Huge Optimism built up before RBI takes a shot on interest rate

Earnings, Growth in last quarter is still in single digit, which is worrying factor. However decline in Crude & Gold are good macro positive which would limit downside. Market currently trading at 16x which is expensive, without any catalyst playing in its favour. We don’t expect rate cut by RBI on its economic review May 3^rd. Even if it happens may excite market for temporary rally to fall back & settle around Nifty 5600 levels. Commodities – Gold & Silver in particular - to cool their heels for some more time.

Debt Funds going forward would be safest haven to park fund as it will be delivering around 10% Tax Free Returns on year on year basis. Just ensure which funds suits your criterion before going for same.

What to expect from 2013-14

If demand contraction (as we have seen last quarter data) is anything to go by – resultant we have supply constraint which leads to lower inflation creating scope for lower interest regime. Correction in commodity & real estate market prices soon to be factored in prices. Decline in Gold import and lower inflation (on account of demand contraction) has given elbow room to manage CAD (Current Account Deficit) more efficiently. Being FII’s inflow at its best - going forward lot will depend how FDI nos. (in-flows) will be unfolding with all possible innitiative taken by the govt.

Usually May month is not good for the equity market… having said that equity market should be range-bound with upward biased in current election year.

Debt is one market where one can be assured of  9%-10%TAX FREE RETURNS(equally safe as bank deposit)- which is more than what anyone can ask for………. SO ITS HIGH TIME WE SHOULD REPLACE OUR BANKS TRADITIONAL FIXED DEPOSIT SCHEMES WITH SAID FUNDS.