Wealocity blog

“The future is already here, it’s just not evenly distributed.” ~ William Gibson

Demonetisation and IDS

As the initial brouhaha settled, the merits and demerits are emerging with better clarity. Also, the under-preparedness from the govt. and scarcity of the cash is glaringly visible despite new note introductions by RBI. The IDS is slowly turning into a sham with more skeletons tumbling out each passing day.
 
The RBI's monetary policy also reflects this wait & watch mode while being accommodative.

Us & the US

There's suddenly a divergence in the way the economies are moving. The US is on a gas peddle while the rest of us are still pondering. The possible expansionary policies is driving the appreciation of the USD.

This with the European bank woes incl the world's oldest, BMPS are only adding fuel to the uncertainty. China's growth remains sluggish while India's internal issues forced to take a breather.

What's in it for you:

Equity: The domestic markets tend to consolidate at these levels  with intermittent opportunities available, though. Despite the uncertainty of the impact of the demonetisation the equity-class remains attractive in the 15-24 month timeframe.

Debt: Contrary to the market expectation, the RBI retained status-quo on the rates. The impact of the latest govt. moves are unclear yet and so the waiting game. Dynamic funds seem attractive in the short to medium term horizons.

Gold: The run-up could be curtailed, at least, thanks to the appreciating USD. The concern is due to the counter-productive happenings in the Europe and the ECB actions that could lift the prices up. 

Crude: Though the recent OPEC deal has lifted the oil price, the implementation would decide the extent of price support, which seems negligible considering the history and also the waning influence of Saudis.