Does rate hikes by central banks really cause a bear market? Data says opposite

The last 50 years’ data tells an entirely different story. Let’s see what happens whenever the US economy goes into a recession after that Indian economy starts booming. Are you wondering why this happens? there are 2 reasons

  • Crude oil – whenever the US goes into recession the demand for crude oil drooped significantly hence the price of crude oil drops in the international market. So India gets oil at a cheaper rate .
  • US 10 – year bond yield dropped to 2% in the time of recession. Hence the value of money gets reduced. India gets money at a cheaper rate again a good thing for the Indian economy
  • Domestic consumption – Unlike US or China India is not heavily dependent on exports for its GDP growth. Most of the products & services are consumed within the country. so India is not get affected too much by international markets.

Cheap crude oil cheap money & stable demand is a perfect recipe for India’s growth. Let’s see the example from 2004 to 2006 FED hikes the rates 9 times that period S&P 500 was up 50% & Indian stock market went 100% up in the same period.

In India, from 2003 to 2008 interest rate was hiked by 5% Nifty compounded by 29%. Again 2009 to 2012 rate was hiked by 4% nifty compounded 17%
So rising rate hikes cause down market is myth data proves it again & again. So take advantage of a current market fall & buy some quality stocks. Many market leaders or even monopoly stocks available at huge discounts. If you don’t want to do the hard work of research & right stock selection DM us on Twitter & get your personalised portfolio.

Pratik Kale - DM on @kpratik28

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