In the past 5 years there have been major changes in the Indian Economy.
- Demonetisation
- GST implementation
- NBFC Crisis
- Changes in definition of Large Cap, Mid cap and Small Cap Stocks
- Changes in Classification of Large Cap, Mid Cap and Small Cap Mutual Funds
- Tax on Long Term Capital Gain on Equities
- Reduction in Corporate Tax ( all companies are now taxed at a max of 25%)
- Special Dividend to the Govt. by RBI (as recommended by Jalan Committee)
All of these big changes have and are going to have major changes in the way Indian Economy ig going to grow in the future.
Some trends are clear
a) The market leader gets bigger : The competitive landscape in India has changed in favour of the big players. Reduction in tax rates has meant that Large corporates now pay less tax and this coupled with GST means that foe the first time a large corporate is able to compete with very small players (e.g. take an industry like fans where the small scale players always had an advantage. They may not have so much advantage now. Same for Real Estate). So markets leaders are likely to get bigger at a faster rate.
b) NBFC Crisis - favouring large players : As many NBFCs find it difficult to raise monies from banks - the large NBFC and Banks will take up their market share. It's a change from a borrowers market to a lenders market.
c) Mid Caps and Small Caps - out of flavour : The change of classification means that Mutual funds can no longer have Large Cap funds with some Mid cap Stocks. This has resulted in across the board selling of Mid Caps and Small Cap Stocks.
Whether for good or for bad - these changes do need to be incorporated in the way we invest our monies in the stock markets.
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(Disclaimer : For information purposes only. Equity investing is a with risk investing including risk on principal invested. Please take an informed decision)
