. Injecting further liquidity into the markets, rate cuts might start in the latter quarter of this calendar year. Nikunj Saraf, Vice President of Choice Wealth stated, “I maintain confidence in India’s long-term growth narrative remaining intact,” even if he admits that valuation issues or global developments might cause short-term volatility.
In order to preserve the structural growth of the Indian economy, according to SAS Online Founder and CEO Shrey Jain, a strong policy framework supported by a stable administration is necessary. This bodes well for the future of corporate profits.
The fast-moving consumer goods (FMCG), automotive, real estate, infrastructure, and defense industries, according to Jain, should maintain their strong performance. In addition, Indian exports and manufacturing could benefit from the ‘China plus one’ policy. The chemical and pharmaceutical industries, which rely on exports, could experience growth. As a result, the equity markets should be lively, and additional money from outside sources should be attracted.
Investors can accumulate select large-cap equities, according to Jain. Companies with leveraged financial sheets and turnaround tales should be avoided.
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