The recent rate hike by the Reserve Bank of India (RBI) may adversely affect the ongoing stock market party. With a credit squeeze and expensive credit, the cost of funds for corporates will be affected.
This will in turn affect the bottom lines of companies, especially those companies which are highly leveraged or which depend to a great extent on market borrowings.
It won't be the right strategy to enter the markets at this point in time. 'Wait and watch' is the recommended strategy. Once the markets stabilise, investors can start taking positions again. Individual investors need to be cautious at this point in time while entering the markets.
This is a good time to sell and book profits. Individual investors need to exercise caution and do their homework before taking investment decisions.
http://economictimes.indiatimes.com/quickiearticleshow/6626061.cms
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