Financial Market Update @ August 2017

We are pleased to share Market Update with regard to recent financial development in the Indian Market.

RBI after the gap of 10 months cuts Repo rate by .25% bringing it down to 6.00%. This new rate augment well with the present CPI based inflation at 1.08% & wpi based inflation at 1.88%.

Going forward the challenge will be to contain inflation as it is set to rise on account of GST. GST in initial days i.e. 12 months to 18 months will be pushing inflation on higher side & it will be big challenge for RBI how it is going to manage interest rates in near future. I will not be surprised to see balancing act by RBI on quarterly basis. So Debt funds based of duration statistics be aware of your Portfolios.

And rightly so with the announcement of this rate cut – the run was over. Market traded on 2nd August 2017, at all time high of 32686 (BSE) and 10137(NSE Nifty50).

Market is corrected almost 3.50% till date & has appetite for another 4% to 5% from current level. Even after this estimated corrections market is not expected to bounce back strongly. In the better interest of the long term investor it should spend some time there before signaling out its forward march may be till December 2017. The Permutation & combination at that point of time will decide whether market would like to see another significant correction further or not. The ample liquidity in market (courtesy -November 8, 2017 – demonetization) is & shall be providing desired cushion to the market.

The 2^nd & 3^rd quarter earnings are expected on the lower side. Govt. via SEBI has tightened its noose around major 331 companies & almost deli censed almost 1.75 lakhs of dubious companies from the stock market.

These are enough reasons for market to have sideways movement which eventually should turn out as blessing in disguise for healthy market.

SIP as rightly fits the bill & is correct way to participate in these market with medium to long term investment horizon with earning forecast of around 12% p.a.

Debt fund accrual based will be doing all good, by delivering around 8% to 8.50% tax free with 3 years of time horizon.

Happy Investing