Plan The Year Well

The markets worldwide are witnessing a year-end rally. Globally, there are three distinct pockets from which cues are emanating over the short term. The US is hanging precariously from what is being called the ‘fiscal cliff’. Tipping over it could spell disaster for the US economy, which is regarded as the world’s growth engine. The Fed has already announced its decision to extend its bond buying program from the present USD 40 billion to USD 85 billion. Now, considering that there is no middle way worked out for managing the ‘fiscal cliff’, the US is seen entering into a recession.

Let’s leave the US at that and take a look at the European region. Here too, things aren’t improving as they ought to. In fact, a lot of experts and commentators are of a very clear view that the troubles in Europe are far from over. The region will go through a prolonged period of pain before it gets back to where it was. This means growth which is sub-normal or rather no growth at all.

Asia is one region that is currently balancing the fault lines drawn by the US and Europe. Though the growth in China has been slowing, it still remains among the fastest growing economies of the world. Japan, on the other hand, has gone through a change of regime, and the new premier has clearly spelled out his objective of ushering in growth even if it means having an easy money policy.

Now, for a glimpse at the situation in India. After a long tiff among its policy makers, things have started moving in a desirable direction. Reforms have been fast-tracked, and this is sending out the necessary positive vibes to the markets. The government is all set to usher in a good amount of social and developmental spending going ahead. So, what does the new year look like? From all that is mentioned above, what emerges loud and clear is that the world is going to be flush with liquidity. Money will flow from the developed and developing regions like never before. And where will it go? The basic premise of our lead story this time is an answer to this very obvious question.

Traditionally, during this time of the year, we have carried views on where to invest in the ensuing new year. However, this time, it’s different. As mentioned earlier, our cover story in this issue tells you how much money is likely to flow between the different shores and through what routes. India is strategically poised to garner a good amount of this money in various forms including capital inflows and direct investments, which will help in asset and job creation.

What does this mean for the markets? Are we prepared to handle this huge surge in liquidity that will emanate from foreign shores? What will emerge out of government action on the domestic front? With more money ready to come in from that side too, is it time to re-examine your asset allocation strategy? We answer these vital questions with support from some of the strongest pillars of the Indian investment universe so that you can make informed decisions and benefit over the longer term. After all, our stated motto is to help you book profits.

Since there is a clear consensus emerging on the fact that it is time to invest in equities by cutting exposure to other asset classes, we help you build a portfolio of stocks. Our recommended portfolio is designed to create wealth for you over the next one year. We have been doing this year after year, and are proud of the results we have achieved.

Apart from this, you would read about one sector that is considered to be the most important from the standpoint of economic growth but which has not been doing too well over the past couple of years. The power sector is all set to come out of its gloom thanks to the many initiatives from the government which will put the light back into this sector.

Apart from this, the mutual funds section will bring to you insights into the mind of Sanjay Shah, Senior Vice President & Head of Fixed Income at HSBC Global Asset Management, along with other features which help you sort out your problems, whether on the financial planning front or on the tax front.

The next few days will be spent partying and welcoming a brand new year. I, along with all my colleagues at Dalal Street Investment Journal, take this opportunity to wish all our patrons and readers a very happy new year ahead! As always, I request you to write in to me at editorial@dsij.in with your feedback on this issue of the magazine.