Wish you all a happy and prosperous New Financial Year 2017-18
We call it Year of the Underdogs:
Things happen when no one predicts. This was a year which related to the performance of the underdogs of the previous couple of years.
It was a year of surprises and revolutions: Started with Brexit, then came the 2D effect- Demonetization and Donald Trump win and finally ended with the UP election victory.
Performers: $, Metals, Crude, Brazil, Russia, European markets and many other periphery markets shined:
Underperformers: China, Bullion, Currencies,
It was a year where more uncertainties and less conviction, yet people made something out of it. It was year where opportunities knocked and yet investors didn’t have the conviction to go with full force. There is a classic saying that “bull markets climb the wall of worries”. Long term investors who were there with the turmoil of 2015 had cheers to their investment and have seen double digit growth. Wounds of 2015 were healed in 2016.
Our thought for investors:
“Asset allocation is the best recipe for once investment dish. Miss any ingredient your dish misses the best taste. ”- PFS
Long term Investment options:
Invest in Equity saving funds a new breed of mutual funds which offer, equity, arbitrage and debt as an asset allocation. They will provide better returns compared to arbitrage funds/Fixed deposits and are liquid and tax efficient. Risk on investment is moderate.
Markets FY 17-18
When things look very comfortable that is when the uncomfortable happens.
- Europe elections, China November economic outlook are major global events to watch.
- America is still a very important point to look with Trump economic reforms and its successful implementation to be watched. It will be a do or die situation with his health policy rejected by the house.
- Real estate, gold and bonds which has lesser return and flexibility, money were diverted to riskier assets like equity through mutual funds and provident funds..
- Markets are now very optimistic post demonetization and the emergence of Domestic inflow as a key driver to the markets is giving boost to the stock markets.
- Earnings are yet to emerge on the larger horizon to drive the markets higher. Any miss in this regard will only lead to small correction as this market is now led with liquidity rather than fundamentals.
- With BJP win, the reforms process might be more or less easy for action, but with no opposition stress, the reforms might also be delayed.
- GST implementation by July 1st will also be watched. There might be confusion for the first 2 quarters and also there might be chances of earnings miss from corporate during this migration. Need to watch carefully.
- Crude, Monsoon and Trump will be a key factor and earnings will always be important.
- Gold needs to be watched carefully as smart investors are lapping on to this asset even with good economic news. Which is contrary?
- US FED hike is expected with another 3 to 4 hike in 2017. As of now there is -0.5% negative real interest in US. Emerging markets can sustain up to 1.5-1.75% positive real interest in US. So until then let’s enjoy the party in emerging markets. More hikes in US means no more reduction in interest rate in INDIA, as we will become less attractive as a Bond investment nation.
- Reliance JIO will keep the telecom players on the Running mode.
- IT and Pharma companies will continue to be working on night shifts to listen to Trump reforms which might hurt their earnings and business environment.
- Metal and financials will be on consolidation mode.
- Valuations are very rich and stretched and if earnings don’t follow soon, then markets will surely be confused with the haves and have-nots.
- $ Rally and YEN rally might have come to an end.
We will surely be a guiding force for your investments and will guide you through this journey. We look forward for your continued support and confidence in our advisory and services.
We have ramped up our backend team and systems, which was shared to you in the month of Feb-17. We have also now started sharing news article and letter through social media as likes of facebook: https://www.facebook.com/productivefinancials/ and PFS blogs. http://productivefinancial.co.in/blog
Equity and derivative is an ocean and we are still in the initial stage of gaining knowledge and would share more opportunities of creating value to your investment in coming days and years to come. We request and appreciate your patience and confidence in this regards.
We also request you to share our thoughts so that many more people can be reached and benefited from the ideas if fruitful.
Assuring you with the best of knowledge and service.
CEO & Managing Director
Productive Financial Services Pvt., Ltd.,
No. 469/41, “Maagam Sankeerna”
1st floor, 12th main, 55th Cross,
3rd Block, Bhashyam Circle,
Bangalore- 560 010
Phone- +9180-23157929/8162/64, Fax- +9180-23157928