Market update - (Rare Opportunities to be Optimized)

This report has some macro analysis done for year 2016:

·         Market has corrected substantially

·         Good money could be put into equity in this month & March 2016.

·         This opportunity could be compared with year 1998, 2002, and 2008 though not on same magnitude.

·         In year 2011-12 FII were bullish on India when

Growth was down

Lot of Projects were getting stranded

Current account deficits were high

Inflation & Fiscal deficits were high

FII were bullish for two reasons oil was high Pension Fund were given mandate to invest in emerging markets. In those economic scenarios, emerging markets was way to go.

·         Year 2016 – Oil is falling & One set of FII ‘s are selling to mend their loss & other set of FII’s investors who invested in emerging market is selling as they have made good money & quitting with the trend.

·         Simple lesson to be learnt

When non fundamental selling is happening, it’s time to invest. In present scenario:

Inflation is low

Current account deficit is stable

Fiscal deficit is low with 3.3% trailing of last year

Govt. during this fall of Oil prices from 110 $ per barrel to 29$ barrel has amassed 500000 crore.

·         We are positive mainly due to two reasons:

1.       We belief with lifting of sanctions on Iran – Oil price will become stable & will rise from here & should settle around $50 per barrel.

2.       Banking space has come out with realistic NPL & there is enough reason to believe.

·         Entire Macro Economic factor are phenomenal.

·         Mid Cap index & Large Cap index are 52 weeks low. Mid Cap though still little overweight.

·         The growth we see would be increase in Capacity Utilization (replicating America growth of 2012 to 2014)

Currently around 70% of Capacity utilization is seen across sectors which are expected to go up to 100% in next two years without Capital influx.

This will further add to bottom line of the companies. Importantly market moves ahead & earnings come back ended.

·         Banking segment is also expected to bottom out in a year’s time.

·         Deflationary Deleveraging Cycle is on its bottom end. First mild leveraging cycle will start by 2017 to be bettered of in 2018.

·         5 Lack crore earned by govt. should be used to increase the growth during 2017 & 2019.

·         Raghuram Rajan has done phenomenal job by improving REAL INTEREST RATE.

·         We expect a rate cut again pre march.

·         Hefty Taxes has been collected in current fiscal due to exercise duty on Diesel & Petrol due to fall in International Oil prices.

·         We soft tax regime for 2016-17

·         Finally we could comfortably say year 2016 is year of Investment into Financial Market be it Equity be it debt & not of physical Asset with minimum time horizon of 2 years.

Happy Investing.