5 reasons why festive season is important for equity markets

Being an equity investor is not easy work these days. With every spike or fall in the numbers, the pulse seems to follow suit. Even though the government has announced a slew of favorablemeasures to pick up the economy and restart the growth engine, the spike in the market was not sustained for too long. What the market is really looking for is proof of the pudding. Sure, the measures sound great but we still need to see the impact of it to trickle into the numbers. That is what makes the upcoming festive season so crucial every year, with a far bigger importance in the scheme of things this year. Read on to understand some key reasons for why festive season is so important for equity markets.

Consumer sentiment 

While we like to naively believe, that economics is solely about numbers, a large part of the swings are also driven by sentiment. Not every consumer or investor is privy to the exact numbers or the numbers that matter. However, a lot of phases in the economy are fuelled by the sentiments shown by the consumers and investors. When it is boom time, everything is hunky dory and all things seem to magically fall in place. When there is gloom, nothing seems to be working. However, in times like these where most of us feel it is gloom giving way to cheerier times, consumer sentiment in festive times could be a big leading indicator to achhe din.

Demand indicator

In any economic market, the two main forces are demand and supply. While all market analysts believe that enough stimulation has been given to the supply side with the latest measures, it could well fall flat unless the other measure of demand also starts to show an uptick. When we look at demand, festive season is the phase in the year when a lot of people receive a Diwali bonus and use it to spend for delayed purchases. This year specifically, we believe that a lot of the manufacturers will use the tax cut bonanza to pass on some of the benefits to the end consumers. That again should lead to a demand stimulation and this festive season will give us a good idea of whether we can see some domestic consumption turnaround. If the initial numbers of the two big online sales, Flipkart’s Big Billion Day and Amazons’ Great Indian Festival, are to be believed, India’s growth story is far from having hit a pause button.

Auto and Real estate

Two of the biggest industries that are facing the highest challenges are the auto and the real estate sectors. These are also the two big purchases a lot of households hold on to and buy in the auspicious festive season. Just look at any newspaper, especially the supplement and you are bound to see it filled with advertisements, especially from these two industries. Dhanteras is especially considered auspicious by a lot of people wanting to make such high ticket purchases. This festive season could well stimulate much needed demand for these two industries. 

Job creation

With increased demand, a lot of industries end up hiring part time labour and sometimes even increasing manpower permanently. This period also sees spikes in labour intensive industries like automobile and real estate. In years when the demand is not as per expectation, the number of jobs created suffer likewise. Hence, the festive period is an important driver towards any changing trends towards job creation as well. 

Credit pick up

One of the important aspects of liquidity and money flow in an industry is credit. Since a lot of high ticket purchases happen in festive period, as a chain reaction, loan disbursals also see a spike in this period, be it Home Loans, Car Loans or even Personal Loans. Since financial services are one of the key industries in the index, a good demand and favorable numbers would see a resultant spurt in the market. It would also provide some much needed relief in a liquidity crunched market, still reeling from the effect of the Il&FS crisis and the smaller ones that seem to keep erupting. 

As you can see, the festive season can provide cheer not only in our daily lives but also in our financial lives. So, here’s hoping this year, the next few months of festivities also lead to a turnaround in the fortunes of the economy and the equity markets. From Moneyfront we wish you all good health, happiness and of course wealth this festive season.

Previous article5 key takeaways from the latest fiscal stimulus package
Next article5 reasons why gold funds are a smart choice
Pratik Sarawogi
Pratik is an MBA from IBS business school – Mumbai, with dual specialization in Marketing and Finance. He is driven by passion for markets and loves to analyze client portfolios with a long-term approach. He believes in the principle of asset allocation and diversification to maximise client return following a risk-based approach. Managing risk comes naturally to him, owing to his prior work experience with worked for ICICI Prudential Life Insurance Co. Ltd.

15 COMMENTS

  1. Does your blog have a contact page? I’m having trouble locating
    it but, I’d like to send you an e-mail. I’ve got some recommendations for your blog you
    might be interested in hearing. Either way, great website and I look forward to
    seeing it expand over time.

