Indian Market Scenario 1: Would you Invest in India under these circumstances?

Currently, there are lots of negatives news, events and circumstances related to Indian Market such as

 India’s Rating

  • India has lowest Investment grade rating by rating agencies (BBB-). One more downgrade will change its status to non-investment grade i.e. Junk
  • S&P has negative outlook on India i.e. there is higher probability of downgrade than upgrade
  • Fitch recently change the outlook on India from stable to Negative

 Indian Economy

  • RBI keeping Interest rate very high (highest amongst emerging markets)
  • Inflation is very high due to supply related issues
  • Decreasing GDP growth rate
  • Increasing Budget deficit
  • Deteriorating foreign exchange reserves
  • Devaluation of Rupee from 49/$ to 56/$ in 5 months

 Indian Government

  • Political deadlock/problems related to coalition government
  • Corruption
  • Policy deadlock
    • Delay in implementation of Direct Tax Code (DTC), Goods and Service Tax (GST), Company Laws Bill, International Financial Reporting Standards (IFRS), etc.
    • Uncertainty about GAAR provisions
    • Uncertainly about review of DTAA with Mauritius and other tax haven countries

 International

  • Greece, Spain and other PIGS countries debt problem and probability of default
  • Eurozone crisis due to inter linking of debt
  • Struggling developed economies (including USA) and declining growth rate in emerging countries (including China)
  • Devaluation of currency of emerging economies (Brazil’s currency depreciation is worse than Indian Rupee)

And more………

So, what you think, Would you invest in India under these circumstances????

 

About Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

Mr. Jigar specializes on NRI Investments and Taxation. He is proud to be one of only 21 CFA Charterholders in India working as consultants. (In 2011, when he became CFA Charterholder, out of 97,173 CFA Charterholders in the World, only 697 Charterholders were in India and only 3% work as consultant; Source: www.newcfa.org). He received his MBA (Finance) from University of Illinois, Chicago, USA, CPA from USA and a Chartered Accountant from India. Jigar has over 15 years of professional experience including more than 4 years with KPMG USA’s Risk Advisory Services. Currently, he provides Wealth Management and taxation consulting serving clients from USA, UK, Americas, Europe, Middle East, Asia, Africa, Australia and India.
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