Tamilnadu Investors’ Association – Investors Digest
by Vivek Karwa, CPFA, CFPCM , Financial Planner & Wealth Manager
121219: If one was to go by the absolute returns, the Indian stock market has performed pretty well delivering a return of 27% in 2012. Very few markets have performed so well and the other market which has done well is the Germany’s DAX index delivering a return of almost 30% till date. If closely watched Asian markets have performed better than rest of the world. Inspite of slowing Chinese economy the Shanghai Index and the Japan’s Nikkei have fared well.
The year 2011 was testing time for the investors due to the unearthing of scam’s at frequent intervals of time. The investors and the stock market had lost patience due to policy paralysis which was seen at Delhi. Even the management’s of bigger companies started voicing their concerns on the future prospects of the business as no one was sure where the growth was headed under the government which was just not able to take any decisions.
Sensex started its journey into 2012 with a tally of 15455 points. There were lot of expectations and hope carried forward from 2011. The year has been spent trading in a range, between 16000 pts and 18500 pts. It was almost certain that the year 2012 would also end like the previous year with no major decision being taken on the policy front. With the 2014 general elections staring in the eyes, the government finally woke up and has started to put its act together.
Better late than never, since September 2012 the reforms train has finally started chugging. Will this help the government return back to power doesn’t matter to us but the recent actions surely have improved the sentiments at Dalal street. Sensex hit a year high of 19612 recently (as on 19/12/12) and may continue its upward journey if policy actions continue.
Stock market always factors in the news, be it good or bad, in advance. The Indian growth story slowed down to the lowest point in 2012 with the GDP hitting under the 6% mark, but the index hit a low in 2011 itself.
Among all the countries and particularly among the BRIC nations India looks the strongest economy which can recover very fast if the reforms continue. We are probably at the lowest level the growth can fall to and thus we may start recovering now. 2013 is expected to be good on this account but the markets have already started to factor in the growth which may come in next year.
The Sensex EPS may improve from here and as said by RBI, if rates really start falling from Jan’13 wud bring in more cheers. Hence one needs to be fully invested right now in the markets. The Immediate target for the index lies at 20000-20300, Psychological resistance at 21000 and if decisively broken we can see even 24300 – 25000 on Sensex by end of 2013 to mid of 2014.
FIIs have already shown the confidence in Indian markets and have already pumped in almost $23 Bn. These are signals which a small investor should pick from the street and go for good quality companies. There are good quality stocks available in every sector which are trading at good valuations. Remain cautious on the leveraged companies.
The fiscal problem still remains across the globe and the year 2013 will continue seeing central banks worldwide supporting the governments in keeping rates low and announcing packages to keep the growth momentum. This will keep Gold high but investors need to be very careful since gold if not right now will enter the bubble territory soon.
Finally, 2013 looks promising, the party may be spoilt if early elections are announced. If reforms continue one should remain invested since whichever government comes to power, will only take the process forward.
Wishing all a profitable 2013.
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