The end of the financial year means you have to deal with lots of numbers. You make appropriate tax-saving investments, pay your taxes, and prepare your tax returns. The quarter ended in March is particularly important to most businesses in India as they follow a financial year of April to March.
In April of every year, there is a lot of annual information put out by large businesses. The earnings season outlines the vision businesses have for the year ahead. The Reserve Bank of India (RBI) also releases many quarterly surveys that publish an overview of the consumer sentiment and industry outlook for the quarter and for the year ahead in April every year.
With so much information out there, you may feel overwhelmed especially if you are new to investing or have just set your foot into the wonderland of investment. The start of the financial year is also an excellent time to start new investments.
What to read about companies
Technology companies like Tata Consultancy Services and Infosys would be the first in line to announce their quarterly results for the quarter and the financial year ended March 2021. It would help if you kept an ear open for guidance from the management on the year ahead.
For the past few years, technology companies have not provided significant guidance for markets to take cues from. With the United States (US) economy surging, Indian technology companies are likely to benefit from increased corporate spending.
The preference for digital technologies is inducing changes in the way businesses in the US to consume IT services. Indian companies are servicing such companies in the US. Similarly, read up on the commentary put out by companies in the consumer sector such as Hindustan Unilever, Jubilant FoodWorks, ITC, Godrej Consumer, and other major market players.
You will get a sense of the demand for consumer goods in India. The RBI’s latest consumer confidence survey for March 2021 revealed a dip in the current sentiment and for the year ahead. That may not be such good news. The rapidly rising number of new Covid-19 infections means that people may cut spending and save money.
There was a lot of anticipation of a speedy recovery in the economic growth in 2021-22. The Reserve Bank of India’s monetary policy committee has projected an over 10 per cent economic growth. At the same time, international organisations like the IMF and the World Bank also expect India to grow faster than before.
However, the second wave being witnessed in India could stall that expected growth. This means companies may struggle to generate profits at a level people expected them to do before the second wave. That could dampen the stock market sentiment.
What can you do
Interest rates are expected to remain low for the foreseeable future. The RBI monetary policy committee is supportive of economic growth due to the hardships faced by people. Despite a spike in the consumer price inflation to 6 per cent, the committee has kept repo rates at 4 per cent.
Central banks tend to use borrowing rates to control inflation in the economy. Your deposits and small savings in post office schemes would continue to attract lower rates. For your investment in the stock market, keeping an eye on leading companies’ management commentary should be a priority.
When companies announce their quarterly results, the chief executives or chief financial officers of large companies give press interviews. A lot of information is released along with the quarterly results. You must hear out their view to get a big picture.
Companies often give a good sense of the external environment their businesses face. Factors to watch out for include the demand situation, changes in input prices and their ability to pass on rising costs to consumers.
If you are serious about making your investments work for you, it is essential to get that big picture perspective on factors influencing your savings and investments. You cannot put up the excuse of not knowing or liking ‘finance’. Even if you get professional help for your assets, you need to know a few ‘finance’ things to make it work.
(The author is editor-in-chief at www.moneyminute.in)