Financial Markets @ January 2020

India’s economy is expected to rebound in 2020 as per the Confederation of Indian Industry. CII further added that this is due to the measures taken by the Govt. of India and the RBI coupled with easing of global trade tensions. The fiscal policy will set a Central Govt. target for the deficit in the range of around 0.5 to .75%.

There are nascent sign of Indian Economy( on account of improved PMIs of manufacturing and services, jump in passenger air traffic, sharp moderation in decline of sale of passenger cars, e.t.c.) on better footage than what it was in the year gone by. With the proactive measures taken by Govt. in tandem with RBI will overcome the slowdown and a gradual recovery will be in place.

Though worse is yet not behind us, we may see some sharp decline in valuations at stock market within the last two months of this financial year.

Going forward:

Equity Market: While macroeconomic concerns weighed on equities for most part of the year, corporate tax reduction in September has helped equity funds give moderate returns in 2019. We may see some good revival of Portfolios with booking of profit in one segment and making cautious participation in other where huge value opportunities exist. The equity market is expected to adjust within next six months with a possibility of corrections to the tune of 5 to 6% in Feb-March 2020. Systematic approach of investment in either of the Equities segment will certainly bear fruits in time to come.

Debt Market: Investor anguish over multiple credit events is justified, RBI inventions and giving much desired stimulus to markets by reducing Repo rate by 135 basis points is commendable. Gilt funds were mostly benefitted out of this act at longer ends. The year 2020 can be safely defined as year of consolidation and those who have seen some drop of returns in their portfolio will see it iron out by years end.

The mantra for 2020 is stay invested and do participate as per your risk appetite, be equity be debt.

Happy New Year