Market recommendation “PARDE KE PEECHE”
Dear friends,
When a movie is made and say the Producer Director is Raju Hirani, Actor Aamir Khan, Music Director –Rehman, etc etc …the probability of the movie being a hit will be high. Why!! Simply because the people behind the same, are talented, true to their vocation, and the intent is there to make a sound product.
That is how I see the current government. The top management team at various ministries viz PM, FM, Defence, Railways, Power, etc, are proven people, and the intent is there to improve the systems and processes and steer the economy towards growth. Whether they succeed or not, that only time will say, but at least there is intent and actions unlike, the previous government.
The RBI Governor has given a massive booster to the economy by aggressively cutting interest rates by 50 Bps yesterday. This action means RBI has cut massive 125 Bps interest rates in the last 9 months. This act will surely propel the economy toward growth.
As I see it, the three important factors required for an economy to perform are in place:
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- Falling inflation
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- Falling interest rates
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- Low commodity prices
It will be a matter of time before the economy starts performing.
See the macros :
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- 70% of the population under 35 –which means consumption-led growth
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- CAD under 1%
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- Massive savings in Subsidies on A/c of Direct bank transfer
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- 7% + GDP growth –which other countries can boast of.
Friends, admittedly, there are short-term issues, and there will always be something or the other. World degrowth led by China, Oil slump leading to issues with Gulf countries, Fed rate hike, etc.…
Haven’t we been listening to some issues since last 7 years? Greece/Spain/Portugal defaults, replacing USD with Euro as a world currency, tapering off of Fed Quantitative easing, etc etc . Yet in last 5 years, Nifty, from mean of 5500, has jumped to 7500.
What I am trying to emphasize is one should stop listening to or bothering with short-term concerns. They have always been there and will always be there. On a macro basis, there is no alternative to making money apart from equities, as Gold and real estate are out (pls refer my article dated 2nd Oct’13).
Interest rates have fallen, and it is a matter of time before the benefits will start percolating down, and as and when they will fall further, it will result in growth momentum picking up and money shifting from Debt/savings to equities and propelling the markets further up.
I am of firm believer that an investor is bound to make money into equities provided he is a disciplined and systematic investor.
One can buy directly into stocks or through a mutual fund route in SIP mode.
But Equities it is.
With warm regards,
Samrendra Tibarewalla, CFPCM
PS: You are the best manager of your money. Please take informed decisions only.
Disclaimer: The author in no way will be held responsible for losses incurred on the basis of above recommendations. The investors are advised to take independent decisions after verifying all facts.
FAQ: Market Insights and Equities Investment
1. How does the current government’s approach differ from the previous government according to the article?
The current government, led by proven individuals across various ministries (e.g., PM, FM, Defence, Railways, Power), is highlighted for its intent and actions to improve systems, processes, and steer economic growth, contrasting with the inaction attributed to the previous government.
2. What are the three important factors required for an economy to perform, as mentioned?
The three crucial factors for economic performance highlighted are falling inflation, falling interest rates, and low commodity prices.
3. Despite short-term issues, why should investors remain focused on the long-term?
Despite short-term issues like world degrowth and oil slumps, the historical performance of Nifty, rising from a mean of 5500 to 7500 in five years, suggests that equities remain a solid long-term investment. The advice is ignore short-term concerns in favor of long-term macroeconomic trends.
4. What macroeconomic factors are presented as evidence of economic potential?
The article points to several macroeconomic factors, such as 70% of the population being under 35 (indicating consumption-led growth), CAD under 1%, massive savings from subsidies due to direct bank transfers, and over 7% GDP growth as indicators of the country’s economic potential.
5. What investment advice is given for those new to the equity market?
For newcomers to the equity market, the article recommends starting with systematic investment plans (SIPs) in mutual funds. This method allows investors to benefit from the principle of dollar-cost averaging, potentially reducing the risk of market timing and encouraging a long-term investment horizon.