11460 Views | April 29, 2019
These are historic times for the economy. And historic times for the market.
Over the last two trading days (20 September 2019 and 23 September 2019), the stock markets have risen nearly 3,000 points on the Sensex and nearly 900 points on the NSE Nifty. And this is just the beginning of the uptrend. The Indian stock markets are now poised to record historic growth levels as a result of a strong thrust from the government towards reforms.
Friday, 20 September 2019 was a historic day for the stock markets when the Finance Minister slashed corporate tax rates by about 25% of the existing rates. This level of rate cut in one go has never been done in the economic history of the country. The implications of this tax rate cut on corporates and the economy as a whole, is massive. The clear positives are – greater post-tax corporate profits, more spending power to consumers, reviving the capex cycle, etc. all of which will reflect in a massive positive increase in stock prices. This will result in a record-breaking bull run with strong fundamental undercurrents.
Over the last two trading sessions, most stocks have made record highs, and history tells us, the next high will be higher than the previous one. We are now on the brink of spiraling valuations.
You may wonder… we were supposed to be in a recessionary phase, right? Wrong. The truth is – our economy is headed for a transformational growth as a result of structural changes (and not band-aid stimulus packages with temporary benefits). What’s even more important is the shift in sentiment and growth of confidence among investors – domestic and foreign.
You may also want clarification on the global trade war, especially between China and the US. At this point, both countries have decided to resume talks, which are expected to end on a positive note. This will be a trigger for another massive positive re-rating of global stock markets (including Indian markets). In a situation of the talks faltering, the US economy has been growing at a healthy pace, which means it will continue to provide a large market for Indian exports.
The RBI too is doing its bit by reducing interest rates, which is another positive trigger for the stock markets. In fact, the RBI has clearly stated that it would go for further extensive rate cuts if further stimulus is needed in the economy.
Don’t miss out on this historic opportunity to grow your equity portfolio exponentially. When you look back on this period, make sure you look back with pride because you grew your wealth during this time, not with regret because you sat on the fence and merely watched in awe. Such a time may not recur till the distant future.
People tend to buy stocks that make them feel either good or comfortable. But in a bull market populated by dynamic leaders that just keep surprising on the upside, these sentimental favorites often turn out to be the dullest laggards.
One should always be invested in the one with the best quarterly and annual earnings growth, the highest return on equity, the widest profit margins, the strongest sales growth, and the most dynamic stock-price action. This type of company should also have a unique and superior product or service and be gaining market share from its older, less-innovative competitors.