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

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.

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

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.