Stocks For Long-Term Investment 2017 By IIFL

India Strategy – Diwali Sparkles 2016: All set to glitter!

In Samvat 2072, BSE Sensex is up with gains of 8.9% (as of 24th October 2016). At the start of Samvat 2072, the market fell significantly till Budget 2016 to the levels of 22,500. After government assured in Budget 2016 that it would stick to the fiscal deficit target of 3.5% of GDP in FY17, the market has seen a decent rebounded.

Low Inflation, Low Interest rates

In Samvat 2073, the market is likely to make new high as economic macros of India have improved compared to previous year. The inflation has come down to 4.31% in September 2016 from 5.41% in November 2015 due to good monsoon and stable commodity prices which gave room to RBI to cut the interest rates. We expect RBI to continue with its dovish stand and continue cutting interest rate further as the inflation is under control.

Government to focus on implementation of reforms

The GST bill was passed by the Parliament with the government targeting to implement it from next fiscal year. In addition, the government has already doubled its expenditure on infrastructure in FY17 compared to FY16.

Consumption to rise

During Samvat 2073, the low interest rate environment and good monsoon will boost the consumption. The rural demand is expected to boost after 2 years due to good monsoon. The consumption will also increase as the government has implemented the 7th pay commission recommendations which will infuse Rs. 1.02 trillion in Indian economy. This will benefit 47 lakh Central Government employees and 52 lakh pensioners.

In Samvat 2073, the Indian market will continue to inch higher though the global market uncertainty will continue to haunt the Indian market, but considering the strong growth of Indian economy, global flows are likely to continue. Equities is always given the highest return in long term. We have recommended 10 stock ideas and 4 mutual funds in our ‘Diwali Picks’ note. We are sure, they will light up your portfolio in time to come.

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