The sensex is trading at 18000 levels, and we can best say that the sensex is currently consolidating. There are thousands of investors, not very sure whether the markets are heading upwards or a correction is due. Any bad news from the USA or Europe might cause a major correction. I see this as an opportunity. Why? Simply because the domestic growth story is very robust.
Today the elephant(SBI) announced its FY11 Q1 results, which beat the expectations on the street. The bank posted a jump of over 25% in net profit's over the previous(year) quarter. Net Interest Income(NII, which is Interest earned minus Interest expended) grew a robust 45.36% to 7304 crore. Net NPA stood at 1.7% as compared to 1.55% for the previous quarter(this is a concern but quiet acceptable since the bank has witnessed tremendous credit growth). These numbers( specially the NII) clearly indicate that corporate India is on a clear growth path, because SBI has the maximum penetration into the economy when compared to the other banks. Healthy credit growth is a testimony to the fact that the economy is growing.
From the domestic perspective, inflation is a risk but the planning commission has indicated that the inflation will subside in the coming months. We have had a good monsoon this year, and this will definitely help in checking the food prices.
We also hear stories of a prospective deflation in the west. Though deflation is not good for an economy, it is a good sign for the Indian economy. Why? Because India is a net importer and deflation in the west will bring down the cost of imports.
Finally, if something goes wrong in the west the FII's will sell in India to book profits and cover their losses(in the west). This should be an ideal opportunity for us to buy.
My suggestion to the investors would be to stay invested in the markets with some liquidity in hand, to exploit any corrections in the market. Happy Investing!!!
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