It is that Festive season again in India. Diwali is celebrated from Kashmir to Kanyakumari and the world over. It is one the most important festivals across India. Urban and rural areas alike light up a week or 2 before the festivities begin, not to mention the festival of Dussehra that precedes it. Diwali – the festival of lights, like all big festivals of cultures across the world, makes sure that the pockets of people are made considerably lighter.
Consumption Spikes During Diwali
In other words, consumption tends to spike significantly; even an inflation ridden recession on the global front cannot dampen the festive spirit. Sales, discounts and across the board increase in footfalls in shops and digital footfall for ecommerce websites alike means demand increases. More to investing in festive times means more to cheer for the businesses. Diwali is also known for marking the Hindu New Year for a big part of India’s business community. Shops, offices, and homes alike are decorated elaborately. The Goddess of Wealth, Lakshmi is worshipped. It is believed that Goddess Lakshmi visits the site of the puja, and brings wealth and prosperity along with her. Investing in Festive Times, especially Diwali is considered an auspicious time to start new projects and acquire greenfield assets.
The Diwali festive sales crossed Rs 1.25 trillion mark, a record sale last year. These sales are spread across the organized and unorganized sectors. Shops and online stores have high footfall during Diwali and people which drive up the sales. The industries also have their order books full and that keeps the logistics, whole-sellers and entire distribution system busy and their cash registers clinging. In Diwali 2021, stores on Amazon clocked a 2x spike and sold over 10 products every minute! The sectors which benefit during Diwali include textiles, automobiles, consumer durables, electronic goods, jewellery, real estate, tourism, and food and beverages.
Investing in Festive Times In Indian Equities
While the stock markets have been choppy over the last few quarters, there is no sense of gloom and doom or palpable fears of a recession in India. The right time to invest in stocks is when you have the financial stability to do so. The Indian market is poised well and if consumer demand is a barometer, then the next few years appear to lead to a boom in the industry. Because a bulk of the sectors have had good sales in Diwali, the stock markets are also likely to perform well. The “Muhurat Trading” wherein the markets are kept open for trade for an hour during the Lakshmi Puja of Diwali day is supposed to be auspicious.
Considering these factors it is prudent to assume the markets will move up during Diwali. But let’s first take a look at the current market situation. The Global economic crisis has started unfolding and there is little doubt about the coming recession at least in the Western economies. They have been hit by high inflation which has been driven up by the excess liquidity after the pandemic. It is also partly due to high energy costs which are an outcome of the sanctions on Russia. Therefore the world economy is looking at headwinds and a potential slowdown. India has been a bright spot on the global scene, but cannot remain insulated for long. In the short term though, Indian markets are still looking positive due to the in-control inflation and good growth figures. The domestic economy is propelling the demand for the time being.
Indian Equities and Global Markets
As always, investing in the stock market involves risk and requires careful analysis and planning. It’s important to consider not just the current market conditions, but also the long-term potential of the companies you’re investing in. Look for companies with strong fundamentals, such as stable earnings, low debt, and a history of growth. It’s also a good idea to diversify your portfolio to spread out risk.
Conclusion
Overall, investing in festive times like Diwali can be a smart move for investors, particularly those with a long-term outlook. With the Indian economy still performing well despite global headwinds, and the demand for consumer goods and services high during Diwali, there are plenty of opportunities to invest in companies that stand to benefit from this trend. But as always, investors should proceed with caution and do their due diligence before making any investment decisions.
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