If Donald Trump’s victory in the recently concluded presidential elections didn’t do enough to ruffle feathers among investors here in India, Narendra Modi’s surprise move to demonetise old Rs. 500 and Rs. 1,000 currency notes came as quite a shock to the system. Although Trump’s win was initially met with the suspicion that the markets would be in for a tough time, it turned out to be a case of ‘smoke without fire’ as the markets performed better than previously expected. However, with the demonetisation scheme introduced on the same day, the markets still had an air of uncertainty about them.
So, if you’re currently sitting on your couch at home still watching re-runs of Donald Trump’s victory speech in disbelief, or if you’re out on the streets standing in mile-long queues just to withdraw some money from an ATM, or if you’re busy swiping your Credit Card to buy supplies; here’s some reading material to help you understand just how the dual effect of Trump’s triumph and Modi’s demonetisation move affect your Investments.
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The demonetisation move is likely to favour banks the most, due to the large number of deposits rolling in as people look to park their money before the 30th December deadline. Keeping this in mind, investors should look to open deposits in banks that are technology savvy, since going cashless looks like is set to be an inescapable feature of the Indian economic landscape. Banks that can keep abreast of the latest technological trends will hold a significant advantage over those that don’t. This will certainly benefit investors in the long run.
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Forex
If you’re one of those investors who trade in foreign exchange, there’s every chance you will start to feel the effects of demonetisation over the coming months. With the replacement of old currency notes with new ones, the forex market is expected to see a shortage in circulation of notes in tandem with appreciation of the rupee. However, if you factor Donald Trump’s victory into the equation, much will depend on how he plays his cards from a policy standpoint as the year draws to an end. This could result in fluctuating markets until the U.S Fed policy meet takes place in December.
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Real Estate
Analysts are expecting the real estate sector to face the full force of the demonetisation scheme due to the amount of black money reportedly pumped into it on an annual basis. Land and residential property prices are expected to either remain as they are or fall considerably in the near future. This will certainly come as welcome news, especially if you’re looking to purchase property of some kind. However, if you’re looking to sell, then now might be the time to do it since property values are projected to decrease over the coming years.
Additional Reading: Currency Demonetisation To Impact The Real Estate Sector
Gold has always been one of the most durable and consistent investments, regardless of market trends or volatility. But with the double impact of the U.S presidential outcome and demonetisation here at home, gold took something of a beating. In the wake of these events, gold markets surged initially as news of Trump’s victory filtered through, before being reined in considerably following the demonetisation announcement. However, with Indians being Indians, many flocked to purchase gold in order to get rid of their old currency notes. So, despite the precious metal facing choppy waters, it is expected to continue to enhance its reputation as a safe investment in the coming months.
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Bonds
Investments such as bonds have fortunately maintained their strong market position following both the demonetisation move as well as Trump’s victory. With people flocking to invest in safe investments, the debt market is likely to be a safe haven for anyone looking to park their funds in order to weather the current situation both globally and closer to home. So, if you’re looking to invest, you could do worse than taking a gander at the debt market since the demonetisation scheme is expected to lead to increased government revenues and tax collection.
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By keeping this information in mind as well as staying up to date with the latest market trends, you could be well placed to come out of this entire scenario smelling of roses. It’s all about making the right move at the right time to make the most out of any situation. And for those of you looking to invest, this period could prove to be pivotal when formulating your investment strategy.