November 19, 2019
“The stock market is a no-called-strike game. You don’t have to swing at everything–you can wait for your pitch. The problem when you’re a money manager is that your fans keep yelling, ‘Swing, you bum!”- Warren Buffett
In early trades today Nifty kissed the magic five figure mark for the first time before taking a breather. With this all eyes of short term traders or market pundits will now be on Sensex crossing 35,000 mark. How markets are going to behave in short term, i.e. over next 3-6 months or for over next one year, are always difficult to assess. In such short period many economical, political and sentimental events drive the movement of markets. In the long run if your economy is growing and there is inflation, it will reflect positively in market valuation and investors are bound to make decent money over long term.
GST has been rolled out and government is making all out efforts to educate the nation on the same and smoothen the process of GST. Inflation is at historic low levels and is much below the RBI’s target rate for considerable time now. Till now monsoon has also been above average in most parts of the country. Corporate earnings as declared till now have been a mixed bag. Fiscal deficit has also been within the limits. On political front, the ruling party has been successful in getting their nominee elected as President and will also win Vice-Presidential election. This only will strengthen faith in the current government of continuing its reforms policy and creating an atmosphere that is conducive for cohesive growth of the nation.
Analysts are keenly looking forward to RBI’s move on interest rates in their meeting on 2nd August. With most things under control, market is expecting RBI to cut its repo rate, at least by 25 basis points. RBI is also known to surprise the market with its decisions. Monsoon is still half way to go, GST impact will take at least couple of months to be visible. We feel RBI may wait for couple of more months before it revises its policy on interest rates. It may leave a positive hint for the market at this point of time.
Where to invest today: Though many fundamentals suggests that there is still juice left in valuations and continuous onslaught of liquidity into the market may keep it stable with positive bias. But looking at the current valuations, we are cautious towards exposure to equity markets. For our long term investors who have to invest Lumpsum money, we are using STPs into equity funds or investing into equity savings funds for the time being, so that we can take advantage of any correction, if that happens. Using SIPs for long term wealth creation is any time favorite.
Maintaining good asset allocation is the key to make optimum returns from the market and keeping yourself away from market noise is key to success in equity markets.
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