PARADIGUM SHIFT

The year 2013 would be seeing cut in RBI rate, which will be reflected in Bank Deposit Interest rates (including other fixed interest products) getting reduced by 1% - 1.50%. This phenomenon as always makes Debt Fund quite attractive as their portfolio yields are inversely proportion to interest rate. Whatever rates you get from the bank – the same rates ARE delivered by these Funds as TAX FREE FOR YOU (without any equity participation). Almost 15 years of track record spells this.

Inflation would be more or less within manageable range of 6.00% to 8.00%. Fiscal deficit should be less than 5.40% of GDP if not equivalent to 5.10% of last year. Going forward various policy reforms announced (and some more to be announced) should beer fruits in reducing fiscal deficit in FIN YR.2013-14 and improving GDP performances.

The entire impact should make equity market friendly, however volatility is not ruled out. We only hope that Indian retail investor should not repeat their 2012 behaviour – where- by on one hand we saw Foreign Institutional Investors pumping money to tune of 1.35  Lakh core into Indian equity market however Indian retail investor participation stood in red with 25K crore. We are repeatedly maintaining, to participate in this market at every lows OR through SIP’s and don’t liquidate positions before seeing nifty at 6400. May be by that level opinion get changed altogether.

Fiscal adjustment in US, ramification of Euro zone crisis and China‘s slowing rate of sustainable growth is a factor that is likely to curb global growth in 2013. Having said that the latest estimates from the International Monetary Fund project developed economies as a whole to have achieved GDP growth of only 1.3% in 2012, with growth expected at 1.5% in 2013. In contrast, emerging Asia is expected to post an estimated GDP growth of 6.1% in 2012 and 6.8% in 2013.

What all happens in U.S., Euro zone, and Japan this year will almost impact the global economy at large, but the ebb and flow of action and reaction is shifting. Emerging markets, for instance, are generally lessening their trade dependence on the U.S. and Europe, and there are other countries that can drive global growth. In addition, a likely continuation of easy monetary policies in the developed markets this year could result in more investment dollars into global equity markets including emerging markets.

A VERY HAPPY NEW YEAR TO ALL