Tuesday, 13 August 2019

Financial Market @ August 2019

Greetings of the Season,

Post Budget and RBI credit Policy announcement, the affirmation statement deriving out is that economy growth is slowing down. Housing Finance Companies like ILFS, DHFL and many more in said league have mismatch in their Balance Sheet due to not many takers in new set of scheme /market of Real Estate. Good thing is that undermining the grieve scenario Central Govt. has initiated support to good debt through banking channels. The cut of 35 basis points only shows the strong commitment of Central Bank towards the cause.
Where-in there has been dip in demand as signal of slowing down of the economy. The positive thing is FDI (Foreign Direct Investment) data has shown positive growth. FII's withdrawal of 3500 cr from equity market is only to divert their portfolio towards debt market to the tune in excess of 6000 cr.

Investment in Selective Debt Fund is the order of the day. Equity Funds are in consideration to slowing down of economy is expected to take back seat for a while.

Long term investors to remain invested and keep participating regularly into equities as with another 5 to 8 percent of correction market should stabilize and look forward. Short term investor should avoid equity market and participate only in liquid plus categories of Fund.

Happy Investing.

Sunday, 28 April 2019

Financial Market @ April 2019

The RBI's Monetary Policy Committee (MPC) cut of the policy rate by 25 basis points (bps) for the second time in 2019 and to take the repo rate back to 6% is seen as futile effort to consolidate debt market and support the institutions burdened with debt specifically in Financial Market space.
This is proving as the welcome step considering the absence of inflationary pressure. Equity Market also made quick gains out of the sentiments developed post interest rate cut.
Going forward due to global reasons the crude prices are expected to inch up raking all financial gains made in short duration of time. If such be the case the RBI will be seen also increasing the benchmark rate by 25 basis points in its busy season credit policy.
Market mood is upbeat with the possibility of current govt. getting re-installed again for the next 5 year term. In assertion of above statement the recent FDI’s flows has already signaled the huge prospects of NDA returning back into power.
RBI to infuse liquidity through FX swap. The RBI continues to infuse durable liquidity into the banking system. Overall liquidity situation may remain comfortable in next 2-3 months as we expect cash withdrawals to normalize.
We reiterate with our stand to participate in equities through SIP’s with investment horizons of at-least more than 5 year with good mix of Large & Mid Cap’s fund. To balance your Portfolio as per your short term/long term investment objective (keeping post tax returns in mind) keep participating in debt fund with average maturity & modified duration of around 18 months to be in safest territory with regard to the fluctuation of interest rates going forward.
Happy Investing

Tuesday, 1 January 2019

Investments Economic Scenario @ January 2019

Season Greetings!

Globally the markets were stable with an outlook of increase in interest rate scenario in USA and slowing down of European economy including England. Chinese were also seen mending their business model suiting to new developments. Statement in the last week of the last year by President Trump Vis Vis US & Chinese trade relationship has thrown some amount of optimism in the global Market.
Back home in India when we look at the opening and closing numbers of the calendar year Nifty ended with 5.9% and Sensex 3.1 gains. The sharp movement in crude oil price marked the year 2018. From close to 70 US$ at the start of the year it rose to over 80 US$ before falling to 50 US$ levels near year-end. Consequently, we saw some widening in current account deficit. Movement in oil prices also influenced Rupee (currently at 69.80 which was at 63.80 on the first day of 2018) and interest rates.
Global trade war also kept market volatile in early half of 2018. Positive derived out of same was that our dependency of foreign inflows got reduced.
Corrections, in Midcap & Small Cap stocks were imminent, with the kind of rally they had in preceding year. Overall, technology funds, which benefited from the sharp depreciation in Rupee and robust corporate earnings, were the star performers in the equity space. Meanwhile, PSU funds delivered the lowest returns. On market capitalization basis, large cap funds outperformed the mid and small cap schemes.
What to expect from 2019.
Interest rate hike will be order of the year in US. European markets will still take time to settle down. With decline in crude demand globally (as the prices are also coming down) there is all possibility of the cutting down production of crude resulting in hike in Crude prices in first half of the new year. This aspect needs to be watched very carefully going forward in 2019.
Elections and stance of RBI in the upcoming monetary policy meeting will be events to watch out for in the coming months. Inflation expectation will also affect market sentiments in the near term as RBI closely tracks inflation trajectory while determining interest rates. However, on a long-term basis corporate earnings and the valuation at which a security was purchased are the two key drivers of equity market returns.
Goal oriented SIP’s (equity/balanced/debt) would be order of the year. Debt fund in Short term space would be an ideal call for three year time horizon. Well traders can set an eye for NIFTY 10000 mark to speculate which looks possible. We can summaries safely by expecting 2019 to do better than 2018.

Happy Investing

Sunday, 2 December 2018

Financial Market @ November 2018

When the mood is uncertain, November always turns out to be month to watch for. Record FII outflows in October and then FII’s returned to equity markets in huge numbers in November. Sharp correction in crude oil prices led to a stronger Rupee, which fell below 70 levels for the first time in three months. We must pay respect where it is due. Finance ministry did extremely well by letting the Rupee fall with the hike in crude prices in October. It helped in two ways

– Exchequer didn’t had to bear the brunt of increase in crude prices as it was passed to consumer
– Further, the weakening of the Rupee discouraged FII’s sell out… this is one negative attribute they had to face which didn’t had its precedent. It works well both for economy and Financial Markets.

