Few Words on Market…

by Vivek Karwa, Certified Financial PlannerCM

150421 – The parliament session has reconvened after the break and as expected has seen high decibel debates across the board, particularly, on the land ordinance which was re-introduced with fresh life, since the older version had expired before it could be passed in the upper house, in the first half of the session. Farmers are being made the talking and the focus point on this Land Bill.

The arguments of those opposing the land bill lack conviction. They lack substance and no specific point is being pointed out which actually is negative for any stake holder. Let’s be clear on one thing, India needs both development and agricultural progress. Both these have to go hand in hand, both these have to live side by side! One cannot be sacrificed or killed for protecting the other. Hence the land bill is a necessity in our country.

After GST, this is the most watched reform which the world is looking for in India. Companies will come and invest in India only when there is clarity on the land acquisition. Factories cannot be installed in thin air! The government seems serious on this, hence we will have to wait and watch if the same is passed in Rajya Sabha this time or a joint session is called to pass it.

Whichever may be the route, once the land bill is passed we may see fresh FII inflows in the Indian markets. The sentiments may change on the positive. After all ours is the only country which can make money for all. As per the modified calculations, we have already beaten China in growth terms and may soon do it even if you consider the old calculating methodology.

Hence the dips which we are seeing right now should only be used to buy for the long term. Now is the time banks may start doing well again. Banking sector looks good. We may, next quarter onwards start seeing banks report treasury gains. Manufacturing and select Capital Goods sector also looks good. Pharma has seen a correction, the valuations seem still stretched but nothing can be said about this sector since when it goes up it doesn’t bother about valuations.

The Sensex at the current valuations does not look costly. Neither it looks cheap. Since India at present is giving the best growth opportunities, don’t expect to get Sensex cheap. Hence, if one is getting market at fair valuations like the present one, start investing. At least start investing in tranches. If you are a young person and salaried one, start investing a fixed amount in equity markets for long term. This discipline of regular investing can really create wealth for you in next 4 to 9 yrs!

The older people who have all money invested in bank fixed deposits should start looking at debt funds in current scenario. Not all your money, but at least a portion of it should be allocated to the debt funds. These funds, over next 3 yrs have the potential to give few percentage points additional returns over your fds.

Unless and otherwise real bad news flows out of the world, India should stay stable. 26200 could be the worst case scenario for the Indian markets. Only worse geopolitical news can take us there in the present circumstances. The second worst thing which can happen is the crude rising back to 100 mark. That looks difficult but nothing can be predicted in commodities like the crude.

Government needs to sort out the retrospective tax issues which are still pending. Though the finance minister has claimed that no new claims based on the lines of primitive thought process will be raised, the investors willing to invest in India will always be wary until the Vodafone case is shut forever.

Hope this will happen. But as said earlier, Invest for long term, atleast invest monthly and regularly.

This Article will be Printed in the Investors Digest Magazine of TamilNadu Investors Association (SEBI Recognized)

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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