Stock Market Mantra

Let us see some of the basic understanding before investing in mutual funds and stock markets.

If the Indian Rupee's valuation goes down (say 80 Rs for 1 Dollar)., the global investment into India's stock market will go down and the NSE will fall (say to 5000). When the Indian Rupee goes down and US $ strenghtens, we must wait till the NSE bottoms out and then start to buy the stocks (good quality large cap stocks). While the Rupee goes down you must refrain from investing and after it hits the rock bottom and starts to strenghten you must buy NSE. If the US $ is strong, you can buy IT stocks.

If the US $ weakens, the global stock markets will fall and this may not be a good time to invest in stocks. You must wait until you see good upward trend in the US $ which is dependent on the US jobs/manufacturing data.

If the US $ weakens, you can invest in GOLD.

If the Inflation in India is high, the banks will reconsider the interest rates and the banks will be forced to up their rates by 25-50 basis points thereby increasing the personal, commercial, home loan rates. You must avoid buying construction, real estate stocks at this time.

If the crude prices go low, you can buy Oil, aviation and transportation sector stocks. If the crude prices go high refrain from buying the above sectors.

Pharma stocks can be bought if their valuations are good at any time.

Local political affairs are very important to consider. NSE was close to 4500-4800 at the end of Congress's rule and within 3 months of a strongly elected Modi Govt NSE rose to 6000. Now it is at 9000. I missed out the rally and now the valuations are too high to be bought. So one must watch and predict the political movements closely.

These are some of the aspects to be learned before buying stocks. happy investing.