Along with these macro indicators, easing liquidity concerns surrounding NBFCs were also a positive on the domestic front. Approx. 44000 crore of debt maturity/roll over will be an event to be watch out.

Globally, lesser severe oil sanctions imposed on Iran and dovish Fed commentary further improved market sentiment. Overall, thanks to mix of healthy news flows, the broader markets ended the month in green.

Going Forward:

Equity Market :
Following will act as triggers for Equity Market staying in favorable zone:
·       Outcome of State Assembly result will have short term impact on Markets.
·       Upcoming OPEC discussions and their decision quantum of Oil production.
·       RBI credit policy in December – though it is expected to maintain status quo as Rupee seems settling around Rs.70 landmark.
Debt Market:
We should be lucky that a good mixed Portfolio of AAA and AA+ with investment time horizon of 3 years is presently yielding around 10% post management Fee. We should have no reason to park funds elsewhere than Low duration Funds or even Short Term Debt Funds…to enjoy Post Tax yield of more than 100% in comparison to Bank deposits.

 Happy Investing

Saturday, 20 October 2018

Financial Markets @ October 2018

Season Greetings.

Worst seems to be behind us. Unwinding of leverage position of HNI led to sell off in the market. NBFC borrowing short & lending long in the falling interest rate scenario had favorable position though with the hardening of the interest rate played spoilsport. To add its hue & cry crude kept inching up.
Crude looks like settling somewhere near its current level. Further, the possibility of further increase of quarter % of basic interest rates can’t be ruled out. Weakening of the currency which is bound to happen over a period of time was allowed to balance itself which in way supported market in huge way.
Weakening of currency has also helped many segments in a way. Exports data YOY basis is on upsurge parallel to the corporate earnings which will be getting announced by November.
Markets are priced relatively better with a fall of market around 20% broadly and weakening of rupee around 7% (virtually with an impact of 27%.
Liquidity is not a concern as it used to be the case with previous falls. Going forward Crude and interest rate would only be factor to be closely looked upon.
Macro parameter currently is in best of it shape with lower fiscal deficit & Current account deficit around 2%.
Equities certainly to be looked upon for long term in a way of SIP and debt fund is having great opportunities for returns of more than traditional bank long term rates as these Debt Funds has advantage of better post tax returns with indexation benefits for holding period of 3 years or more.

Thursday, 14 June 2018

Financial Market @ June 2018

Market Quotes by Mark Mobius – Partner at Mobius Capital Partners

“Investors are always concerned about risk particularly in times of market uncertainty or volatility. The “Value at Risk” (VaR) calculations that banks and other institutions developed in order to determine how much could be lost in the bank's trading positions on any given day is based on historical volatility of markets. However, once financial crises hit it becomes evident that losses can be much greater than the what the models predicted.

Although the theory of a bell-shaped curve distribution sounds good, the reality is that markets often do not obey those theories. Investors can be lulled into feeling secure when markets are moving up steadily and volatility is decreasing. At such times it is tempting to pile more money into the markets, thus causing them to continuously climb and exhibit low volatility. However once the trend is broken and a “black swan” event takes place volatility can skyrocket as the market gyrates up and down violently.”

Market has made top and trying to make another one (in a way signaling steep fall thereafter).
Short term investor who r invested should book profit to avoid risk. With interest rate inching up domestically so as in US in light of increase in crude prices, market looks like building up for major corrections.
Debt Fund investors as always would be benefitted on three year holding period with tax benefits.

Happy Investing

Saturday, 10 February 2018

Budget 2018 – What it means to us as an investor...

1-      Current Economic scenario & growth story of India
2-      New Norms
3-      Market going forward

Current Economic scenario & growth story of India

·         Fiscal deficit kept at 3.20% of GDP, though last yr target was missed with actual at 3.50% against budgeted 3.20%
Ø  Need to restrict it at 3.20% & gradually to be lowered to 3.00%.
·         Revenue deficit is defined at 2.2% of GDP
Ø  Need to bring it down to Zero percent level.
·         GDP expected to grow at 7.50%
Ø  As most of the Global economies are also growing.

New Norms

·         Long Term Capital Gains Tax Re-introduced at 10% on more than one year of holding & profit component of 1st Feb 2018 onwards on such LTCG of 1 Lakh & above.
·         Thus Dividend component of equities & equity fund are also under purview of 10% flat Tax at source.
·         Corporate tax was reduced to 25% for companies with turnover below Rs 2.5 bn
·         On the individual taxation front, standard deduction was increased to Rs 40,000 along with additional benefits for senior citizens.

Market Going Forward

·         Much awaited corrections triggered by Budget as an excuse. No wonder market is having further scope of correcting to 5% to 8%.
·         10% long term LTCG has certainly applied breaks to market march which was result of Punters play. All of them are caught on wrong foot..
·         New depth is created in market and expected to move forward post corrections in a more affirmative way factoring in corporate profit & adjusted correct PE ratio.
·         Debt market will take couple of month’s time to see the dust settling on 10 year yield & liquidity in market.
Ø  Still Short Term Funds are all season risk free investment avenue with holding period of minimum 3 years fetching around 6%-8% Tax free returns.