"Any
idiot can face a crisis - it's day to day living that wears you out."
Anton
Chekhov
(Russian, 1860-1904)
(Russian, 1860-1904)
Word for the day
Indefatigable (adj)
Incapable
of being tired out; not yielding to fatigue; untiring.
(Source: Dictionary.com)
Malice towards none
Madison,
Allphones, Wembley.......Veni, vedi, vici.
First random thought this morning
The winter session of the
Parliament will begin next week amidst a great deal of anticipation.
Sanguine are anticipating that
the government will cover more than the half distance to meet the resurgent
opposition in their camp in order to successfully carry out its agenda of
inclusive and faster development.
Skeptics anticipate a "no
show" as the stalemate continues.
Cynics are anticipating the
opposition to gang up and thwart all legislative business, as the government stays
put on its standpoint.
Investment strategy 2016 - 1
Indian investors are most likely entering once in five year phase
when the return prospects on most asset classes are frustratingly low.
Fortunately though the return of investment is not under threat as yet.
On YTD basis benchmark equity indices have given a negative return
of ~4%. Given the poor earnings growth, slowdown in global flows and moderation
in optimism over economic reforms, the outlook for 2016 is not very
encouraging. Save for a major re-rating of Indian equities (no reason to
foresee that today) the benchmark indices may return a moderate 10-12% return
in 2016, with a reasonably higher degree of risk and volatility.
Despite 125bps reduction in repo rates, benchmark yields have
fallen by 20-25bps this year. The best in class debt funds have given 12-13%
return over past twelve months. However given that both economic growth and
consumer inflation might have bottomed, the scope for a further reduction in
rates from the current level may not be great.
Save for a global crisis requiring larger monetary stimulus, one
should not expect the rates to fall more than 75bps from the current level. On
the contrary, a material spike in consumer prices and/or pickup in investment
demand may actually restrict the further cuts to much smaller proportion. This
would essentially mean that the debt investment also may not offer more than 8%
return in next twelve months.
As the US Fed finally begins the tightening cycle, precious metal
may continue to lose their luster - making investment in gold unremunerative.
Leaving apart very high priced locations e.g., South Mumbai, and
areas with huge oversupply hang, e.g., NCR and Central Mumbai, real estate
prices in many areas may bottom out in next twelve months. Lower rates and
stability in employment conditions may spur decent demand in LIG/MIG segment.
However expecting any material rise in home prices in next twelve months would
be bit unreasonable at this point in time.
So what should be the investment strategy going into 2016?
I will share my views in coming days.
No comments:
Post a Comment