Traversing the current markets
India probably never had all the macros so well aligned the way we currently have. While inflation is under control with lesser chances of any upticks in the coming months, the stable lower interest rates, the resilient rupee and most importantly Oil at a sweet spot in 50’s is turning into a boon. Add to this an early monsoon with a possibility of normal rainfall is a blessing.
Of course, the govt. efforts & policies over the past three years seems to slowly bear fruit with so many structural changes happening, the India growth story is now on the move. The only hiccup is the corporate earnings which continues to have mixed results but with some green shoots in many sectors.
The biggest concern however, is about how long this fairytale continues? Would there be a correction, may be a deeper one. It’s difficult to gauge the mood while the markets set daily new records. It’s very difficult to decide whether to fence sit and lose out on the rally or be conservative and arrest the possible loss.
This dilemma tears the mind. Certainly, the valuations are not at all cheap and this is not a go all out situation into equity but yes, to be overweight on equities. It’s very difficult to predict or asses where the market is headed in a mid-cycle except to be vigilant and cautious.
Sectors interesting are those that have bottomed out their cycles like Metals, Power and Infra as a theme, though IT & Pharma would take a little while to reach there. So, it’s about having exposure in to these areas with a view of 2-3 years that would do good.
Investment pick: ICICI Pru Value Series 14, with a hedging strategy to contain the downward risk in case of a fall whilst participating in the bull phase.
Godspeed,
| 
Follow us on