Monthly Market Commentary - Mar '17

Wealocity's perspective on what's happening around the world  Monthly Market Commentary Mar '17

There’s a simple reason the future always feels uncertain but the past seems relatively orderly: No one has any idea what the future holds, while hindsight allows us to assume that the past was more predictable that it actually was ~ Anon. UPrising!!! UP, the powerhouse state which contributed for the party’s grip in the parliament is back into their fold after a decade and half and the comeback is through a landslide victory. The gains of Uttarakhand & Manipur are signs of both consolidation and expansion. Punjab followed the most expected path while Goa seemed to miss Parikar's charisma, a sign of weakness that the opposition wants to exploit in Gujarat next year.  There's a slew of Initial Public Offerings (IPO) by the companies of late and a few more are expected in the weeks to follow. The plethora of offerings is due to the buoyancy in the general market, the continued influx of capital by domestic institutions. Underwriters have learned over the years to price IPO deals at such a level that a) the company raises a nice amount of money that greatly values the business but b) it leaves enough room on the table for an opening share price pop for appearance’s sake. We believe market would provide an opportunity enter through the secondary market at a short period from the listing for medium term to long term investing. Euro area inflation has accelerated at its fastest pace since Jan’13 and is expected to hit the 2% mark. The ECB’s latest projection foresee an average inflation rate of 1.3% this year. US growth was less diverse in terms of its contributors than previously thought in Q4 2016. Like the UK, growth is heavily reliant on consumer spending. To all intents and purposes, it was the sole driver of headline growth, contributing over 2 percentage points to the 1.9% figure. President Trump in his first address to Congress, struck a conciliatory tone urging Americans to set aside conflict and continued the election rhetoric of “I’m going to bring back millions of jobs”. Equity: India’s domestic MFs (pure equity+ELSS) have witnessed an unprecedented level of inflows over the past three years, both in terms of consistency and scale. Since May ’14, the inflows into equity MFs have been positive for all months except Mar ’16. Such a level of consistency and scale of net inflows has not been witnessed anytime in the past 18 years. We continue to forecast gains in equity in the short run with further IPO & FPO (govt) offerings. The domestic politics would add fuel to it. Debt: 10yr yield was volatile in a huge range of 6.37% to 6.98% last month due to RBI stance. The AAA corporate bonds have seen spike up in yields from 6.95% to 7.63%. With hardly any positive triggers, no further G-sec issuance and existing large MTM losses by PSBs, the fixed income is best avoided for the month.  Oil: The West Texas Intermediate (WTI) for April delivery continued its tumble below $50 a barrel creating concerns that the US shale industry could kill the oil market if it embarks on another spending binge. The increasing threat from the US production is leaving OPEC members unsure as to what to do next. As 'animal instincts' taking over the US manufacturing/mining industries, the possibility of further spends on shale could lead to unknown results in the medium term. Copyright © Wealocity, All rights reserved. Our mailing address is: dreams@wealocity.com Disclaimer: All the views expressed are strictly personal and we recommend consulting your financial advisor for making any investment decisions based on your risk appetite, timelines and goals.