Current Market Volatility :Outlook

[Deepa Nittala]

Hi , 

This is with reference to the current volatility in the market . Just wanted to re-iterate a few points from my end. 

Indian markets do not only react to business fundamentals, many a times the reactions are news based. Last week , the last quarter earnings of many corporates were released which were not very encouraging , and hence the reaction. 

With a stable government election , it was anticipated that the Indian economy is on its recovery path. With huge expectations, there was overbuying of stocks last year and surge in the indices. (this was a news based reaction/speculation whatever you may call) . 

But do things really work that way. 

1. Government has to formulate reforms.
2. Reforms have to get approved by budget and parliament . 
3. The companies implement action steps based on reform measures 
4. The action steps show up as earnings and profits. 

If we logically relate to above points, the 1st budget in Jul'2014 , could start actions in small way. Reformatory measures were more focused in Feb budget and parliament sessions took steps forward in March , and some are still happening . Can this really translate corporate earnings in the first quarter. My personal opinion no. We can see the translation in second half of the year . 

Due to this , assuming the 29K levels to be high valuation levels of market , profit booking and consolidation of markets was the next course which followed. 

Why these consolidations should not effect you . 

• You are here for a long term >5 years. Market at 27K or 29K should not really bother you since 5 years later , the levels we would be looking at would be completely on different scale. 
• I have been encouraging you to go systematic and discouraging bulk purchases. This in itself would inherently average out market risk and many of you are faring with a positive overall portfolio , despite market correction upto 10% . 
• Always remember , you are saving for your needs and Equity is only meant for your long term goals. For near term , we have already accounted with debt funds which are not market linked. so , keep the panic aside , and rejoice the volatility, since when investing , lower levels will help you . Going systematic , is anyway helping yu make benefit of every market level. 

Now some positive news for you :

• According to the World Bank, the Indian economy is projected to grow by 7.5% in the current fiscal on account of increased economic activity and greater stability.

• The growth rate is expected to accelerate to 7.9% in 2016-17 and 8% in 2017-18.

• Data from the Department of Industrial Policy and Promotion showed that Foreign Direct Investment (FDI) in India rose by 63% to $3.28 billion (about Rs. 20,397 crore) in February, 2015.

• In February last year, the country had received FDI worth $2.01 billion. During the period from April to February period of 2014-15, foreign fund inflows rose by 39% on a yearly basis to $28.81 billion. The inflows stood at $20.76 billion during the same period a year ago.

Trust this re-iterates your belief in planning and saving . 

Have a great day !!

regards

Deepa

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