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The rise of Indian economy continues with stronger Rupee

Indian Stock markets are soaring these days and people i.e investors, hedge fund managers, brokerage houses, analysts are not finding any reason for it.

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The rise of Indian economy continues with stronger Rupee

The Indian economy keeps on improving as the Rupee becomes stronger. IIP for January was 2.7%, PMI above 50, controlled inflation at 3.65% within RBI limit, forex reserves have gone up to $367 billion, exports grew 17.50% in February and GDP at 7.1% is the fastest growing in the world.

“It’s the TINA factor sweetheart”, I quipped when my 12-year-old was emphatic over her social science & biology grades. I explained that there was no other alternative for her than to study. “Really! You are funny Ma”. She has no idea that these days even stock market surges are being attributed to this renowned acronym, TINA (There Is No Alternative). Well, Indian Stock markets are soaring these days and people i.e investors, hedge fund managers, brokerage houses, analysts are not finding any reason for it. How long can they keep giving UP election results as a reason for the REASONS why our NIFTY might touch 9300 in few months? So for most of them, when the markets go up its ‘TINA’ and when the market goes down its ‘TRUMP’. And mind you both TINA & TRUMP are mutually exclusive.

Stock markets were once considered as a barometer of economic prosperity & financial health of a country. But this theory has long been forgotten in the era of liquidity & uncertainty. As a result, investors are more driven by sentiments & information flow within the market than by its fundamentals. With respect to India, there is no uncertainty left, so no reasoning left for upside risk for the economy. Analysts keep on harping on policy continuity on reforms and predicting 2019 general elections and even beyond that as if they were discussing some telecom company’s extension offer. Have the macro fundamentals just gone up after UP assembly elections or have we started using prism glasses. But the question remains, why the Indices are moving up without any backing from corporate earnings. I think most of us have forgotten what we learned in our graduation days. PEST.

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PEST is nothing but Political, Economic, Social & Technological external factors that influence any company or industry. These factors are analyzed by any sane serious investor before putting his hard earned money in stocks or companies. And India has all these factors in the right place at the right time. So when the dollar seems to be confused about its own divergent economic & fiscal policies, Indian Rupee is gaining strength over the convergence of its socio-economic-political policies. Now for pragmatists who need facts, IIP for January was 2.7%, PMI above 50, controlled inflation at 3.65% within RBI limit, forex reserves have gone up to $367 billion, exports grew 17.50% in February which is a sixth consecutive rise this year and last but not the least GDP at 7.1% is the fastest growing in the world. Now coming back to corporate earnings, growth is definitely not anemic but in single digits which are expected to rise in double digits by the financial year 2018 and investors both domestic & foreign are betting on this growth as evident from FPI flows of Rs.22268 crore this month, highest since February 2013. The government is moving with GST implementation by July this year, NPA resolution policy next month and other land, labor and agricultural reforms. So foreign analysts are rightly calling us of being in a SWEET TINA SPOT. But I really love this word TINA, which I am planning to give it to my newborn niece. Yes, you guessed it right, I didn’t find any other name.

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DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation in writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.

The author is a SEBI registered Research Analyst in India. She has done her PGDBA (Finance), Ms. Finance and Fellowship from Insurance Institute of India. Equity research is her major interest area and currently she is working as an independent equity research analyst. Fundamental Research is still in its nascent stage in India as retail investors are still dependent on brokerage houses for investment advice. She aims to fill this gap by providing retail investor centric fundamental research. Starting as a blogger in November 2015, she has published articles on various current affairs before clearing NISM certification and obtaining SEBI Registration in July 2016. Apart from preparing fundamental equity research reports, she maintains her own blog, oasisfundamentals.blogspot.in and publishes her own research reports and articles on various current economic affairs. She also contributes to indianotes.com through her fundamental equity research reports. Her other interest areas are movies, cricket & economics.

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