Stock prices will go up due to weak property and gold prices
gold vs property vs shares
Recently, in an interview with CNBC-TV18, Manishi Raychaudhuri of BNP Paribas stated that recent weakness in the prices of property and gold can be the main reason why domestic investors are flocking towards the stock market and it could be bounty for equity investors in the long term.
In present, it’s difficult to make any prediction because market is still uncertain. These days Indian public sector banks like Bank of Baroda and other banks are recording little small increase in non-performing loans (NPLs). Now in India market seems to be volatile as China and government is expecting to act as the backstop for their equities. According to experts, for short term India will continue to outperform because these days investors are appreciating as still it is one of the best markets with a good options and choice of stocks. As an investor we all like to invest in private sector banks because they are able to raise their capital and asset quality, which is very much alive. However; retail clients love to deal exclusively with institutional clients, but if you will analyze the performance of gold and property, so you will understand that they are used to occupy the lion’s share in the asset allocation when it comes to middle class. It means in the developing country like India most of the people are investing their more than half of the saving in real estate and gold. Apart from that now people also prefer to invest in the alternative asset classes and it seems to be pretty relative attractiveness of equities and unattractiveness of the alternative asset classes.
The saving rate of India is 30 to 40 per cent and it is a USD 2 trillion economies out of half comes from financial assets which is about USD 350 billion and if 10 per cent will go to the equities, so it will become the 30 to 40 billion per year. And it will be larger than the FII inflow in country, which India has received ever. These days financial experts are targeting a Sensex on 30,300 by the end of this calendar year and it will approximately 8 to 10 per cent from the present level. However; the appreciation of US dollar would obviously be another tailwind for this sector. There are few commodities such as; oil and gas or energy, and they all are refining the margins. With the performance of NIFTY at last Friday its clear that it was surprising as the entire rise are for short volume as well as momentum support. Nifty is closing in decisive manner and for August month we can expect certainly positive response.
