Good Evening all. Yesterday was a blood bath in the market falling down by 800 points or more today market fell by 78 points. The reasons being the Greek crisis in Europe which is undergoing an election which might not be in the European union, is a bad thing. The continuous fall in oil prices which has come to less than $ 50 a barrel today has been assumed that, there is less Industrial activity.
The opinions are conflicting. The oil declining in India seems to be a very good thing for the country.As India imports 80% of its oil the falling prices will save the country precious Foreign exchange and reduce our fiscal deficit. Plummeting commodity prices will keep inflation within 5%, below the Central Banks 6% target for January 2016. The decrease in oil prices will have a manifold effect with increase in demand for automobiles both passenger and commercial vehicles. With inflation down due to decrease in oil prices the chances of interest rate cut are there which is good for the Economy. On the whole the opinion is mixed it is not definite wether such decrease in oil prices will benefit the world.
There is a opinion that, we are in deflation ie lot of lowering of prices. This leads to less demand as the economic activity is less.
India, is a net importer, not an exporter this deflation might be good for India, but Indian Economy is open and we have to cater to the Economies of the other world which seem to be in not so good shape. We have a huge domestic market which is good for us but, we also need a good market abroad as, we do a lot of software exports. The chances are the manufacturing sector might do well compared to the service sector. We have to watch the situation. It is better to trade cautiously and book profits periodically. HAPPY TRADING AND INVESTING AND A HAPPY NEW YEAR.
