5 Must-Have Things to Know About the Indian Stock Market: Sensex Inches Closer to 50K
If you’re a long-term investor who has been patiently waiting for the Indian stock market to reach new heights, then this might be your lucky day. The Indian equity market is witnessing a bull run right now that seems set to continue in the coming months. There are a few catalysts that are helping drive this bull run even further, including certain government policies and reforms as well as the continued recovery of the global economy. If you’re interested in earning higher returns on your savings and investing in long-term growth oriented businesses, then it couldn’t be a better time than now to invest in the Indian stock market. With so much upside potential, let’s take a quick look at five key things you need to know about investing in the Indian equity market:
The Indian Stock Market is Undervalued
One of the biggest reasons for investing in the Indian stock market is that it’s undervalued. In fact, according to Credit Suisse, the Indian equity market is 40 percent undervalued compared to other emerging markets like China and Brazil. This means that you have a greater chance of making your money back in the long run with less risk and effort.
Key Liberalisation Measures in Place
There are a number of key liberalisation measures in place in the Indian banking sector right now. For instance, the government has allowed foreign investors to invest in Indian equities on a fully tax-free basis for the first time ever. This is expected to help attract greater foreign investment into the market and allow for greater transparency for domestic investors. Another major liberalisation measure is the implementation of a unified capital market that will allow all securities to be listed on exchanges across India as well as abroad. This means that mutual funds, stocks, and bonds will all be available through one platform at an affordable price and with better liquidity than before. There are also other developments that have been made with regards to regulatory reforms like the introduction of the SEBI Bill which seeks to make trading more transparent and inclusive by introducing a standardized model for all securities trading across India’s diverse markets.
Easy Investor Access to Debt Markets
One of the key things that investors in India have been waiting for is better access to debt markets. This has not only been a long-term goal of the government, but it’s also an important part of making India an investment destination. The government has made significant progress on this front, which has led to increased interest in bonds and stocks among foreign investors. A large part of this increased interest has come from foreign portfolio investment (FPI) inflows into India. In the first half of 2018, FPIs invested $6 billion in Indian stocks and bonds. This was a huge increase from 2017, when FPIs invested only $1 billion in Indian stocks and bonds during that time period. The increase in FPI investments coincides with the government’s efforts to liberalize its capital account convertibility rules, which allow foreigners to invest in Indian stocks and bonds directly without going through a third-party broker or exchange. Right now, foreigners are able to invest in Indian stocks and bonds as long as they spend at least $2 million every year also investing in other equity instruments like mutual funds or even company shares.
Steady Increase in Corporate Earnings Growth
One of the most important things you need to know about investing in the Indian equity market is that corporate earnings have been on an upward trend over the past few years. With 10-year CAGRs of 8 percent and 12 percent, respectively, it’s not hard to see why investors are excited about the prospects of investing in Indian equities. In addition to this, we have seen steady increases in profit margins and monetary assets. In fact, profit margins have increased by 27 percentage points over the past five years and valuation multiples for companies in the index have increased by 18 percentage points during that same period. This kind of positive momentum has helped boost investor confidence and has given them a lot of reasons to invest in the Indian stock market.
Government Stance on Reforms Continues
to Drive Market The Indian government’s willingness to implement reforms in the country’s economy has been one of the biggest driving forces behind the bull run that is currently happening. India has had a long history of implementing progressive reforms in the past, and this trend is expected to continue well into the future. If you think about it, there are a lot of things that could have caused losses for Indian investors if there hadn’t been any reform efforts from the government. On top of that, these reforms have also improved financial conditions as well as liquidity. With this situation in mind, it’s certainly not surprising why so many people are interested in investing in Indian stocks today.
The Indian equity market is a promising place to invest in the long-term. Some of the key catalysts that are driving the bull run include government policies and reforms as well as the continued recovery of the global economy. With so much upside potential, now’s the time to get your investments in order and start planning for your future. Key points: 1. The Indian stock market is seeing a bull run right now 2. There are many catalysts that are helping drive this bull run 3. If you’re interested in investing, now might be the perfect time