This letter in lieu to the current Economic Situation due to Demonetization and Mr. Trump Victory.
We believe we are not late in conveying our message and would like to give our view on the same.
It’s been long time we were expecting correction and were repeatedly trying to keep our portfolios light or investments pushed to either Balanced funds or Arbitration funds.
We now see markets adjusting to the Valuations comfort zone levels and might go even lower with our Prime Minister move. The only issue is our wait for the economy recovery will get longer than expected, but it will be much stronger than expected, post this adjustment.
What is the issue from these two events.
• Interest rate will be higher in US coming months which is also a cause of concern. Interest rate in India will be lower in next 2 quarters which will also be positive for industry.
• Consumer and peripherals led industry will face the brunt for short term
• IT will be displaced for the next 2 quarters. Volume game will be driven with acquisition or merger. This industry needed this for long time. Possible that we might see big merger of elephants.
• Oil will move higher.
• Chances of technical recession world wide- Its technical and will not show in the economic activity much.
• NPA will shoot for short term.
• Equity investment will pick as alternate investment as debt, gold and realty will have lower ROI.
What to do now and what will happen to our investments?
1) For every bad phase there will be good phase- We may see more correction in the coming months, which will give .
2) Current Demonetization will hurt economy for short term, which will hurt stock markets (which is already on the card) for the next 2 quarters.
3) The key will be the Budget which is in Feb-2017. We believe that this will be a populist budget and will bring in lot of cheers to the mass.
4) Current market analyst are skeptical and are sharing fearful analysis. We don’t believe this being a dooms day, but believe this is a great lift for the ongoing India Growth Story.
5) We recommend to stay invested with optimism and invest more in days and months to come at every dips.
Our belief is everyone needs to adjust so that they can survive. Its survival of the fittest and these economic changes will be adjustable and growth will come and markets will move higher.
This fall will look like an opportunity lost in next 1 year and let’s not repent later. Just invest and reap the benefit later.