Bad time to invest in stocks now - Fusion - WeRIndia

At the moment, the economy is looking excellent, with markets being down about 6% or 7% from their peak levels.

Therefore, many people are eager to invest in stocks, in order to reap massive benefits in the future. However, this is not the case. At the moment, it is advisable to not invest in stocks, since the markets will still not merit large sums.

There are several reasons that large sums will not be gained from the current markets, and here are some of these reasons.

One reason to not invest in stocks is that Indian stocks have very heavy prices.

In fact, Indian stock markets are well-known to be the most expensive stock markets in both emerging and developed countries.

The Sensex trailing p/e is about 24 times, which is far above other countries such as China, Russia, and Brazil, who each have p/e multiples that range from 8 times to 15 times.

India’s big attraction has been its large demographic dividend, and because of this, investors are paying huge amounts.

Whether it be large caps, mid-caps, or small caps, nothing seems to be cheap anymore. Therefore, people will only invest at lower levels.

Another reason not to invest in stocks is the change in the emerging market index of the MSCI (Morgan Stanley Capital International).

Recently, the BSE Ltd., the National Stock Exchange, and the Metropolitan Stock Exchange all announced that they would stop licensing products and data to foreign exchanges.

This action would prevent trading from migrating overseas.

These unprecedentedly huge changes could lead to unnecessary trading disruptions.

They could also cause a potential market classification change of the Indian market in the indexes of the MSCI. All in all, these changes make investing in Indian stocks very risky at the moment.

Another reason not to invest in stocks is that earnings are still not picking up. For several years, analysts have been assuring people that earnings would soon pick up.

While the index has been picking up, earnings have not been, which is causing the p/e to raise and making prices in the market more expensive.

These large prices make it inadvisable to invest in Indian stocks at the moment.

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