The title sounds like a disclaimer…and so be it.
When I said I like the equity markets I meant NOW. In June of 2015, frankly I am liking the index, and the valuations at which some of the blue chips are available. After a mid cap rally, the biggies may just play catch up? Or will they not?
Let us look at what works in favor of the Indian markets (aka Namo politically speaking):
1. The drop of the oil prices…and the revival to about $70. This is a far cry from $ 120! This has helped Na Mo reduce deficit, stabilize rupee, free price the fuels, do not underestimate the impact of all this on the economy.
2. A sensible Reserve Bank Governor! Look at the fact that the interest rates around us are all sub 5 – Australia, China, Far east, but RR does not succumb to pressure. He is holding Narendra Modi to the promises he made..and pushing hard.
3. SIP is growing at a very fast pace: the average size of the SIP is increasing and the number of people coming into the market is also increasing. Like it or lump it, ULIPs are selling like hot cakes and it is worth looking at the AUM collected by the life insurance companies. This will act as a counter to the pull away of money by the FII if it were to occur at all.
4. Some of the FII money will get pulled out of India – from debt and equity markets, but that may not impact the markets much.
5. Interest rates are headed south – especially if Modi does some path breaking stuff in the Infra funding
Sure, there are some red flags – the NPA problem, the Modi-RR combine ABILITY to comedown on banks who have created a mess, the hugely publicity seeking but relatively inexperienced cabinet, the inability of the Govt to push PSB reforms….however I am still optimistic of getting a 14% cagr over the next 5 years. So doing a SIP now makes sense – and we could be going the 2014 way…or will we?
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