Financial Market @ October 2017

The market continues to swing from end to end, in a way is consolidating at its peaks but remains steady. At one end the growth moderation has caused some concerns. But at the other end is the uptick in the industrial production as marked by IIP. In July, IIP grew by 1.2% yoy against -0.1% in June. In Aug-17, exports picked up by 10% over the last year. Trade growth needs to be sustainable.

Structural reforms have come in. The push for transparency in capital management, tax compliance and general corporate governance may stimulate entrepreneurship. This is likely to result in sustainable long term growth over a period of time. Though much is needed to be done on the policy front. The initial teething troubles howsoever temporary have an economic cost. Simplification and ease of doing business are the hallmarks of GST; and that principle must be ensured.

The monetary policy stance continued to remain unchanged for October 17. Inflation concerns are clearing dominant in central banker’s risk matrix. Growth may now increasingly be dependent on the swift resolution of the stressed banking assets; and the resumption of the banking credit to the commercial-sector.

In the phase of consolidation fresh investments in equity segment have to wait for 2 to 3 year of time horizon to see meaningful gains. Debt fund should continue deliver better post tax returns over three year of holding.

(With inputs from Mr. Nilesh Shah – Kotak Mutual Fund)