  2. I’d like to thank you for the efforts you’ve put
    in penning this website. I’m hoping to view the same high-grade content from you in the future as well.
    In truth, your creative writing abilities has inspired me to get my own blog
    now 😉 cheap flights yynxznuh

  3. Have you ever considered about adding a little bit more than just your articles?

    I mean, what you say is valuable and everything.
    But think about if you added some great pictures or video clips to give your posts more,
    “pop”! Your content is excellent but with images and videos, this site could certainly be one of the most beneficial in its niche.
    Awesome blog! cheap flights 32hvAj4

  4. Have you ever considered publishing an e-book or guest authoring on other
    blogs? I have a blog based upon on the same ideas you
    discuss and would love to have you share some stories/information.
    I know my audience would enjoy your work. If you are even remotely interested, feel free to shoot me an e mail.

  5. We’re a group of volunteers and opening a new scheme in our community.

    Your site provided us with valuable information to work on. You
    have done an impressive job and our entire community will be grateful to
    you.

  6. Hello there, I discovered your web site by the use of Google
    whilst searching for a similar subject, your site got here up,
    it appears great. I have bookmarked it in my google bookmarks.

    Hello there, just was alert to your blog via Google, and found that it’s truly informative.

    I’m gonna be careful for brussels. I will be grateful in case you continue this
    in future. Many other folks will likely be benefited out of your writing.

    Cheers!

  7. Здраствуйте!

    В материалах данного поста мы хотели бы ознакомить вас с компанией Приложение playfortunacas.com. [url=https://playfortunacas.com/mobile-version/]playfortunacas.com казино [/url] представляет собой игровую площадку с большим разнообразием игровых автоматов.

    Площадка была разработана в далеком 2017 году. С самого начала своей деятельности площадка Плей фортуна радует своих посетителей завлекающим дизайном и частыми выигрышами.

    Для начинающих игровок площадка Play fortuna приготовила промокоды, с которыми ваша игра покажется одним удовольствием!

    На официальном сайте казино вас ждет множество видов рулеток, поэтому любой игрок останется доволен! Независимо от широкого игрового функционала казино скорость открытия страниц остается очень быстрой. Функциональность казино остается на высшем уровне! Так например, на сайте казино у пользователя есть возможность бесплатно сыграть в любой из игровых автоматов из представленных на портале.

    Сегодня было разработано много вспомогательных сайтов, которые призваны познакомить игроков с деятельностью казино Playfortuna. Такой площадкой является портал:[url=https://playfortunacas.com]playfortunacas.com[/url]. Разработчики данного ресурса посторались изложить игрокам все тайны казино Плей фортуна.

    Для любителей ставок на спорт http://www.playfortunacas.com создало свою букмекерскую контору, которая прекрасно вписывается в общий функционал казино. Для ввода и вывода денег в проект доступно широкое разнообразие платежных систем, что позволит буквально каждому игроку попробовать своих силы в флагмане игровой индустрии. Минимальная сумма вывода всего 15$.

    У компании Play fortuna бонус при регистрации существуют программные продукты на все известные операционные системы, что сделает пользование сервисом максимально комфортным для игроков. Игровой зал сайта Плейфортуна регулярно пополняется
    новыми видами игр, которые сделают игру увлекательной и интересной.

    Прекрасные девушки ждут игроков на официальном сайте компании Playfortuna бонус за регистрацию. Если вы любите азартные игры, и не против хорошо провести время в хорошей компании, то компания Playfortuna – это то что вам нужно! Приходите, играйте, побеждайте, а дружный коллектив проекта Плейфортуна сделает ваше время нахождения в казино увлекательным и интересным!

    [url=https://playfortunacas.com/play-fortuna-casino/]Казино плей фортуна онлайн играть[/url] – попробуй прямо Сейчас!

  8. Hey there, I’m completely new here, I am not sure in case this section will be the right place to publish this and even sorry just for this, but I was hoping someone here on moneyfront.in would be able to guide me.
    I’m wondering if anyone knows any kind of trusted company for petroleum products, i’m a producer which need a great source for such services. Is this seller good and anyone worked with them ?
    [url=https://beroilenergy.com/sodium-bicarbonate-supplier/]bulk sodium bicarbonate[/url]
    Likewise please introduce any good and even comprehensive blog for more inormation about this kind of services. I appreciate it.

LEAVE A REPLY

Please enter your comment!
Please enter your name here