Liquidity, Earnings To Push SENSEX To New Highs

Who would have thought Sensex could go so high, so fast. Well we did, didn’t we? Sensex above 33,000 is merely reflecting the bullish mood in the markets which we have been repeatedly communicating. The recent enthusiasm in the Indian markets can be attributed to the government’s three ground-breaking steps to kick-start growth and employment:

Proposed injection of Rs 2.11 lakh crore as recap bonds in capital-starved PSBs :- This move is expected to act as a force multiplier for the growth needs of the PSBs and will also help in accelerating their tepid credit growth. This will also help PSBs arrest market share loss to private banks and NBFCs, which are well capitalised.

Rs 14 lakh crore capex plan over next 5 years:- This capex plan in key infrastructure sectors like railways, power, road and housing can be expected to create employment opportunities and improve the aggregate demand in the economy. This move can directly impact sectors such as capital goods and engineering, construction and cement.

 MSMEs :-  The government has forced the large PSUs to register themselves on TReDS platform and clear their dues to MSMEs within 90 days. This is expected to be benefit the MSMEs as access to capital was holding back these large employment-generating enterprises.

 I am telling you, this government means business and all the right steps taken today will benefit the economy in the coming years. Many may be wondering why equity markets are scaling news highs. One must understand that equity markets are forward-looking and always discount the future. The future belongs to India.

 In this issue, we thought it will be ideal to identify stocks that most have ignored and are trading at relatively cheaper valuations. In the cover story we discuss the benefits of contrarian investing and also highlight the challenges faced by a contrarian investor. Check out whether contrarian style of investing suits you as an investor.

 Mutual fund space is a crowded one. More than 50 per cent of the equity mutual fund schemes fail to outperform the benchmark index returns. In our special story, we have come up with a list of mutual funds that one can exit from at this point of time. I am sure the recommendations will help you align your mutual fund portfolio in a way that maximises returns.

 Often, we hear from investors that risk management is not their forte and is frequently ignored by many investors. We have in detail explained the basics of risk management and have focused on the best risk management practices that one can follow to optimise returns. Hope you find our suggestions valuable.

The rally in global markets triggered by the US and Japanese markets signifies improving prospects of global economy. Markets will soon start focusing on earnings and, in my view, the earnings will be key trigger for the markets in the coming quarters, along with various government initiatives to propel economic growth in India.While markets are no doubt good, worst of the investing errors are made in good times. So, stay cautious and pick your investments with utmost care. Remain tuned to DSIJ.

Happy Investing !