Along with the clamor of elections, speculations about which party will win with how many seats also replete our Share Market which causes it constant trembles. However, this tumult also present more opportunities for the investors to gain more. There were many chances until January that attracted many investors but the scenario got changed afterward. Nifty plunged by 10% after touching a mesmerizing peak of 11,000. It is now 5% down from that point.
You have to keep calm in such unstable atmosphere. The numbers of the income of companies are improving which is good for the prices of shares. However, the equity valuation is high from last a few years; therefore, there might be some drop in the market.
In the headship of metal, automobile, auto component, specialty chemical and consumer goods, the companies have performed quite well in the first quarter of 2018 and the income might go up by 10% to 20%. The momentum of growth will be observed more in financial services companies than private companies.
Public sector banks are struggling due to NPA while there is hope of boost in the automobile sales. Income in infrastructure is also expected to go up. The order book of cement and engineering companies are increasing. The Meteorological Department of India has hinted at good rain, which will not only benefit the rural economy but also boost conveyance, and fertilizer.
Capital investment is still low in the private sector. Revival in capitalized expanse has been a concern since a long time. The government is investing more in the sectors like road development and electricity. The capitalized expanse of the private sector is still low; therefore, the companies are making only the 70% of their total capacity. Afterward, there would be an investment by corporates in developing new capabilities. Governments usually invest heavily in infrastructure and social schemes in the last 6-12 months of their tenure. Therefore, demand from this is expected to remain high.
With the boost in the expense of the government, there are chances that the fiscal deficit might also go up from the target. After the fiscal deficit of 3.5% in place of 3.2 in the last financial year, the government has now set it to 3.3%. Crude oil might also influence the deficit because its prices have gone up in the global market and this further made rupees weakened. Inflation is also surging. If we look at it from the global perspective, the risk of the trade war will also put pressure on our currency. The proliferation of Protectionism will also influence trade.
The interest rates in America have been raised twice this year and indicated to go on increasing in the time to come. Rupee will be weak even after coming out of India's flow of dollars. Nevertheless, such uncertainties will no more have their influence on the economy for long. Usually, the momentum of increasing the income will last long and we believe that this will have an upper hand over all the negativities spread in the market.