Few Words on Market…

Tamilnadu Investors’ Association – Investors Digest

by Vivek Karwa, CPFA, CFPCM , Financial Planner & Wealth Manager

130515: In our previous articles we have been mentioning this… “The Immediate target for the (sensex) 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”

It is always a tough job and a risky job as well for an analyst to predict the market, but even an approximate estimate can help investors decide on how to distribute their investments, across segments. We have seen market test the above mentioned targets and has tried to correct after hitting the 20000+ but now looks like that market is willing to even test the psychological mark of 21000.

Expectations of investors have been high from the government, particularly since they had numbers in the current Lok Sabha. All dreams of the country turned out to be nightmare as almost whole term has been veiled away, by those in public service, making money for self, friends and relatives at the cost of Development, benefits of which would have been felt by the Aam Aadmi.

So what should the common man be doing with his investments at the current juncture? Let us see at few of the most common assets.

Equities: At the outset the market looks little expensive, going by pure index levels after the recent rally. And the index is also due for correction since its trading at crucial resistance levels. But this time we may not see big fall in the index. Index may be at 20000 levels but when we peep outside index, we will find many stocks are trading at deep discounts. Hence investors should keep hunting for value buys and look at individual stocks rather than confuse with pure index levels.

American and the Japan markets also have been doing well after the recent correction in the commodity prices. India is lucky since the external factors are now helping the investors, this doesn’t mean the government can wish away its responsibilities.

Falling Gold prices will help the country in the long term. Crude also has helped us a lot. One good thing which was done by the government is partially freeing up the diesel prices. The oil marketing companies under-recoveries are reducing and this in turn help on fiscal deficit side. Let’s hope populist bills like the food security bills are not tried to push through.

We like Banks at this point of time. Also look at consumer driven stocks. Delisting candidates and MNC companies may attract attention.

Debt and Fixed Deposits: This could be the last chance for those investing in bank FD’s since it’s most likely that the rates will come down faster now. RBI may cut rates with steeper numbers particularly since the inflation seems at reasonable levels now. The 10 year papers have already rallied and the yields have fallen. Those invested in debt market through mutual funds should not be booking profits in laddered manner. It is time that investors should start looking at debt mutual funds rather going in for bank fixed deposits.

Gold: We still are cautious on gold. US is recovering and we have not seen any major crisis in the recent past for the metal to go up. We believe that those wanting to invest in precious metals should look at silver with higher preference than gold. Investors can buy e-Silver in lots of 100 grams and keep accumulating the metal in their demat accounts. Gold should be looked at as an investment only after another correction of $100 to $150 per ounce. If you are supposed to be buying gold for non-investment purposes like jewellery or marriage, then please go ahead and don’t wait.

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.

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