Huge Optimism built up before RBI takes a shot on interest rate

Earnings, Growth in last quarter is still in single digit, which is worrying factor. However decline in Crude & Gold are good macro positive which would limit downside. Market currently trading at 16x which is expensive, without any catalyst playing in its favour. We don’t expect rate cut by RBI on its economic review May 3^rd. Even if it happens may excite market for temporary rally to fall back & settle around Nifty 5600 levels. Commodities – Gold & Silver in particular - to cool their heels for some more time.

Debt Funds going forward would be safest haven to park fund as it will be delivering around 10% Tax Free Returns on year on year basis. Just ensure which funds suits your criterion before going for same.

What to expect from 2013-14

If demand contraction (as we have seen last quarter data) is anything to go by – resultant we have supply constraint which leads to lower inflation creating scope for lower interest regime. Correction in commodity & real estate market prices soon to be factored in prices. Decline in Gold import and lower inflation (on account of demand contraction) has given elbow room to manage CAD (Current Account Deficit) more efficiently. Being FII’s inflow at its best - going forward lot will depend how FDI nos. (in-flows) will be unfolding with all possible innitiative taken by the govt.

Usually May month is not good for the equity market… having said that equity market should be range-bound with upward biased in current election year.

Debt is one market where one can be assured of  9%-10%TAX FREE RETURNS(equally safe as bank deposit)- which is more than what anyone can ask for………. SO ITS HIGH TIME WE SHOULD REPLACE OUR BANKS TRADITIONAL FIXED DEPOSIT SCHEMES WITH SAID FUNDS.

Relax! India will outperform by year-end:

 Indian equities have had a rather unexpected wobbly start to 2013, after showing remarkable resilience in 2012. This shakiness, according to Sakthi Siva of Credit Suisse, has to do a lot with investors booking profits on their investments. Her own strategy is to buy the dips. So with recent correction, they are highlighting India now as one of the four cheapest markets in the region." she told CNBC- TV18 in an interview”. 

This is the fifteenth time since 2000 that India has made it to the "cheapest four" list of Credit Suisse and 13 of the 14 times India has outperformed. "I am quite confident that India by the end of the year will actually be a major performer," Siva says.

HSBC Global AMC – Investment Director-India Equities thinks’ likewise when he say’s India is looking good. There is a lot of opportunity. We find a lot of attractively valued stocks in India.

Going forward the Indian markets looks volatile, reacting & over-reacting every news coming along….. Having said that the trajectory will be upwards… good opportunity for investors with three time horizon.

For investment tenure of 12 months to 18 months stick to Debt Fund for post tax returns around 9%. In other words it’s high time you get rid of your traditional Bank FD. 

HOW BUDGET 2013-14 BENEFITS YOU

Budget presented can be described as solid, sound & credible. Not a spectacular one, no fireworks, not an election budget in the sense of populist giveaways, but yes, a subtle election budget- to bring inflation down, stimulate growth, make sure that foreign investment comes in & keeps rupee strong so that CAD (current account deficit is fixed. It aims to satisfy the investment community, the voters and also promotes the notion that India is turning around. It is, therefore, not an austerity budget. The importance of stability in tax rates is well highlighted & the surcharge on the super rich for one year will be entirely acceptable. The budget seems to be positive for the markets and for the economy.

SALIENT POINTS

• FY13 growth rate pegged at 5% and FY14 growth pegged at 6.1-6.7%
• Capital Markets
• Proposed launch of inflation indexed bonds;
• RGESS modified to include mutual funds and investments in three consecutive years; RGESS income limit raised to Rs. 12 lakhs;
• STT reduced and introduction of commodities transactions tax
• Fiscal Deficit: To be reduced to 4.8% in FY14 from the revised 5.2% in FY13
• Taxation
• No change in taxation slabs or tax rates
• Tax credit of Rs. 2000 for individuals with total income up-to Rs. 5 lakhs
• Surcharge of 10% on individuals with annual taxable income of over Rs. 1 crore
• Surcharge increased to 10% from 5% on companies with annual taxable earnings of over Rs. 10 crore (5% for foreign companies)
• Surcharge on dividend distribution tax raised to 10% from 5%.
• Addl. Rebate of Rs. 1 Lac (over and above Rs. 1.50 Lacs presently) for Interest on 1st Housing Loan for a House Value up to Rs. 25 Lacs.

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Time to Capitalize opportunity created in Market:

Classic example of Media hype:-

Today’s ET headline: - “Market Mourn as Fed Looks to Withdraw Stimulus Measures”

However those who would be affected most are nonstop pumping money in our economy and environment back home is created as if everyone should become seller in market or at-least should not think of fresh investments:

How-ever actual scenario is that market is gone in oversold region(courtesy BEARS) & since investment support has weakened on account of advance tax outflow as well as yearend financial adjustment in  Balance-Sheet, it has weakened buying support resulting weakening (correction ) of indices.

We expect the recovery to start definitely at 5700 NIFTY if not at 5800 levels which is currently trading around 5844 levels – this on account of –

The slide on account of cutting losses by Short term buyers who bought around NIFTY-6000 or + LEVELS & squaring of Oversold position by buying again into market at relatively lower levels to profit from same post Budget.

Generous Call: Its high time going forward to replace your Bank Fixed Deposit with Pure Debt Funds which is relative safe & delivering better Post Tax returns with instant liquidity features for investment tenure of six months onwards....

Savings rate to dip to 30% this fiscal: India Ratings

India Ratings today warned that the national savings rate will slip further to 30 per cent or so this fiscal, from 30.8 per cent of the GDP last fiscal, if the advance estimates of national income is anything to go by.

RAJIVE GANDHI EQUITY SAVINGS SCHEME relief under section 80CCG

Only thru RGESS you can do additional tax savings (over & above 100000) on Rs. 25000/-, - Only for those files which has Gross Annual Income less than 10,00,000/- & have never traded in shares/bonds in secondary Market via DMAT account prior to 22nd November 2012.