Many new facets came in front of Indian economy after the result of the General Elections, 2014. After 30 years the history has repeated it again. This kind of historic win was once witnessed in 1984, where Indians had put Rajiv Gandhi on the throne to take India to new heights. The winning numbers were outstanding with Indian National Congress bagging 414 out of 533 seats in the then parliament.
It is the first time after then, that a party (BJP) has won a clear mandate (winning 282 out of 543 seats) with Indians putting complete faith in Narendra Modi. All the coalition rumours vanished when the results were out and this may be the first time ever that the opposition party have to form coalition to raise their voice in parliament. As per Indian Constitution, an opposition party needs to have 10% seats in parliament (congress bagging only 44 seats).
With the faith of Indians that modi will revive the economy and take India to a new height, as he has put gujrat on top, has deepend after this historic win. Mango man were the most sufferers in UPA-1 & UPA-2 tenure with losing there hard earned money in various scams be it Coal scam, 2G scam, CWG scam and lots of unreported scams.
The modi win has started a new era, a new phase of Indian economy. A lot of things are expected from the modi govt at every stage of society be it Women security, cleanliness of rivers, easy availability of money for businesses, easy compliance for regulatory approvals. Simplicity in taxation system, etc, etc.
Lets talk now from the investment perspective now. Sensex and Nifty, the key benchmarks of Indian economy has surged 22 percent, when Narendra Modi was announced prime ministerial candidate in September 2013. The hopes of the mango man has clearly reflected through this, but the major inflow has came from foreign investors.Foreign investors have pumped in over Rs one lakh crore in the Indian securities market since then.
The mango man has missed this rally and they may yet miss further rally, if they won’t be investing now. Many say, that the market has over-reacted and it tends to fall in near future, but that’s not true. All Indian and International brokerage houses have revised their outlook on India, as they see India gaining more strength after BJP starts delivering more economic and user-friendly policy reforms to lure investors across the world and making the regulatory approvals and taxation system simple and easy.
Various Investment options are there for mango man in the market, some of them are explained in brief:
1. Investment in Shares/ Sector Specific Stocks: Modi has always emphasized on industrialization and some sectors which need growth. For example:- power sector, banking sector, capital goods sector, real estate, etc. all the companies operating in these sectors have huge potential of growth and some had even clocked huge gains too. Many brokerages houses are betting that they won’t be surprised to see Sensex and Nifty getting doubled in next 5 years. So here’s the bet, choose the sector you want to invest in. Google it, ask your financial adviser and invest as soon as possible and see your money grow. Don’t let your money sit idle.
2.Investment in Mutual Funds: For all folks who are super-busy with their lives or are not from financial background can opt for investment in shares through mutual funds. Your all investment worries of investment in shares will be handled by an expert, at a charge of a fixed percentage called expense ratio.
There are 46 fund houses in India, which offers many mutual fund schemes. These schemes differentiate from each other, in terms to the composition of type of investment made by a particular scheme in different investment options(equity, debt, government securities).For example Equity funds, invest primarily in equity shares. Debt funds- invests in debt securities issued by government and corporate sectors.
In which mutual fund one should invest in, depends upon the risk appetite and the quantum of goal and period for attainment of that goal of an investor. A thumb rule- It states that one should invest, that percentage in debt of his portfolio as represented by his/her age. For example, if you are 25 years old, then 75% should be parked in Equity and 25% in debt.
3. Investment in real state: The property prices has fallen a lot in previous few quarters. That means you can buy them for cheap now and reap the benefit later as the economy is bound to grow in coming years.
4. Investment in gold/silver: Indians love for gold, made India stand second after China in terms of consumption in the world. Infact our import bill gets inflated the most by gold after Crude oil. With RBI easing norms for gold import, the gold price has seen a steep price cut. Even more steep cut is expected after the first budget of BJP. It is expected that the import duty will be reduced from mammoth 10 % to 5%. If that happens, don’t be surprised to see gold prices hovering around 24000-25000 till the year end. So the investors are required to keep a close watch on that.
So all, please chalk down your each financial goal, be it building your dream house, retirement planning, child’s education, child’s marriage, etc and pave the way of achieving them by investing in different options. As Warren Buffet says- a person should have atleast two sources of income.
(Pratyush Harlalka, CA FINAL Student, e-mail: capratyush2517@gmail.com)
Excellent article.
One thing you should have covered is reference to articles you have considered for stating that brokerage houses have revised their outlook on indian markets.
Financial advices are sensitive issues. So better to be double sure. Article is nice and I completely agree with the views.
By