Last week the markets gave the jitters literally. The sensex lost nearly 900 pts. and the nifty nearly 270 pts. As it is, investors deserted the markets after the last rate hike fearing a slow down in the economy. Such fear is not unfounded. Indian corporates are going to face margin compressions and it will be an uphill task to maintain bottomline growth.
With languishing markets, Govt's plan to raise money through disinvestment is already in a mess. Two big ticket disinvestment programs, that of ONGC and SAIL are in the back burner. Which means keeping deficits within target is going to be elusive. This has a direct bearing on how much Govt can spend on development. So much for infrastructure developmet. No wonder infrastructure stocks are a thoroughly crumpled lot.
On the international front S&P's downgrading of America is expected to have some effect on India. If debt servicing costs for America indeed goes up, it will have to cut expenditure. This will impact our exports both goods and services.
However in such a scenario commodity prices will also climb down and this includes Oil in particular. This is going to augur well for India as we can see inflation cooling off. This will prompt RBI to ease up on rate tightening. If that happens we can see our markets rejoicing in no time.
The crucial thing to do therefore is to keep an eye on commodities with crude in particular focus.
Now that markets have corrected significantly one can start accumulating blue chips
and other growth stocks. Sure prices may erode further, but thats a risk one has to take if one has to be in stocks. Over a period these will deliver profits. The stocks mentioned in this blog are still in profit/or a minimal loss inspite of the recent carnage. Additions can also be made in these. Few more stocks which can be money compounder are as follows
Coal India, L&T, JP Associates, Tata Steel, SBI, Infosys/TCS
Disclosure : I hold/intend to hold the above stocks.
Happy investing
Basudev
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