Market view series is back in a new avatar – shorter, strictly focused on money making investments and providing you with an avenue to start your stock investments. Needless to say, the motivation for this comes for the interesting feedback we have got from some of you. The primary aim of the series continues be to assist the average investor in managing his / her equity investments. We are strong believers that there is immense wealth to be created in the stock markets over the next ten years and that is also the only way (apart from real estate) for working professionals to give wings to their financial aspirations. Those who wish to start stock market investing in a systematic manner can write back to us.
What’s our market view?
The last series was written in December, when India got the first flavor of Narendra Modi’s charisma in the state elections of Madhya Pradesh, Rajasthan and Chhattisgarh. The markets have virtually been on steroids since then and scaled the previous all time high. In the last series, we highlighted that the worst for India is over. Currency is stable, fiscal situation is slightly better and reforms initiated by the current government has started bearing some fruits. Obviously this is not to say that things start improving from tomorrow but we are looking at a slow economic recovery over the next two years irrespective of the election outcome. In case, the Narendra Modi led NDA fails to form a government, markets can correct 10% but will resume their upward journey post that. Thus, it’s time to start buying stocks in a calibrated manner.
Which sectors/ themes do we like?
As mentioned in the last two series, FMCG & IT sectors continue to remain overvalued and investing in HUL, GSK, TCS, HCL, etc at current levels won’t help you beat market returns for the next few years. Better off taking some risk in the portfolio in the form of an exposure to cyclical and turnaround stories. A word of caution here would be to avoid highly leveraged companies where recovery prospects as gloomy.
While we never take a market call and continue to be stock specific in our investments, we have added few stocks from the auto ancillary, banking and capital goods sector in the model portfolio as these will benefit from the economic recovery.
P.S: Equity as an asset class in extremely rewarding in the long term, however only individuals who can bear interim volatility should invest in stocks. Kindly consult your investment advisor before acting on advice provided here.