Wealocity's perspective on the market happenings.                                                             Monthly Market Commentary Aug'17

Marking a milestone Life isn't a matter of milestones, but of moments. ~ Rose Kennedy. For the first time in its history, the NIFTY has crossed 10,000 and closed above it. It’s a very big psychological mark and the journey so far has been pretty interesting ala a rollercoaster from 1,000 in 1995 to 10,000 in 2017. However, during the same period the market capitalization has seen a 48x at a CAGR of 20% while for the investors it has delivered a 11% CAGR on the index. The first 1K increase was at the slowest pace taking almost 9 years while the next slowest is the journey from 6,000 in '07 to 7,000 in '14 about 7 years. The quickest 1K jump is from 5,000 to 6,000 in 2007 which took just 52 trading days while the next quickest is the race from 7,000 to 8,000. Elaborating further into the statistics, the index has hit new all-time highs twice in 2006, 2007, 2014 and in 2017. Do we see a third high or is this the last for this year? Time is the real judge! The landmark tax overhaul came at the start of July and it’s still creating jitters among the market participants. As most earlier thought, the initial hiccup didn’t seem to surface and seemed to be a smooth transition. The benefit/impact would nevertheless be felt only in the long run, the short to medium term gains would soon rationalize in the long run. Despite some hitches, the new system is in place and certainly needs tinkering which would be carried out by the committee.  The disastrously low bond yields across the world and the insatiable appetite for purchase of assets by the central bankers excepting the US Fed has resulted in deluge of liquidity into equity markets. Excepting the geo-political tensions of Indo-China border dispute and US-N Korea tensions, there isn’t any possible untoward surprises in store. Watch out for these flashpoints for future course on the liquidity movement and the asset allocation matrix. Equity The recent restrictions from the SEBI on ‘shell’ companies have created a chaos in the domestic bourses creating a knee-jerk reaction pulling the mid & small cap indices down. With the earning season not providing any hope, the latest move only provided a good reason for the retracement in the march by the stock markets. We believe a further down side and the disappointing company results could pull back a bit more in the short term and provide an opportunity to enter the market. We recommend continuing staggered entries to equities while taking potshots at dips. Debt The falling CPI and the rate cut by RBI has further diminished the gleam out of bank deposits. The MPC also continued its neutral monetary policy stance monitoring the pain points for possible inflationary cycle. With corporates wobbling in their performance, it’s become difficult to hunt for good bargain in the bond markets. The medium term (5-10yr) govt. bond are at an attractive spread over repo. Investors looking for better returns could explore dynamic bond funds though it would increase the risk profile owing the duration play in these funds. 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.

Wealocity's perspective of the market happenings  Monthly Market Commentary

Experiential Luxury A shift in focus from purchasing luxury goods to enjoying services. A common refrain of the past half-decade has been the decline of luxury ‘ownership’ and the rise of luxury ‘experience’. If this is to believed, then we're moving away from permanent, physical object ‘possession’ and ‘personal luxury goods’ into transient, intangible, service-dominated ‘experiential luxury.’ Experiential luxury is one-off and unrepeatable. This makes the moment of experience ever more important.

RBI Monetary Policy Two key aspects of RBI's commentary are: Hawkish inflationary outlook while extremely optimistic about growth in the coming FY; and serious intent to solve the NPA problem of the banks. While sticking to the medium term target of CPI to 4% within a band of +/-2% it flagged multiple risks to inflation. These include the probability of recurrence of El Niño and it's impact on food inflation, 7th pay commission receipts, one-off GST effect and even the farm loan waiver in several states. Rupee Conundrum The rupee rise in the last quarter caught almost all the analysts off-guard, revising the forecasts for the quarter and year. RBI's gauge of the currency's strength puts in the overvalued territory. And it's non-intervention though perplexing is a wise move as any aggressive buying of dollars would only add to the excess liquidity it's trying to suck out through reverse repo rate hike. We see the trend to continue in the medium term. The Syrian War The US has thrown a wrench in to the ongoing Syrian repair, unsure of which nuts and bolts it wants to tighten or loosen. So, this sudden US reaction to an alleged chemical attack by the Assad admin to be considered genuine or a POTUS ploy  to reverse the ever falling approval ratings is unclear. Musings also indicate the sustenance of new tax cuts and hiked spend proposals need more political mileage especially post the failure to replace 'Obamacare'. But this misadventure could add chaos to the Middle East.

What's in it for you: ‘Bull markets are known to be born on pessimism, grown on scepticism, mature on optimism and die on euphoria'  ~ Sir John Templeton.   Equity: The recent political victories have changed the sentiment and is attracting huge inflows both domestic and foreign. At Wealocity, we've used these higher levels to create cash reserves and believe this strategy would help us grab an impending opportunity. Probably time to bet on the infrastructure theme again!    Debt: With the change in RBI stand and the subsequent events, there could be possibilities of profitability in the long papers and hence are interested in the dynamic asset allocation based investment avenues. Crude: The Domestic price would be dependent on the USD parity, though the recent gains in the global prices is a combination of demand (US summer spends) - supply (shutdown in Libya) issues. The current geo-political tone would add more volatility to it. 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.

Trumphatic and Unpresidented!!!

Donal Trump takes oath as the 45th US President and seems to makes strides on his declared agenda using his executive powers to repeal 'Obama Care'. The tone of the official twitter account hasn't changed any hues as it continues the Donald way. Revellers attending the swearing-in ceremony got a rude shock when the caps with caption of "Make America Great Again" were tagged with made in Bangladesh/Vietnam/China. So, the world continues to watch what the new administration unravels going forward on major economic & foreign policy issues.

History sure, could it be Dream?

This budget is already a history in the making for advancing the date by an almost a month and relegating more than a century year old tradition of separate railway budget. But, would it turn to be a dream one with more relaxations and exemptions especially coming back of the demonetisation drive and ahead of the crucial state polls. Like always, the common man has more expectations on the budget deliverables but any changes in the capital gains taxation could trigger an equity market turmoil in the short run. The roll-out of GST and the govt. commitment on this would be keenly observed.