Time to be Cautious in Equities
Dear Friends,
I would refer to my article dated 2 nd Oct 2013, in which, I was of the opinion that
equities would be the right asset class to invest into. In last 5 years, broad based
NIFTY has moved from 5800 (Oct ’13) to 11400 (present), thereby giving about
15% per annum return on broader index only.
Implementation of GST would be giving the desired push to the economy, yet I feel
that markets are fully priced. On a macro basis, there are some worry points :
- Increase in international Oil price to USD 80 per barrel.
- Increase in Bond yields to 8.1%
- Rupee devaluation to 73
- Markets trailing PE at 27 (app)
- Forthcoming general elections 2019
Looking on to the situation I think that investors are better off booking profits. My
advise would be :
For those who have been investors in MF for long time and are nearing their goals
or objectives (within a year or two), they should book profits and park money in
short term accrual funds. The profit booking should be done gradually and at every
rise of the market.
For those investors who have recently started investing into MF and have their
goals or objectives at least 5 years away, please continue to invest and not be
bothered about market movements.
Indian economy is robust and the fastest growing economy in the world. Next
10/20 years, the economy will continue to grow at fast pace because of the
population demographics, wherein 50% of the population is under 35 years of age.
As such, Equities will give good returns for sure.
Its only near term or short term that might not give the desired results.
With warm regards,
Samrendra Tibarewalla, CFP CM
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 re
commendations. The investors are advised to take independent decisions after verifying all facts.
FAQ : “Time to be Cautious in Equities”
Q1: What was the performance of the NIFTY index from October 2013 to the present?
A1: From October 2013 to the present, the broad-based NIFTY index moved from 5800 to 11400, delivering approximately a 15% per annum return on the broader index alone.
Q2: What investment advice is given for long-term mutual fund investors nearing their goals?
A2: For long-term mutual fund investors who are nearing their goals or objectives (within a year or two), the advice is to book profits and park money in short-term accrual funds. This profit booking should be done gradually and at every market rise.
Q3: What should investors who recently started investing in mutual funds do?
A3: Investors who have recently started investing in mutual funds and have their goals or objectives at least 5 years away are advised to continue investing and not be concerned about market movements.
Q4: What is the long-term outlook for the Indian economy and equities?
A4: The long-term outlook for the Indian economy is positive, being described as robust and the fastest-growing economy in the world. Over the next 10 to 20 years, the economy is expected to continue growing at a fast pace, largely due to population demographics, with 50% of the population being under 35 years of age. As such, equities are anticipated to yield good returns in the long run.