Tamilnadu Investors’ Association – Investors Digest
by Vivek Karwa, CFPCM
110418: The world markets offlate have been driven by the Fukushima nuclear power plant news. The aftermath of Tsunami on the plant has been in focus and a debate has already arisen over the Indo-US nuclear deal and the capabilities of India if such an incident has to occur in our country. The result should be that India should understand the importance of safe and clean power and should encourage more of solar power parks and wind energy. Though the initial costs of such installations are high the country will reap in the long term benefits as the source of power is free and the damage to the Mother Nature is absolutely NIL!
The Tsunamis, Droughts, Floods, etc., are all since we have been meddling with the nature far too much. Few solar power plants were to come into India but the state of them is now unknown. Govt. should subsidize such activities.
The world markets are behaving as if Japan will not be able to build its economy back. Japan is extremely capable and the current turmoil there may prove to be a boon for them as lot of activities have already started and though the GDP number might not reflect these activities the ground reality would be totally different.
Indian companies should take the full advantage of the situation there. There might be certain industries which would like to shift to India. Though we hope no human should suffer in any part of the world, the fact is any problem in these developed economies is surely a boon our country. We are being perceived by many as “Developed Economy” and hence have the advantage of benefiting from others woes!
The benefits can be in form of FDI or even as FII investments in Indian stock market. Markets in India are no doubts FII driven and would remain to be so for very long time. We just cannot get away from this fact, but offlate the retail investors seem to have become more intelligent and have started to understand the minute details about the market, thanks to the awareness programs being conducted across the country.
Hence as long as FII continue to call the shots in India the markets would remain volatile. We should learn how to use this volatility in our favor and use any unsolicited dips to buy into stocks and sectors which look promising. We have been mentioning to buy into the banking sector ever since it corrected and the sector has given very good returns since then. Even at this stage the sector doesn’t look over priced.
The maximum upside in Interest rates we see from here is 25 to 50 bps and hence once the cycle peaks out there would be buying in interest rate sensitive sectors as even a 25 bps dip in future will just set these sectors on fire. We still advise investors to stay away from the realty sector. Auto, Banking, Capital Goods, Infra looks the best along with Health Care and Pharma which are not so sensitive.
The inflation also seems to have stabilized now. The elections are over and in states like TamilNadu the major two parties have announced a big list of freebees if they win. The system of freebies is surely not good for the people and economy but again whichever party wins we will be seeing a huge demand for these goods from the government. Keep a watch on companies which can benefit from the freebies. We expect some of these companies to run on full capacities for the next 12 to 18 months. Pricing and profitability is something to be carefully watched.
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.
*Vivek Karwa is a Management Committee Member of TIA but the views mentioned are of his own and not necessarily that of TIA.