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Indian free stock photo markets are delicately poised at present momment. Due to steep fall in markets during May, 2006 number of investors have gone out of maket. Index has bounced back quite nicely within two months without much hype as it was previously. Foreign institutional investors have slowed down their investments since April, 2006. However investors confidence on markets and Mutual funds with huge funds have really given a positive development on markets.
The biggest question which investors put is where the markets are poised in India. It was quite clearly evident that Indian markets in recent four months have been moving along with the trend on international markets. Whenever asian markets have fallen, any rate hike in US, raise in crude oil rates have all had an negative mark on indian markets. The quarterly results which are declared for 30.6.2006 have exceeded all expectaions. Infrastructure, Cements, Hotels, Pharma and Textiles have all exceeded the expectations on quarter on quarter basis. Indian markets have come to a certain point of maturity where small factors will not have major effect. Recent bombay blasts occured when there was a expectation of steep fall in market. However to surprise there was very good raise in free stock photo prices at that time. Even floods at Maharastra, Gujarat, A.P and other places didn't have any effect and market responded positively.
The main reason for such a good performance of Indian companies is the transparancy of company managments. With Corporate Governance becoming mandatory and boards having more than 50% directors who are independent really indian companies are gearing up to the next phase of growth. Economy in India is showing a growth rate of 6-8%. With this constant growth free stock photo and industrial development Indian markets are in for a steep growth in future.
In India govenment policies have been in favour of the industry. Tax concessions have been given to many industries in infrastructure etc., This has acted as an additional incentive for enterprenuers to take up ventures. Due to lower cost of production some units like textiles, auto components etc., have had India as a natural destination. This has increased growth potential of indian industry.
The main reason why FII's are going in for India is its growth story. There are more than 1000 FII's who are operating in India at present and they have allready become significant players in Indian free stock photo markets. Every day during the closing hours of stock market just as people are curious to know the closing index mark in the same way they are curious to know the FII investment figure in India as they feel it will show the direction of the market. Even though in short period there may be a few outflows from market long term trend is bullish.
With recent fall in markets by 30% investors have become quite knowledgeble in India. Every one started looking at long range targets rather than going in for short range one. This will act as a cushion against any steep falls in market in short duration.
The number of stock brokers and broking houses in India has increased extraordinarily. Many of the stock broking houses are cashing themselves on the stock market boom. The number of investors in Indian stock markets have also increased tremendously. Even small villages have got stock brokers. This is not expected previously as usually investment in stock markets are considered as a urban phenomena.
Indian companies can be assessed on the basis of their P/E, book values and dividend yields. It was surprising that even today when markets have been quoting quite high dividend yields from some stocks have been great. However growth potential in Indian stock markets cannot be assessed solely on P/E multiples. Some companies like Telecom, Cement which made huge looses suddenly break even and give some excellent results. If assessment is made on P/E multiples it may not give postive picuture in such cases.
The observation which one has is that if the growth rate can be maintained in indian companies. In the recent two years Indian companies have shown growth rate of 25-40%. The question which one gets is that whether such growth rate is sustainable in future. Some service sector industries like Banks have shown maturity and such growth rate mayn't be sustainable in future. However if margins are maintained they will definitely give good return to investors. Recently because of rate hike in India interest rates have increased quite substantially. Housing loan interest which was quoting quite low as 7.25% has increased to nearby of 9.00%. At the same time deposit rates have also shown significant increase. Fixed deposits for which interest rate was as low as 6% have increased to nearly 8.5%. Slownly banks have also started getting huge deposits due to higher interest rates and tax concession given to deposits over five years period. If markets becomes shaky infuture due to some political developments banks may get huge funds in future.
Now the question is in future what can effect Indian stock markets. One factor which is always a risk with Indian stock markets is political factor as Indian government is UPA which is a combination of several small parites. Left is always against any concession for enterprenuers. India is also a soft target to terrorists. Due to terrorist attacks it may discourage foreign tourists and foreign investment in India. It is always a risk for India in such situation. Barring these two factors there are very insignificant factors which may really effect the Indian markets as such.
In India also govenment wants to take control of various operations done in stock markets by asking all dmat account holders to compulsorily give their pan number by 30.9.2006. If d-mat holders cannot submit their Pan number then their accounts will be freezed.This will help government to track all transactions easily. Tax concession like dividend being tax free, long term capital gains on sale of shares tax free and short term capital gains being taxed concessionally at 10% have all worked out positively in Indian stock markets. However in Derivative transactions where the turnover is huge there are no concessions. Govenment wants to track those transactions minutely. This will help not only to crub unwanted operators but also to prevent tax evasion. Share holders interests are safe guarded by these changes. SEBI has also been quite stringent in looking after stock market operations. It is imposing heavy penalities and debaring companies when it finds their operations are not in track with desired levels.
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