Financial Markets @ October 2019

Season Greetings.

The RBI in its 4 ^th bi-monthly monetary policy statement for 2019-20 held today, reduced policy rates by 25 basis points, placing the repo rate at 5.15% with immediate effect. These decisions are in consonance with the objective of achieving the medium-term target for Consumer Price Index (CPI) inflation of 4.0% within a band of +/- 2% while supporting growth.

Liquidity conditions, overall remained in surplus in August and September 2019. The path to inflation and interest rates going forward...

RBI is hopeful that several measures announced by the government over the last two months would to revive sentiment and spur domestic demand, especially private consumption. Plus, the impact of monetary policy easing since February 2019 is gradually expected to feed into the real economy and boost demand.

The new lease of life is infused into debt market with ease of payments and accounting which will be taken care of by time, going forward. The Good time to review portfolio and have allocation into short to mid-term Portfolios of AAA rated securities.

Bouncing back of Equity Market (with reduction of Corporate Tax) is no reason why market will not be falling again, yes it will be but certainly not the way the cloud of pessimism was building up. Hence good time to take advantage of slow pace of growth rate (around 5%) of economy to build up position in different equity class depending upon the time frame of investment horizon.

Happy Navratri & Happy Dushera

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.

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

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