November 19, 2019
17.4.2018

“Cash combined with courage in a time of crisis is priceless.” – Warren Buffett
It’s a universal truth that change is the only constant. Sometimes it could be very dynamic or volatile and sometimes it could be gradual. But the changes are inevitable and keep happening constantly. Same happens in the world of investments. Everyday there are new news or noises on what new has happened and then all of us start scanning these news with our own lens and create perception about the likelihood of future outcomes.
2018 has been one of the extraordinary year for the stock markets. Its buoyancy continued even through January in 2019, until some global news and long term capital gains tax proposed in the budget by Indian government spoilt the party. The long awaited correction happened. Suddenly everybody’s face was down, market looked very expensive, Indian economy looked dump, politico-socio atmosphere in Indian ecosystem started getting worse, parliament became dysfunctional etc. etc. This continued for almost two months and there seemed no respite.
Then government announced its borrowing program for the first half of this fiscal year. It seems that people were perhaps just waiting for one good news to shirk the gloom and start smiling again. RBI’s monetary policy also brought in more cheers to the market and the stock markets are on the rise all over again for last eight sessions.
There are all good reasons for market to remain positive for sometime with some breathers in between. Macros are improving, WPI & CPI numbers have been good, IIP numbers have improved, good monsoon is predicted, government’s borrowing program seems favorable and signs of no immediate rate increase from RBI, more likelihood of good corporate results this month etc. – all these things augurs well for the Indian stock markets.
But the worries of escalation of trade war between US & China and US & other countries, political action in middle east & east especially Syria & North Korea and rising tensions among super power, monetary policy of US & European countries (possibility of interest rate hike) amidst the situation where their economies are still struggling to revive are some of the global reasons that warrants caution.
Back home all macros and economic indicators including monsoon seems fine. But don’t forget this is election year. And the way the atmosphere around Modi vs Others and BJP’s Hindutva vs Indian secularism is being built, expect the temperature to remain very high. Heat & hatred will increase day by day till election happens. Nirav Modi, bank scams, Kathua & Unnao have been in the news for quite some time. Expect much worse news on electronic and social media on economical and social issues. Karnataka’s election is just a month away and its results will also have its impact on the markets.
Shall we be Greedy or Cautious
While we at InvestmentMitra believe that with all macros improving and economy coming out of glitches of demonetization and GST there is all good possibilities that markets should be doing well in medium term. India’s long term story has always been intact, so have no doubt that India and its economy will grow well over long term and so will be the stock markets unless there is full scale war.
And when we talk of war with kind of personalities heading three super powers especially Mr. Trump, they may give sudden shock to the world and push it into third world war. So time now is not to be greedy but remain cautious. At this point of time your portfolio must have good debt in it. One should have at least one fourth of their portfolio into debt. You may consider tax free and other type of bonds or specific category mutual funds for the same. You should also consider gold for your portfolio and should have 5-10% into gold.
So review your portfolio with your advisor and check your asset allocation and portfolio diversification in light of your investment objectives and devise your investment strategy accordingly. Should you wish us to help you in this exercise, we are more than happy to help. You may reply to this message or contact us on ajay@investmentmitra.com.

Happy Investing!

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