The Nifty 50 index, the benchmark Indian stock market, has fallen about 1% so far in April on pressing concerns over rising geopolitical tensions. Rising geopolitical tensions could potentially send commodity prices soaring and throw cold water on the world’s central banks’ efforts to curb inflation.
The new escalation in tensions between Israel and Iran is worrying investors and is the biggest reason for the decline in Indian markets this week.
“Tensions in the Middle East are the main reason for the sell-off in the Indian stock market as it raises questions about geopolitical uncertainty in the region,” said Avinash Gorakshkar, head of research at Profitmart Securities. ” he said.
Also Read: Stock Market Crash Today: Why is the Indian Stock Market Falling for the Last 3 Days? Explained with 5 Reasons
Additionally, as Iran is the third largest oil producer within OPEC, oil prices also rose due to concerns about supply disruptions. Higher oil prices mean higher inflation, higher interest rates, lower corporate profitability and pressure on India’s fiscal books and economy. Furthermore, a prolonged rise in crude oil prices could lead to a downgrade of India’s rating.
Also read: 5 biggest concerns about Iran-Israel tensions that could impact Indian stock market
The market is expected to remain in negative territory until there are clear signs of de-escalation between Iran and Israel. But that’s not the only concern investors are dealing with. They’re staring at a ton of headwinds.
Hopes for a significant rate cut this year appear to have been dashed. Recent US inflation data suggests the Fed may not be confident in cutting rates in the near future.
Additionally, recent stronger-than-expected U.S. retail sales indicate that U.S. spending remains strong, which could drive inflation.
Also read: Morgan Stanley says RBI repo rate cut will be ‘unplanned’ in 2025
The outlook for the market seems hazy. But experts say now is the best time to bet on quality Indian stocks.
Why should you invest in Indian stock market?
Most analysts believe that the Indian stock market is poised for healthy growth in the medium to long term due to strong economic growth prospects, hopes for political stability after the 2024 general elections, and strong inflow of domestic retail investors. The view is that there is.
Also read: India’s goods trade deficit narrows to $15.6 billion in March, 11-month low
Impressive GDP growth, healthy direct tax collections, easing inflation and expectations of a normal monsoon indicate that the Indian market is likely to maintain its momentum.
Also read: Retail inflation and factory output provide twin driving forces for Indian economy
“India’s economy stands in stark contrast to the global scenario where inflation continues to confuse policymakers and stakeholders,” said Nikunj Saraf, Vice President, Choice Wealth. “This is exacerbated by rising global tensions, exemplified by the ongoing conflict in the United States.” However, if we look at India’s macroeconomic situation, we find that we are on a promising trajectory. ”
Also read: India can sustain 8-9% GDP growth: CII Chairman R Dinesh
“We see potential disruption to Indian markets as minimal. Interest rate cuts could begin in the final quarter of this year, injecting further liquidity into the market. Valuation dilemmas and global While I acknowledge the possibility of short-term disruption due to the situation, I remain confident that India’s long-term growth story remains intact,” Saraf said.
Also read: Indian Economy: Is it now a force to be reckoned with globally?
Prashant Tapse, senior vice president and research analyst at Mehta Equities, says India remains an attractive investment destination despite ongoing geopolitical tensions and diminished expectations for interest rate cuts. he emphasized.
“India’s neutral stance on these tensions has indirectly led to increased investment in a safer economy. The country’s long-term economic growth has been strong and outpaced that of major economies. “While the near-term market outlook is uncertain, the long-term outlook is positive due to strong micro and macro fundamentals,” Tapse said.
He noted that global economic signals have been mixed over the past year, leading to market volatility. However, while India and the US remain stable, China and Europe are showing signs of weakness. This attracts global investors seeking better returns on their investments in India.
Additionally, the upcoming general elections in 2024 could significantly move the market.
“There are signals suggesting that the current Bharatiya Janata Party-led NDA government will continue and promote economic growth and stability in interest rates, which could increase global investment in India. These factors Considering the market decline, investors should use the market decline as an opportunity and continue investing in Indian stocks for long-term accumulation,” Tapse said.
“Despite global uncertainties, India’s economy is poised for sustained growth in 2024. Forecasts from major financial institutions such as the IMF, OECD, and World Bank predict that India will see robust growth. “The world’s fastest major economy is expected to maintain its position as the world’s fastest major economy, driven by strong domestic demand and increased foreign investment,” said Master Capital Services Senior Vice President. Mr. Arvinder Singh Nanda emphasized.
Shree Jain, Founder and CEO of SAS Online, said a strong policy framework supported by a stable government should ensure the structural growth of the Indian economy. ing. In other words, corporate profits will continue to grow.
Jain believes that domestic companies in FMCG, automobile, real estate, infrastructure and defense sectors should continue to perform well. Additionally, the ‘China Plus One’ doctrine should support manufacturing in India and support Indian exports. Export-driven businesses in the chemical and pharmaceutical sectors should gain traction. This should lead to further inflows of foreign capital and certainly boost stock market sentiment.
Jain said selected large-cap stocks will be accumulated by investors. However, companies with leveraged balance sheets or turnaround plans should be avoided.
VK Vijayakumar, chief investment strategist at Geojit Financial Services, said long-term investors can gradually accumulate quality large-cap stocks in the correction.
“Further revisions will make the valuation of large-cap stocks fairer. Large-cap stocks in banking, IT, automobiles, capital goods, oil and gas and cement are ideal for long-term investments,” said Mr. Vijayakumar.
Read all market related news here
Disclaimer: The views and recommendations expressed above are those of individual analysts, experts, and brokerages and are not the views of Mint. We recommend checking with a certified professional before making any investment decisions.
Unlock a world of benefits! From insightful newsletters to real-time inventory tracking, breaking news and personalized newsfeeds, it’s all here, just a click away. Log in here!
