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Indian Economy
With the Modi reforms since 2014, namely, demonetization, GST, RERA, Bankruptcy code, cleaning up of the NPAs, have put a lot of brakes on the economy in the last 6 years or so. However, we are in a comparatively better shape than most countries currently and we will now begin to reap the benefits. China is going through its own clean up.
Some paradigm shifts that are affecting the Indian economy:
- China plus 1 - which could bring business to India. This is showing up in our export numbers.
- Home loan rates went down to 6.5% which has never happened before. This will be a boon to the real estate sector.
- World-class software is now available to small companies on reasonable subscription bases. This will allow smaller companies to compete.
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Equity Markets
The equity market continued the unrelenting run up, and is constantly touching all-time highs. Markets are definitely expensive and we need to remember previous lessons, namely:
- Do not invest in one asset class only.
- Do not use leverage - Open interest in stock futures is at an all-time high for retail investors.
- Use asset allocation - or if cannot manage, use funds that do it for you.
On the other hand, we are just starting the earnings growth cycle, and it is definitely not the time to be out of the markets.
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Corporate Profit to GDP in 2002 - 2.2% 2008 - 7.8%
2020 - 1.9%
2021 - 2.3%
The Capex revival cycle is re-starting:
- There were Rs. 2 tn savings from Corporate Tax rate cuts and lower interest rates. This has resulted in the best balance sheets for the Top 100 corporates. Along with high margins and the growth recovery, it is a perfect recipe for investments.
- Import Substitution - Aatmanirbhar Programme.
- Export thrust as the world looks at an alternative to China.
- Performance Linked Incentive scheme across sectors PLI is likely to generate capex to the tune of Rs. 1.4 tn over the next 2-3 years.
We have not had a 10% correction or so since the crash of 2020. This normally happens once or twice a year and would be healthy for the equity markets. We do not yet see any reason for a larger crash at the moment. Unless the goal is close - within a year or two - the investment in equity can continue.
Apart from mutual funds we are also tied up with certain Portfolio Management Companies for investment in equity.
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Gold
Gold price today is the most undervalued among the financial asset categories and it may shoot up to its lifetime high by end of 2021/early 2022, say commodity experts. Festival and marriage seasons are likely to create demand from India. Even central banks like Russia, China, and other banks are adding gold to their reserves, which will create the demand for gold intact. ETF buyers are also adding the gold as a hedge against inflation. The current gold price levels are very attractive for mid to long-term buyers. Global markets are at very high levels and corrections in the global equity will create more demand for safe-haven assets like gold and silver.
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AKURDI |
WAKAD |
WANOWRIE |
MAGARPATTA |
B-20, Jai Ganesh Vision, Akurdi, Pune-411 035. |
No-1, Nisarg Deep Apartment, Kaspate Vasti Wakad, Pune-411 057. |
No. 26, Shraddha Regency, ’A’ Opp Kedari Garden, WANOWRIE, Pune-411 040. |
No. 14, 4th Floor, Destination Centre, Magarpatta City, Hadapsar, Pune-411 013. |
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