student | Posted on | Share-Market-Finance
Why these FII pet stocks are continuing to fall?
Project Manager at The Economic Times | Posted on
'Pet stocks' or 'dog stocks' are the ones which give consistent good dividend yields even in volatile markets, much like a dog, which is considered as man’s best friend.
Now the question arises why such stocks are falling if they are recognised as quality stocks? We all know that current market scenario is flimsy in India. Market is extremely volatile, where investors are losing more money than getting stable returns. In addition, due to upcoming election heavy season, investors are shying away from the Indian markets.
In addition, there are many other reasons behind persuading FIIs to withdraw from Indian markets are as follows:
1. India to miss fiscal deficit target: Despite government’s effort, India is on its way to miss its fiscal deficit target. Government of India had high hopes from Goods and Services Tax collections, but things did not go as expected. This will affect Indian economy and add up to deteriorating macros.
2. Inflation in India is at all-time high, which is discouraging foreign investors to keep invested in India's growth story.
3. Rupee fall: Anything that dents India’s economic picture will have a role to play in bringing down markets. You must be aware that Rupee has been one of the worst performers among other currencies in Asia lately. Indian currency is likely to remain under pressure if the pace of foreign outflows rises amid waning Indian economy. The currency will take a further hit if global crude oil prices surge.
4. Elections: Political scenario will have major impact on market movements in the coming months. Upcoming assembly elections in five states (Chhattisgarh, Madhya Pradesh (MP), Mizoram, Rajasthan and Telangana) will augur the future for stock markets in India. Any disappointment in elections results will push market sentiments to drastically low levels.
Later in 2019, Lok Sabha elections are likely to influence market sentiments. Should it result in defeat of the BJP-led alliance and advent of an unstable coalition in power, it will smash the stocks market hard.
5. Crude oil hike and Trade war: US sanctions on Iran will have major impact on global scenario. Global markets including India’s will have its impact. However, US has allowed temporarily exemptions but there are no certainties on its future action.
In addition, Global trade war and risk of further rate hikes by the US Federal Reserve (Fed) also pose headwinds for the global markets.
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