Markets
BSE See NSE See 39,148.64
-303.43 (-0.77%)
collapse Related Readings collapse

Realistic Optimism

| 11/22/2010 12:54 PM Monday

Industrial production growth numbers have led some corners to doubt the pace of economic activity going forward. In contrast, we believe these statistical series are inherently volatile and cannot decisively indicate a change in trend. We focus on the RBI’s recent statement where it has indicated that the domestic economy is operating close to the trend growth rate, driven mainly by domestic factors. The normal monsoon has boosted the prospects of agricultural production, which should stimulate rural demand. Most industrial and service sector indicators also point towards sustained growth. As an economy emerges from a downturn, confidence improves both at the consumer and the business level. It is not surprising to expect rising discretionary spending in such a scenario. We have witnessed a similar phenomenon in the consumer space too with sectors such as automobiles, FMCG, etc.

It is expected that discretionary spending would continue to move higher and spread to other areas including consumer services like entertainment, travel and leisure, etc. Hence, we see a good demand for investment related goods (capital goods). If we add the government thrust on infrastructure and a large pool of savings available for financing investments, we get a potent economic machine capable of delivering growth for years to come. As the economic landscape world-wide is quite uncertain, we cannot rule out a few odd corrections induced by global macroeconomic volatility, it is not unlikely to reflect a fatal economic condition.It is also unlikely that global policymakers will let the worldwide financial system come dangerously close to instability since they have seen the impact of the late 2008 events in the US banking industry. Therefore, instead of looking for triggers that could spark the next rally, we focus on identifying companies with good business models and sustainable growth prospects. The BSE Sensex was moving in a 2500 point range for almost a year until 2½ months ago wherefrom it staged a strong rally on the back of the huge surge in liquidity from FIIs to reach the January 2008 levels.

Even after this, the index has returned close to 15% during the current calendar year, which is by no means extraordinary, but a reasonable return for 10 months. This rally and the recent success of the Coal India IPO have made a number of investors ask about the market’s prospects in the remaining period of the year. It makes us wonder how many of these investors were able to position themselves to gain exactly before the recent rally started. In our opinion, not only is it futile to predict the market’s move in the next 1½ months, it would be worse to invest on the basis of any such forecasts. We think market valuations are close to fair and not exorbitant. It is reasonable that investors could earn a hurdle rate of 15-20% or perhaps more through good actively managed funds. One must select a judicious mix of large, mid and small cap funds depending on one’s risk profile. However, our suggestion is to allocate incremental capital to equity markets at regular intervals to tide over the volatility.

 

Find More Articles on: Personal Finance, Mutual Funds, DSIJ Magazine, Fund's Focus, Markets, Market Outlook

news letter

More for the early bird.

Get the post-market reports and breakfast news right in your inbox. See latest »

DSIJ Mindshare

Index trend and stocks in action June 17, 2019

Karan DSIJ / Article rating: 5.0

In case Nifty falls below the level of 11,770, it may test the 11,600 mark in the near term. To move upside, the bulls need to move above the 20-DMA once again and sustain for at least two to three days. Only then, the bulls will gain confidence. Stocks in news: BHEL, Elecon Engineering Company, PG Electroplast, FDC, Divi’s Laboratories, Symphony, Coromandel International, Voltas.

12345678910Last

Tiger Logistics topline to grow by 10%--buoyant over infra sector status to logistics sector

Tiger Logistics topline to grow by 10%--buoyant over infra sector status to logistics sector

Logistics sector will play a vital role in making the concept of ‘Make in India’ a success. This will be further aided by some of the recent steps taken by Government of India such as granting of infra sector status to logistics sector.

Best and worst Performing Sector Funds of Year 2017

Best and worst Performing Sector Funds of Year 2017

As the year-end has approached most of you are eager to know the mutual fund movers and shakers of the year 2017. Read on to find the performance of various sector dedicated funds.

Markets may start positive, but volatility likely due to F&O expiry

Markets may start positive, but volatility likely due to F&O expiry

The start of the F&O expiry day is likely to be in the green, but volatility may creep in with the progress of the session. The SGX Nifty suggests that the Nifty could open at 10,525 with gains of 32 points at the opening bell. 

Pidilite announces buyback of Rs 500 crore

Pidilite announces buyback of Rs 500 crore

The buyback offer comprises purchase of up to 50,00,000 equity shares. The buyback offer size comprises 0.975 per cent of the total paid-up equity capital of the company.

Bank Nifty drags markets to close in the red

Bank Nifty drags markets to close in the red

The late session fall in Bank Nifty changed the direction of the market, leading to a marginal fall in the benchmark indices. Bank Nifty yet again resisted at its multiple point downward sloping trendline level at 25733.

Six major underperforming MF schemes having higher expense ratios

Six major underperforming MF schemes having higher expense ratios

Mutual funds with a large size of assets under management (AUMs) are supposed to have lower expense ratios. However, there are schemes with large AUMs but having higher expense ratios and generating lower returns. 

Nifty Pharma supports market; Sun Pharma at bullish reversal

Nifty Pharma supports market; Sun Pharma at bullish reversal

Nifty Pharma index has come in as the healer in an otherwise sluggish market. Index has given a consolidation breakout at the 9420 level today and if the it sustains 9420, followed by 9628 on the upside, it has a long way to go.

Ten stocks close to their 52-week low

Ten stocks close to their 52-week low

Following stocks are close to their 52-week low as at 12.35 p.m. on December 27.

Ten stocks close to their 52-week high

Ten stocks close to their 52-week high

The markets on December 27 opened gap down. BSE Sensex is trading at 34,068.15, up by 57.54 points and the Nifty is trading at 10,539.45, up by 7.95 points.

Five stocks with selling interest

Five stocks with selling interest

Overall volumes in futures & options currently stand at 62.75 lakh contracts with a turnover of Rs. 5,19,204.72 crore.