Few Words on Market – 090417 ( TamilNadu Investors Association )

090417: We are happy to use this opportunity and announce the launch of our stock broking service, with this launch we would be able to provide the investors complete range of financial services. The markets have been supportive over the last one month. The factors which were anticipated and mentioned here quite a few times have finally played role in lifting the markets to a decent level of 11000 on Sensex. We were strongly recommending index funds past many months. Investors who bought are making more than 25% as of today.

Markets globally have recovered, the push in prices started taking place after Obama’s passage of economic stimulus package. There was some sentiment revival in the global markets though the US markets themselves have not reacted much compared to Asian counterparts. The latest GDP figures of the fastest growing economy in the world China shows that it has now been pushed to second place and the first slot goes to our country India. This was again predicted here and it’s a reality today. We all should be proud about this fact. India has its own strengths which will keep its growth intact and a better government at the centre can stimulate it further.

One of the hot topics in this election is Black Money in Swiss Bank Accounts which is estimated at $1500 Bn approx. as per estimates if this money is brought back to our country, our income tax authorities can collect revenues for next 25 years at current tax rates. This money legally belongs to the public of India and should be used for public welfare and development by the government. Not that we would just see development, India would emerge one of the wealthiest country in the world and can pay all it’s external debt in one go. The external debt, due to which India was recently degraded, if paid back, would only improve markets. There are lots of advantages, we need steps to be taken.

Elections are on and we would be having a newly elected government by same time next month. Election process though tedious for political parties and administration, stimulates economy indirectly. Nearly Rs.15000/- crores would be spent in the election process by all parties combined. The money is used almost for all purposes and people get good business, be it a stage decorator or helicopter charter company. The money spent does stimulate the economy.

This is results season once again. The results are expected to be satisfactory compared to the previous quarter. As mentioned in earlier month the sales of automobiles have picked up and that was the early indication of things getting stabilized. Cement sales has picked up in this pessimistic realty market. Inflation is now negligible except in the food segment. There are expectations that RBI may further cut interest rates in the next meeting. Some of these are the reasons which has now brought the market from undervalued to fairly valued levels. Markets would start focusing on monsoon by may first week.

Those holding index funds can now gradually book profits on every rise upto 3600 on Nifty and wait for the election results. Can utilize this money to gradually buy on dip’s as and when they occur. If there’s a sharp fall on account of any surprise that election results throw up, then that would be the right opportunity to enter index funds yet again. Buying would be advised below levels of 9500 on sensex and dips thereon. Else look for large cap companies selectively. The most preferred sectors should be infrastructure, power. The strategy would be different based on which party out of BJP and Congress forms the next government.

The New Pension Scheme would be open to general public from 1/May/2009 and its success may bring a portion of savings of rural population into equity markets and that too for absolute long term. There are some taxation issues which if considered by the government can be a major boost to the scheme.

Disclosure:- It is safe to assume that the author may have interest in the sectors recommended in this news letter. Seeking personal advice from your Financial Advisor is recommended before acting on any of the substance given herein. The numbers, figures, etc., presented may have been taken from various sources.