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----- Original Message -----
From: easy
Sent: Thursday, September 06, 2012 9:10 AM
Subject: Market Update : Roller Coaster Ride : Take 2 minutes to
read this mail
Dear Sir,
Greetings from EASY
Investments.
One look at the attached
graph would clearly show the roller-coater ride of the indian stock
market.
Inspite of the huge up's and down's
in the market, markets have remained where they were.
In other words markets have been in a
range - they didnot crash or rally.
In the last six months we had few
changes in the government :
- One major decision being the new finance minister. After taking charge, he was expected to do some magic to revive the ailing economy. But given the limitations, Fin Min has not made any major announcement. He is busy releasing media news - which has its own limited impact with Foreign investors returning back and investing in indian equities.
- Monsoon - though late - has revived in many parts of india. Though we might not have got normal monsoon, we definitely donot have a drough - as feared earlier. This is a major positive for the economy.
- Left with no other options, government is bound to hike the price of fuel - be it petrol / diesel / kerosen / LPG. Though this may trigger inflation in short run, the reduction in fiscal deficit is likely to be positive for economy. According to BPCL, the extent of loss for selling a liter of diesel is Rs.17, petrol is Rs.5, Kerosen is Rs.32 and LPG is Rs.347. All these subsidies are reflected in widening fiscal deficit
- And there are host of reforms - like banking reforms, real estate reforms, pension reforms, insurance reforms, FDI in retail etc. which needs to be presented, debated and approved by parliment
- But the government is busy fire fighting - the latest one being Coal-gate scam.
- RBI is quiet firm and clear that inflation has to come down for them to reduce interest rates. With monsoon revival and stable international oil price, RBI may reduce interest rates in next 3 months to 6 months.
- And this finance minister has got hardly 5 months to carry on some reforms. Feb 2013 would be the last budget of this government. Though elections are only in May 2014, there will be no budget in Feb 2014 due to election code of conduct. Hence Feb 2013 budget will be election oriented, populistic budget with minimal importance for reforms.
- In April 2012, S&P Rating agency of USA downgraded India from "Stable" Rating to "Negative" rating. Way back in June 2012, S&P had warned that if India doesnot address critical issues like fiscal deficit, then India's rating may be revised to "Junk" status. Which means, India would lose its Investment grade. With lack of political will and very slow implementation of policies, this downgrade seems very much likely which may result in panic and chaos in the investment market.
Given these mix bag of positive and
negative news, market is likely to remain highly volatile - reacting heavily to
local and international news. Though the attached graph may indicate that market
remained in a narrow range, volatality has still been there. Making
use of this volatality is investors big opportunity.
- Ideally you can review your existing investments - be it shares or mutual funds. You can weed out unwanted / idle / unsuitable investments and change them to good ones you own. We @ EASY Investments can help in reviewing your existing investments.
- For those investors who wish to maximise on this volatile market conditions - you can consider investing in phased manner and book profits in phased manner. This is an investment strategy called MOST-STP, where STP stands for Short Term Profits.
- For those investors who wish to accumulate a stock, we have a structured investment method called MOST-VIP. Quiet interesting strategy wherein we assist you in buying a particular share as the price keeps falling. This strategy is particularly suitable for those investors who wish to invest sizable funds in a stock of their choice.
- Investors might think that mutual funds are performing as badly as stock market. That is not the case. In the past 6 months, when sensex has given NIL returns, funds like Reliance Equity Opportunities Fund, IDFC Sterling Equity Fund, Sundaram Select Midcap Fund, ICICI Pru Discovery mutual fund have delivered close to 12% absolute return. All credits to these fund managers. Ideally you can include these funds in you portfolio.
- We have published few informative
articles, which could be read by clicking the links below:
- Good Stocks to invest in Tough Markets : http://easyinv.blogspot.in/2012/08/good-stocks-for-tough-times.html
- Why does it make sense to book profits : http://easyinv.blogspot.in/2012/08/why-does-it-make-sense-to-book-profit.html
- Apart from that we
have lots of Non Convertible Debentures at attractive
interest rates. Part of your investment can be made in some
of these NCD's
- Shriram Citi Union Finance NCD offer 11.5% for 3 years and 11.75% FOR 5 Years. This NCD opening on 12th September can be considered for investments.
- India Infoline NCD offering 12.75%. We donot have a view on this NCD. But it is available in the IPO market for investments and we can service you in these investments.
Be it
MOST-STP (or) MOST-VIP (or) plain adhoc investment - investors need to make use
of the current pessimism. Though many of the
investments made in the past have been languishing, valuations are at very
attractive rates. Current Price Earning ratio of index is 13, when compared to
average of 18. No doubt - volatality is bound to
persist. With suitable investment strategy, you can beat the actual index and
get maximum benefit.
Do call us to discuss and take
sensible investment decisions.
- sd -
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