How is India’s Equity Market Unaffected by Economic Slowdown

Major sectors of India’s economy seem to be in agony due to economic slowdown, yet, India’s equity market is hitting new highs. Sensex reached new high of 40,697.31 on 8th of November 2019. Same day NIFTY too hit a new high of 12,014.65. Few stocks continue to be unaffected by economic downfall and others in the same sector are in crisis situation.

India’s Major Economic Shortfall

Owing to the slowdown in several sectors, the Indian economy undeniably took an extreme hit this year. Few sectors that perceived slowdown included auto, FMCG and consumers durable that have heaved economy into the pits. Further, the liquidity crunch among the NBFCs made the fiscal status unbearably difficult to maintain. Rural buying fell down significantly in India which led to downfall in FMCG and consumer durable sector. Moreover, the trade war between the US and China had an indirect affect on India’s international trade contributing to further slowdown.

In spite of Slowdown, India’s Equity Market Scores High

despite a major hit to the economy, companies in certain sectors are reaching a peak in its growth. HDFC bank and ICICI bank in private bank sector reached highest stock value at 1284.50 and 508.85 respectively. However, yes bank hit the lowest level since 2009 at Rs 32 a share. Similarly in NBFC sector Bajaj Finance and Bajaj Finserv hit their highest level in share market this year. However, rest of the NBFCs are struggling to survive during the crises. Nonetheless, few companies in every sector are doing considerably well while others in majority continue to struggle. Few companies outperforming during slowdown led to equity market hitting new high in 2019.

Scenarios of Investment in Stock

Sensex and NIFTY hit a new record this year and likely to push forward the momentum. Further, it is estimated to have the potential to reach 41,150 in the fiscal year 2019. Also, experts predict SENSEX crossing 43000 mark by the end of 2020. Similarly, in the case of Nifty, experts set a transitional objective of 12,100 and expect to test on a long- term basis. In the present scenario, major sectors are not performing well and it is highly advisable to carefully pick the stocks by checking financials of each company.

On another related topic, addressing the slowdown Finance Minister Nirmala Sitharaman launched a book on finance titled “The Rise of Finance: Causes, Consequences, and cure”. Additionally, she hoped this helps comprehend the present situation.

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