Several experts across the country feel that the current market fall is a golden opportunity for the long-term investors. Let’s take a look at the big picture of the Indian economy and understand factors in favour of a long term investor.
1) Steep falls should be used as a good opportunity to accumulate good stocks
A large number of fundamentally stable stocks – both mid cap and large cap – have fallen anywhere between 20 to 40 percent. This fall can be a good opportunity to buy such high quality stocks at lower price levels.
2) Positive GDP growth trajectory
Indian economy has gained global attention in this fiscal year after achieving 8.2% GDP. This quarterly GDP growth is the highest in 2 years which will definite attract foreign investors.
3) Increase in liquidity from the government
RBI has allowed banks to use 15% of their holdings under statutory liquidity reserves (SLR) which was at 13% last year. This has increased the liquidity by Rs. 2 lakh crores, lowering bond yields by 30 to 45 points.
4) Government’s faith in the economy
The Government has cut down on its gross market borrowing plans for the year by 700 billion Rupees. This shows government’s faith in achieving the fiscal deficit target set for the year despite the market decline.
5) Increased promoter interest in NBFC stocks
NBFC stocks have become the center of attention because of their current valuations. They are attracting majority shareholders’ and institutional investors’ participation due to major corrections in their price, making them lucrative for long term accumulation. This shows faith in their companies by promoters, particularly those in which company outlook remains strong.
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