India is a place of great diversity and cultures, and is also called a land of festival as well. The festivals celebrated in the country are not only limited to dancing, enjoying, etc., but have deep rooted connection with country’s economy. It is one of the permanent sources of income for the country.
Diwali and stock market: the connection
One of the most important festivals of India is Diwali, which is celebrated all over the country and lasts for around five days. Along with happiness and prosperity, Diwali brings a very good opportunity to invest in the stock market because of some sentimental and monetary reasons. Diwali marks the beginning of new fiscal year for many businesses in India, and is also marks the biggest holiday shopping season for the Indians.
Smart stock market tips for diwali
For these reasons, it may be interesting to look upon the performance of Indian stock market with respect to Diwali. So, discussed below are some the segments that are generally seen too rally around this festival.
No Diwali without Gold
Bullion Market is one of the potential opportunities during the festival season especially Diwali. If we talk about the specific commodity then, we have Gold and Silver. Countries like India have sentiments attached to these commodities such as social compulsion and the rituals of giving gold and silver during a personal and festive occasions. If we talk about the impact of the festival, demand for the gold and silver generally rises around Diwali. Demand for the product is at peak from the starting of the day ‘Dhanteras’ till Diwali.
Along with the commodity, the companies involved in Gold also expect growth from the season. There are many stocks that could give good profits at this time such as PC Jewellers, Titan, Shree Ganesh Jewellery, Gitanjali Gems, etc.
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The below graph is of Titan Ltd, which has given a green candle in the Diwali week.
We wait for Diwali to buy Cars
The other sector that gets positively impacted because of Diwali is the Auto Sector. The Industry counts the highest selling of automobile in the month of October, or we can say around Diwali.
The auto industry has already reported record sales in August and impressive sales in September; but still the industry seeks a bit more opportunity to grab more sales in Diwali. Generally, cars and bikes are the prime items on a shopping list during Diwali. So, many companies come with big promotions and heavy discount to attract consumers. Generally, the companies expect a 25-30% jump in sales this season.
Despite Diwali, 2014 seems to be a good year for the industry considering tremendous pressure over the past two years as a result of high-interest rates, inflationary pressures and slowing economy. So, investing in the automobile industry is a very good option to make good profits (even from a non-Diwali point of view).
The above chart of the CNX Auto shows the performance of the sector form October to December 2013. If we look into the numbers, we can see that the sector rose around the beginning of October, or we can days before the Diwali till November first week (Diwali was on November 3rd).
The below graph is of Maruti Suzuki India Ltd, which surged around 25% in the last year of Diwali season. The maximum volume came at the time of Diwali.
Other sectors to look into
Along with the above sectors there are more sectors that grow significantly at the time of Diwali. Since we know the festival brings a lot of shopping sentiments, so, investing in the FMCG is a good option. Moreover, companies involve in manufacturing and selling Electronics good also see a huge rise in their sale at the time of Diwali
In addition, many Indians believe to buy property, land or houses during Diwali. Because of such belief, the real-estate sector grows tremendously. Therefore, the companies involved in theses provide a better opportunity.
So, planning and making entry in a good sector and stock will definitely make your Diwali a little more happier.