Budget 2022 has, as usual, brought excitement and expectation among the Indian middle class. Tax slab, standard deductions for the middle class' income has thrown water as there has been no increase in 1.5 L Tax savings. Long Term Capital Gain Tax has been enhanced and is going to be levied at a whooping 15% rate !!! This does not auger well for Real estate and the Stock market. Yet, Today's market has somewhat cheered the Budget 2022 in expectation of Govt's confidence in a boosting future of India. GDP rate has been improving, Factories are being operated in full throttle. So, Make-good-feeling larks in Dalal street.
The Union Minister has declared taxing Cryptos as asset class. This means exchange, trading of this currency is going to be recognised by the Govt. This will revert the bearish sentiment of crypto market. Stocks may see temporary run up, but in the near term to mid term, liquidity is going to be dried up as the US Fed and India's RBI are eventually going to begin Tapering sucking the liquidity from the system. Besides, a better sentiment in crypto market will divert the liquidity from the stock market in this direction. The Robinhood investors will soon divert their attention to gain and make quick bucks in the cryptocurrency trading. The trading and Depositary Crypto platforms have introduced Fixed deposits in INR while keeping the purchased Cryptos in the stock for the investor. Hence, while one will enjoy the possibility of crypto bull market, one may still earn FD rates on their crypto holdings. It's a double edged benefit.
I think the Real estate will start booming soon. When GDP increases, Interest rates are also hiked by the RBI. Such a situation arrives when employment starts being generated and people start having surplus money through a reviving economy. Real estate, every 9-11 years, undergo a bull and bear cycle. Since 2011 bull ended and bear rule began in Indian Real estate scenario. I guess the market is going to bottom out in matter of next couple of years soon.
Stock market bull run happens even during the most bleak economic condition in anticipation of a better economy and increasing GDP sometime soon. Indian stocks showed exponential increase from mid 2020 to early 2022 . But, Real estate starts moving up when the economy actually starts showing healthy increment. We're going through this situation now in the beginning of 2022. This is when the Real Estate is at the rock bottom, Stocks are insanely valued, economy is showing the green soot.
It's the right time to buy a Real estate at a cheap price as within a span of three to four years, their price will zoom up. Resale properties are being sold at a throw away price. New properties will quote much higher prices as their cost of material and labour charges are very high now.
New stock market entrants should step cautiously as another 10-20% correction in Nifty is possible any time around. One may deploy 10% of one's disposable investment in cryptos and then keep investing little to the extent of only 5% of their monthly income. It has a potential to give very good returns in near future.
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